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Q: What’s the WARN Act?

The federal Worker Adjustment and Retraining Notification (WARN) Act protects workers during certain types of layoffs. If you’re an employer who is planning a layoff, the WARN Act may require you to give a written 60-day notice to your employees and other parties.

If you’re a small business, the law might not affect you. The WARN Act generally applies to companies with more than 100 employees, though there are exceptions, which we’ll cover later in this article. 

If you do employ more than 100 employees, however, you may need to comply with the WARN Act, however, you may need to comply with the WARN Act. Keep in mind that in addition to federal law, several states also have their own mini-WARN laws which may apply more broadly and impose more restrictive requirements then federal law.  Here’s what you need to know.

Please note that in March 2020, due to COVID-19, California Governor Gavin Newsom suspended California’s mini WARN Act for the state until further notice. 

Who needs to follow the WARN Act?

The WARN Act generally covers companies that employ 100 or more people. 

Remember, even if you don’t hit the 100-employee threshold, you’ll still have other US labor laws to follow when terminating an employee. And keep in mind that most states have at-will employment policies, which means you can usually cut off your relationship with an employee without giving advance warning.

You won’t need to count employees who: 

  • Have not worked for you for at least six months in the past year
  • Work fewer than 20 hours per week on average
  • Were hired for a temporary project (or hired to work at a temporary facility)
  • Were fired for performance issues
  • Leave voluntarily
  • Were offered another position within a reasonable commuting distance but declined the job

Here’s an important note to keep in mind: Employees who have worked less than six months in the previous year and those who work fewer than 20 hours per week are entitled to receive notice. But you don’t have to count them in the 100-person threshold.

When does a layoff fall under the WARN Act?

According to the US Department of Labor (DOL), the WARN Act applies if an employer: 

  • Permanently or temporarily lays off more than 50 employees by closing a single plant or facility
  • Lays off more than 500 employees at one location within a 30-day period
  • Lays off 50-499 workers and the total number accounts for at least 33% of the total workforce at one location
  • Reduces the hours of 50 or more workers by more than 50% for each month over a six-month span

What do employers need to do under the WARN Act?

If a layoff meets the conditions specified under the WARN Act (see above), the law requires you to provide written notice to the following people at least 60 calendar days before the layoff occurs. 

These people include:

1. Employees or their representatives (e.g., a labor union)

You need to give notice to managers, supervisors, hourly workers, and salaried workers to help them plan accordingly. If your employees are represented by a union, your company should give the 60-day notice to the union representative, who will decide how and when to break the news to your employees.

The notice should be in writing and include:

  • A clear warning about the upcoming layoff or plant closure
  • Whether this layoff will be permanent or temporary (which is defined as six months or less)
  • The exact date the layoff will happen
  • Details around severance benefits (if applicable)
  • An explanation of bumping rights (if applicable). This is when an employee is laid off by being replaced by another employee.
  • Who employees should contact for more information

2. State dislocated worker unit

You also need to notify your state dislocated worker unit to help minimize the impact the layoff may have on the community. 

The state dislocated worker unit is made up of professionals who help laid-off employees with their transitions. This can include career counseling, job search assistance, and help getting COBRA and unemployment insurance.

3. Local chief elected official

Finally, you need to notify your chief elected official of the impending layoffs. For example, this could be your mayor or state representative. This official can help prepare your community before the layoffs occur and ensure employees receive the services and protection promised under the WARN Act.  

What happens if a business violates the WARN Act?

If an employer violates the WARN Act, they can be liable for back pay and benefits for each affected employee for every day the law is violated, up to a total of 60 days. 

In addition, the employer can owe penalties up to $500 per day if they do not warn the local government about the layoff. You can avoid this $500 penalty by paying each affected employee within three weeks after the layoff.

For more information about WARN Act penalties, head on over to this DOL FAQ page.

Are there any exceptions to the WARN Act?

You may not have to give the 60-day notice if:

  • Your business is considered a “faltering company,” which means you’re trying to find new capital or get new business and giving notice would ruin your chance of doing so
  • You have unexpected business circumstances
  • There’s been a natural disaster, like an earthquake or hurricane

If your company can prove any of these conditions have been met, you won’t be bound to the 60-day notice. Instead, your business will need to give as much warning as possible and also explain why you couldn’t give sufficient notice.

Do states have their own WARN laws?

Yes, some states have their own WARN laws in addition to the federal WARN Act. These include California, Illinois, Maryland, New York, New Jersey, Tennessee, and Wisconsin.

State WARN laws typically impose extra or more restrictive requirements on employers, so be sure to check with check with your state to stay compliant. 

As a reminder, the WARN Act doesn’t tend to affect small businesses. Instead, it typically applies to businesses who need to terminate 50 or more employees at a time.

Are there any particular exemptions from WARN requirements in light of the COVID-19 pandemic?

As noted, the federal WARN Act includes several exceptions to the 60-day notice requirement.  One of those, pertaining to unexpected business circumstances, could apply to the current COVID-19 pandemic. 

Additionally, Governor Newsom in California recently issued an Executive Order temporarily suspending California’s mini WARN Act for employers that have or will have to engage in mass layoffs, relocations, or terminations in response to the COVID-19 pandemic.  Even though temporarily suspended, per the Executive Order, employers must still: 

  • Give written notices to employees that are affected by the order and to the Employment Development Department, the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs,
  • Give as much notice as possible and at the time the notice is given, provide a brief statement for why the notice period is shortened.
  • Ensure that the mass layoff, relocation, or termination caused by COVID-19 were not related to issues that could have been foreseeable when advance notice would have been required.
  • Provide written notice to employees containing the statement “if you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (UI). More information on UI and other resources available for workers is available at labor.ca.gov/coronavirus2019.

You can find Newsom’s full executive order here

As the COVID-19 situation is continually and rapidly evolving, it is important that employers keep up to date on the rapidly changing legal landscape.

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