Many employers have found it necessary in recent weeks to close facilities and furlough or lay off employees. The purpose of this alert is to remind employers of obligations they may have under the Federal Worker Adjustment and Retraining Notification (WARN) Act, which requires advance written notice to employees of certain plant closings or mass layoffs. The pace of events since early March 2020 has been so fast, and the time for careful planning so limited, that many employers have potentially overlooked the requirements of this act. Even in a pandemic, it is important that employers be mindful of the Act’s requirements and the potential risks of non-compliance.
Three types of employers are at particular risk of violating the WARN Act: (1) those who have not yet laid off employees but may have to do so in the future; (2) those who did not have to comply with the notice provisions of the WARN Act during a previous round of layoffs because the cuts were expected to be temporary, but they later have to be extended; and (3) those who have furloughed or laid off employees in numbers that did not initially trigger the WARN Act, but find themselves having to incrementally increase the number until they trigger the notice provisions.
What Notice Is Required?
The WARN Act requires covered employers to provide written notice of certain plant closings or mass layoffs to affected employees, their representatives (i.e., collective bargaining units), and certain government officials, at least 60 calendar days in advance. As discussed below (and of particular relevance during the current public health crisis), employers may not need to give the full 60-day advance notice when faced with unforeseeable business circumstances.
Which Employers Must Give WARN Act Notice?
The WARN Act generally applies to employers with 100 or more full-time workers (excluding workers who have less than 6 months on the job and workers who work fewer than 20 hours per week).
When Is WARN Act Notice Required?
The WARN Act is applicable when a covered employer:
1. Permanently or temporarily closes a facility or discontinues an operating unit, affecting at least 50 employees (not counting part-time workers);
2. Closes an operating unit that has fewer than 50 workers, but the closing also involves the layoff of enough other workers to make the total number of layoffs 50 or more;
3. Lays off 500 or more workers at a single site of employment (not counting part-time workers) during a 30-day period;
4. Lays off 50-499 workers (not counting part-time workers) at a single site of employment and the layoffs constitute 33% of the employer’s total active workforce (not counting part-time workers); or
5. Reduces the hours of work for 50 or more workers by 50% or more for each month in any 6-month period.
What Are the Exceptions to the WARN Act’s 60-day Notice Requirement?
An employer is excused from the 60-day notice requirement in three instances: (1) when the business is characterized as a Faltering Company, (2) when the plant closing or mass layoff is caused by a Natural Disaster, or (3) (the most relevant here) – when the loss of jobs is caused by Unforeseeable Business Circumstances.
The United States Department of Labor (DOL) has stated that an “unforeseeable business circumstance” is “caused by some sudden, dramatic, and unexpected action or conditions outside the employer’s control, like the unexpected cancellation of a major order.”
The COVID-19 pandemic will very likely be characterized as an unforeseeable business circumstance. Most notably, because of the pandemic, many businesses were compelled either by law or by legitimate health and safety concerns to cease or dramatically scale back operations on short notice, which in turn led to the closing of facilities and the laying off of employees. In those cases where employers were unable to give 60-day notice because of circumstances related to the pandemic, employers will likely be excused from the 60-day notice requirement.
What Happens if Notice Cannot Be Given in Advance?
Where advance WARN Act notice is impossible, the employer must provide the notice “as soon as practicable.” Employers who cannot comply with the 60-day notice requirement must include in the notice an explanation as to why advance notice was not possible.
What Happens If A Temporary Layoff Is Extended?
An employer who is planning a temporary layoff of less than 6 months does not have to comply with the WARN Act notice requirements, even if the layoffs meet the numerical criteria for mass layoffs (i.e. more than 500 workers laid off at a single site during a 30 day period or 50-499 workers laid off at a single site constituting 33% of the total active workforce). However, if the employer later determines that the layoffs will extend beyond six months for reasons that were not reasonably foreseeable at the time the initial layoff was announced, WARN Act notice must be given at the time the need to extend the layoff becomes known.
The COVID-19 pandemic presents a unique set of circumstances for employers, because they are dependent upon outside information and conditions to make personnel decisions. Employers that schedule layoffs, anticipating that the duration will be less than 6 months based on the best available information at the time, will likely not be charged with WARN Act violations if circumstances change and the layoff is extended beyond 6 months based on unforeseen new information such as extended stay at home orders, or supply chain interruptions, etc., so long as the notice is given “as soon as practicable” after the need for subsequent layoffs becomes apparent.
What Happens if the Layoffs Are in Waves?
An employer is required to give WARN Act notice if it has a series of layoffs over a 90-day period, none of which standing alone would require such notice, if the aggregate numbers are sufficient to require notice. An employer who can show that the individual layoffs were made necessary by separate and distinct actions and causes and were not designed to evade the WARN Act is not required to give notice. Although the COVID-19 pandemic is a singular occurrence, if additional layoffs are caused by changing circumstances that the employer could not have reasonably foreseen, such as an extension of stay at home orders or an unanticipated inability to otherwise put employees back to work, the subsequent layoffs will likely be deemed to have been caused by separate and distinct causes and the employer will only have to give notice “as soon as practicable” once the need for additional layoffs becomes apparent.
Who Must Be Given Notice?
Employers must give WARN Act notice to three different groups:
- individual employees who are not represented by a union;
- union representatives of individuals who are subject to a collective bargaining agreement; and
- certain governmental entities, including the state’s Rapid Response Dislocated Worker Unit (in Massachusetts, that would be the Rapid Response Team (RRT) of the Massachusetts Department of Career Services), and to the chief elected official of the local government where the action is to occur.
What Form Must the Notice Take?
Notices do not have to be in any particular format or contain specific words, but they must meet certain requirements and include relevant information, such as:
- a statement as to whether the planned action is expected to be permanent or temporary;
- the date when the mass layoff is expected to take place and the employees are to be separated from their employment;
- an indication as to whether or not bumping rights exist;
- the name and telephone number of a company official to contact for further information; and
- an explanation as to why the 60-day WARN Act notice was not possible.
How Is The Required Notice Given?
An employer may use any reasonable method of delivery designed to ensure receipt of the written notice. However, preprinted notices regularly included in each employee’s paycheck or pay envelope and verbal notices do not meet the WARN Act requirements.
Notice to the Rapid Response Team can be attached to an email and sent to: warnnotice@MassMail.State.MA.US. Employers may also give notice to the RRT online at https://www.mass.gov/how-to/submit-a-warn-notice.
What Are the Penalties for Violating the WARN Act?
Whether a layoff qualifies initially as a mass layoff, or only qualifies when the employer decides to extend a temporary layoff or to lay off additional employees, an employer must provide as much advance notice as practicable up to the full 60 days. The failure to comply with the WARN Act can result in substantial penalties.
Employers that violate the WARN Act can be liable to each employee who did not receive proper notice for back pay and benefits for the duration of the violation, up to 60 days. Employers that fail to provide the required notice to a unit of local government face civil penalties, not to exceed $500 for each day of violation.
If you want to learn more about the WARN Act please contact Joseph L. Edwards, Jr. (firstname.lastname@example.org; 617-456-8131), and Daniel Tarlow (email@example.com; 617-456-8013), the authors of this alert.