The federal Worker Adjustment and Retraining Notification (WARN) Act protects workers during plant closings and 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 act generally applies to companies with more than 100 employees, though there are exceptions, which we’ll cover in this article.
If you do employ more than 100 employees, however, you may need to comply with the act. Keep in mind that in addition to federal law, several states also have their own WARN laws, which may apply more broadly and impose more restrictive requirements than federal law. Here’s what you need to know.
Who needs to follow the WARN Act?
The Worker Adjustment and Retraining Notification Act (WARN) applies to companies that employ 100 or more full-time employees. These companies are required to submit a WARN notice in the event of mass job losses or plant closure.
Even if you don’t hit the threshold for the number of employees, you’ll still have other US labor laws to follow when terminating a person’s employment.
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
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 WARN regulations?
According to the US Department of Labor (DOL), WARN applies if an employer:
- Terminates employment or temporarily lays off more than 50 employees by closing a single site of employment
- 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
- Layoffs within a 90-day period where the number of employment losses for two or more groups of workers collectively reaches the specified threshold level
- 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 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. Affected workers or their representatives (e.g., a labor union)
You must give notice to managers, supervisors, hourly workers, and salaried workers. 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’s dislocated worker unit to help minimize the impact the layoff may have on the community.
The state’s dislocated worker unit is made up of professionals who help laid-off employees with job 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 act.
What happens if a business violates WARN regulations?
If an employer violates the 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. Back pay includes any overtime that is regularly available to employees. Employees on disability are also entitled to damages.
In addition, the employer can owe civil penalties of 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.
Are there any exceptions to the WARN Act?
The 60-day notice requirement may not apply 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
- Mass layoffs are due to unforeseeable business circumstances
- There’s been a natural disaster, like an earthquake or hurricane
You can learn more about exceptions, rules, and penalties to WARN advance notices with the U.S. Department of Labor’s employer’s guidance.
If your company can prove any of these conditions have been met, you may not 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 the required notice.
Do states have their own WARN laws?
Yes, some states have their own WARN regulations 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. For example, the California WARN laws apply to companies with 75 or more full or part-time employees. So be sure to check with check with your state to stay compliant.
As a reminder, the WARN doesn’t tend to affect small businesses. Instead, it typically applies to businesses that need to terminate 50 or more employees at a time.