News & Events

Do You Need to WARN Your Employees?

Submitted By Firm: Bond, Schoeneck & King, PLLC

Contact(s): Louis P. DiLorenzo, Thomas G. Eron

Author(s):

Scott P. Horton

Date Published: 10/13/2016

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Since 1989, the federal Worker Adjustment and Retraining Notification ("WARN") Act has required covered employers to give written notice in advance of certain workforce reductions affecting at least 50 employees. Twenty years later, a New York law expanded the coverage to reductions potentially affecting as few as 25 employees.

If your business is planning or considering downsizing at these levels, then a review of the WARN Act needs to be undertaken early in the process.

When Are WARN Notices Required?

The federal WARN Act requires employers with 100 or more employees to provide 60 days’ advance written notice in the event of a "mass layoff" or "plant closing," as defined in the law. New York State’s WARN Act covers employers with as few as 50 total employees, and requires 90 days’ notice. Some other states also have mini-WARN laws, not addressed here, that may differ and should be reviewed with respect to reductions in force in those states.

The "employer" for WARN purposes can extend across a "business enterprise" to encompass more than one legal entity. So, you need to consider total employees across affiliated companies before concluding that you are not a covered employer based on the size of your workforce.

Covered employers may need to give WARN notices (to employees, their unions where applicable, and certain government officials) in the following circumstances:

  • "Plant Closing": where an employment site (or one or more facilities or operating units within an employment site) will be shut down, and the shutdown will result in an "employment loss" for 50 (25 in New York) or more employees during any 30-day period.
  • "Mass Layoff": where there is to be a mass layoff which does not result from a plant closing, but which will result in an employment loss at the employment site during any 30-day period for: (a) 500 (250 in New York) or more employees, or (b) for 50-499 (25-249 in New York) employees if they make up at least 33% of the employer’s active workforce.
  • "Relocation" (New York WARN): where all or substantially all of the industrial or commercial operations of an employer will be removed to a different location fifty miles or more away from the original site of operation and 25 or more employees suffer an employment loss.

Despite the reference to a 30-day period in the definitions of plant closing and mass layoff above, there are additional provisions that allow for the aggregating of employment losses for up to a 90-day period in some cases in determining whether WARN notices must be provided.

The New York WARN Act also specifically requires notice for certain "covered reductions in hours," but any such covered reduction would seemingly also qualify as a "mass layoff" based on the definition of "employment loss."

Generally speaking, "employment loss" for WARN purposes includes: (a) employment terminations other than a discharge for cause, voluntary departure, or retirement; (b) layoffs exceeding 6 months; and (c) a reduction in an employee’s hours of work of more than 50% in each month of any 6-month period.

When May Notice Not Be Required Under the WARN Acts?

Before you send out WARN notices, here are some potential exceptions to consider:

  • "Part-time employees" don’t count. For WARN purposes, this specifically means employees who have worked less than 6 months in the last 12 months and employees who work an average of less than 20 hours a week. (But part-time employees are entitled to receive notice where otherwise required to be issued.)
  • Independent contractors don’t count. But make sure that the individuals who are classified as independent contractors truly are independent contractors rather than employees.
  • New York’s Shared Work Program may provide an exception to New York WARN obligations based on reductions in hours. Where applicable, the Shared Work Program permits an employer to reduce the hours of work of its employees, up to a maximum of 60%, with employees supplementing lost income with partial unemployment insurance benefits.
  • No notice is required if the employer offers to transfer employees to a different site of employment within a reasonable commuting distance.
  • No notice is required if the plant closing is of a temporary facility or if the plant closing or mass layoff results from the completion of a particular project or undertaking and the affected employees were hired with the understanding that their employment was limited to the duration of the facility or project or undertaking. In some cases, seasonal employment may also qualify for an exception from the notice requirement.
  • Notice might not be required where employees retain employment with another company in the context of the sale of a business.
  • "Faltering companies" may get some relief from the full notice period. This applies only to plant closings and is limited to situations where a company has sought new capital or business in order to stay open and giving notice would ruin the opportunity to get the new capital or business.
  • An "unforeseeable business circumstances" exception applies to closings and layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required. The employer still must give as much notice as possible.
  • Full notice is not required where a closing or layoff is the direct result of a natural disaster, such as a flood, earthquake, drought, or storm.
  • Employers do not have to give notice when permanently replacing an economic striker as defined under the National Labor Relations Act.

All of the above should be considered narrow exceptions. Employers should only rely on them upon consultation with counsel experienced in applying the WARN Acts.

What Happens If WARN Notices Aren’t Issued?

If an employer should have given notice under WARN and does not, then it may be held liable for damages to each employee who should have received notice for up to 60 days’ pay and benefits, plus civil penalties and attorneys’ fees.

Is It Too Late To Comply With WARN?

If your company is contemplating downsizing in numbers that could trigger WARN issues, you should immediately consider whether or not notices should be issued. Depending on timing and business considerations, it may be better to issue late notices rather than no notices. In other cases, it might be advisable to delay implementing the reduction in force to permit full notice to be provided. And sometimes you might even determine that notices aren’t required under the WARN Acts in the first place.

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Client Successes

Altra Industrial Motion Inc.

Altra Industrial Motion Inc. has multiple locations in the U.S., as well as Central America, Europe, and Asia. The Employment Law Alliance has proved to be a great asset in assisting us in dealing with employment issues and matters in such diverse venues as Mexico, Australia, and Spain. We have obtained excellent results using the ELA network for matters ranging from a multi-state review of employment policies to assisting with individual employment issues in a variety of foreign jurisdictions.

In one instance, we were faced with an employment dispute with a former associate in Mexico that had the potential for substantial economic exposure. The matter had been pending for over a year, and we were not confident in the employment advice we had been receiving. I obtained a referral to the ELA counsel in Mexico, who was able to obtain a favorable resolution of the dispute in only a few days. Based on our experiences with the ELA, we would not hesitate to use its many resources for future employment law needs.

American University in Bulgaria

In my career I have been a practicing attorney, counsel to the Governor of Maine, and CEO of a major public utility. I have worked with many lawyers in many settings. When the American University in Bulgaria needed help with employment litigation in federal court in Syracuse, New York, we turned to Pierce Atwood, the ELA member we knew and trusted in Maine, for a referral. We were extremely pleased with the responsiveness and high quality of service we received from Bond Schoeneck & King, the ELA's firm in upstate New York. I would not hesitate to recommend the ELA to any employer.

David T. Flanagan
Member of Board of Trustees 

Arcata Associates

I really enjoyed the Conducting an Effective Internal Investigation in the United States webinar.  We are in the midst of a rather delicate employee relations issue in California right now and the discussion helped me tremendously.  It also reinforced things that you tend to forget if you don't do these investigations frequently.  So, many, many thanks to the Employment Law Alliance for putting that webinar together.  It was extremely beneficial.

Lynn Clayton
Vice President, Human Resources

Barrett Business Services, Inc.

I recently participated in the ELA-sponsored webinar on the Employee Free Choice Act.  I was most impressed with that presentation.  It was extremely helpful and very worthwhile.  I have also been utilizing the ELA's online Global Employer Handbook.  This compliance tool is absolutely terrific. 

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Employment Law Alliance (ELA) has provided Boyd Coffee Company with a highly valued connection to resources, important information and learning. With complex operations and employees working in approximately 20 states, we are continually striving to keep abreast of specific state laws, many of which vary from state to state. We have participated in the ELA web seminars and have found the content very useful. We appreciate the ease, cost effectiveness and quality of the content and presenters offered by these web seminars.  The Global Employer Handbook has provided our company with a very helpful overview of legal issues in the various states in which we operate, and the network of attorneys has helped us manage issues that have arisen in states other than where our Roastery and corporate headquarters are located in Portland, Oregon.

Capgemini Outsourcing Services GmbH

As an international operating outsourcing and consulting supplier Capgemini has used firms of the Employment Law Alliance in Central Europe. We were always highly satisfied with the quality of employment law advice and the responsiveness. I can really recommend the ELA lawyers.

Hirschfeld Kraemer

Stephen HirschfeldAs an employment lawyer based in San Francisco, I work closely with high tech clients with operations around the globe. Last year, one of my clients needed to implement a workforce reduction in a dozen countries simultaneously. And they gave me 48 hours to accomplish this. I don't know how I could have pulled this off without the resources of the ELA. I don't know of any single law firm that could have made this happen. My client received all of the help they needed in a timely fashion and on a cost effective basis.

Stephen J. Hirschfeld
Partner 

Hollywood Entertainment Corporation

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Ingram Micro

Ingram Micro is the world's largest technology distributor, providing sales, marketing, and logistics services for the IT industry around the globe. With over 13,000 employees working throughout the U.S. and in 35 international countries, we need employment lawyers who we can count on to ensure global legal compliance. Our experience with many multi-state and multi-national law firms is that their employment law services are not always a high priority for them, and many do not have experts in many of their offices. The ELA has assembled an excellent team of highly skilled employment lawyers, wherever and whenever I need them, and they have proven to be an invaluable resource to our company.

Konami Gaming

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Jennifer Martinez
Vice President, Human Resources

Nikkiso Cryo, Inc.

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Former Senior Director of Human Resources

Rich Products

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Assistant General Counsel

Sanmina-SCI

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General Counsel