The Worker Adjustment and Retraining Notification Act (WARN) ensures that workers displaced by mass layoffs or plant closings received adequate time to prepare for the transition between losing their jobs and finding new jobs. This means WARN essentially requires employers to provide at least 60 days’ written notice to employees who will lose their jobs due to a covered plant closing.
A company’s failure to comply with WARN can be a critical and costly mistake. An employer who fails to meet WARN’s advance notice requirement is liable for full back pay and benefits to each displaced worker for each day that notice was not given during the 60-day period. In cases where large plants have closed and large numbers of displaced employees are no longer working to make money for the company, these liabilities can add up quickly and substantially affect a company’s bottom line. In addition, a violating employer may be liable for civil penalties, attorney’s fees and costs.
Before looking in depth at WARN‘s notice and other requirements, it is important to obtain a basic understanding of several of WARN’s key terms. These key terms include:
Employees who may reasonably be expected to experience an employment loss due to a proposed plant closing or mass layoff by their employer. This term includes individually identifiable full-time and part-time employees, including managerial and supervisory employees, who will likely lose their jobs because of bumping rights or other factors, to the extent that such individual workers reasonably can be identified at the time notice is required to be given. Temporary workers and contract employees who have a separate employment relationship with another employer and are paid by that other employer or who are self-employed, are not “affected employees.”
Any private for-profit and not-for-profit business enterprise that employs 100 or more full-time workers (including all locations and including employees on layoff status or a leave of absence) or 100 or more full and part-time workers who work at least a combined 4,000 hours per week (not including overtime).
A termination (not including a discharge for cause, voluntary departure or retirement), a temporary layoff exceeding six months or a reduction in hours of work of individual employees of more than 50% during each month of any consecutive six-month period.
Note: Reassignments or transfers of employees to other positions or employer-sponsored programs, such as retraining or job search activities, may qualify as an exception to this definition if the employee continues to be paid.
A facility refers to a separate building or buildings. An operating unit refers to an organizationally or operationally distinct product, operation or specific work function within or across facilities at a single site of employment. A common example would be a large manufacturer with different divisions at the same company location. Each division might have distinct management, processes, suppliers, customers, product lines and equipment, though they are part of the same company.
A reduction in force (RIF) that both:
The permanent or temporary shutdown of a single site of employment or one or more facilities or operating units within a single site of employment is a plant closing, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more full‑time employees.
Refers to a single job location or a group of contiguous locations (such as groups of structures that form a campus or industrial park). The term also includes separate buildings or job locations within a reasonable geographic proximity if they share staff and equipment.
WARN provides that, with a few exceptions, an employer must provide written notice to affected employees at least 60 calendar days prior to an anticipated plant closing or mass layoff. Generally, this means that WARN is triggered (an employer must give 60-days’ written notice) when an employer does one of the following:
Example - An employer eliminates its 45-person accounting department. As a result, five additional positions in the administrative support staff at the same site are eliminated. In this situation, a covered plant closing has occurred because at least 50 employees have suffered loss of employment at a single site of employment due to the discontinuance of an operating unit.
In cases where an employer extends a temporary layoff beyond six months, WARN is triggered. Notice need only be given to affected employees when the need for the extension became known to the employer. However, if the need for extending the temporary layoff beyond six months was reasonably foreseeable to the employer at the time the layoff was implemented, WARN will apply and the required notice must be provided for the original layoff.
If the closing or layoff does not meet the definition of plant closing or mass layoff under WARN, WARN is not triggered and an employer is not required to provide WARN notice to affected employees. For instance, WARN does not apply to a temporary closing of a facility that is planned to last no more than six months. WARN only applies to closings or layoffs where there is an employment loss, which is defined as a “layoff exceeding six months.” Since there is no employment loss in a temporary layoff situation under WARN, an employer is not required to provide WARN notice in such a case.
WARN also is not triggered when an employer closes a temporary facility or finishes a temporary project, so long as the employer hired the affected employees with the clear understanding that their employment would end with the closing of the facility or at the completion of the project.
Further, WARN is not triggered when a closing or layoff results from an employer’s consolidation or relocation. So long as an employer offers to transfer affected employees to another location within a reasonable commuting distance and the employees will not endure more than a six‑month employment hiatus, employees will not experience an employment loss under WARN. In addition, if an employee accepts a transfer to any other job location within 30 days of the offer or plant closing (whichever is later), then there is no employment loss and WARN is not triggered.
Finally, WARN is not triggered by the closing of a facility or operating unit due to a strike or lockout.
Under WARN, the required number of employment losses need occur at the same time to trigger WARN’s notice obligations. As a general rule, an employer must combine all employment losses that occur during a “rolling” 30-day period to determine whether WARN applies. This means that an employer must look ahead 30 days and behind 30 days from the date of each employment loss to determine whether the required number of employment losses have occurred (in other words, each employment loss starts a new 30-day period).
For instance, if an employer decides to lay off 10 employees on October 1 and 39 employees 30 days later on October 31, WARN would not apply because only 49 employees have been affected during a 30‑day period. However, if the employer decides to lay off 11 more employees 30 days later on November 29, then WARN would apply because 50 operating unit employees have been affected within a 30‑day period (39 employees on October 31 and 11 employees on November 29). In this case, the employer must provide WARN notice to both sets of displaced employees.
In certain circumstances the 30‑day period is enlarged to 90 days. The 90‑day rule applies if two or more groups of employees suffer employment losses at a single site of employment, each of which separately would not trigger WARN, but combined would meet the minimum number of employment losses for a plant closing or mass layoff at the single site of employment. However, an employer is not required to give WARN notice if it can demonstrate that the separate groups of employment losses are the result of separate and distinct causes and are not an attempt to evade WARN.
Generally, an employer must provide WARN notice to all affected employees, including part-time employees. Although part-time employees are not counted when determining whether there has been a plant closing or mass layoff, part-time employees are entitled to receive WARN notice if either of these events occur. An employer must also provide WARN notice to employees already on temporary layoff if they have a reasonable expectation of being recalled in the future. This includes employees out on workers’ compensation and medical, maternity or other leave.
If an employer maintains a seniority system that involves “bumping rights,” the employer must make a real effort to provide WARN notice to the employees who will actually lose their jobs as a result of the seniority system. Under a “bumping rights” system, an employee with seniority who loses his position may “bump” a more junior worker from another position to retain his employment with the company. Alternatively, for covered union employees, an employer must provide WARN notice to the employee’s union representative or chief union official (in other words, employers are not required to give individual notice to union employees).
An employer must also notify the chief elected official of the local government unit where the layoff or plant closing will occur and the state’s Rapid Response Dislocated Worker Unit.
If the layoff or closing affects more than one local government unit, an employer should provide notice to the local government unit to which the employer paid the highest taxes in the previous year. Because many affected employees often live in surrounding areas that have different local governments, an employer should also consider providing notice to all nearby local governments so that coordinated planning of services for displaced workers may begin as soon as possible.
Employers are not required to provide WARN notice to temporary workers, independent contractors or other non-employees, such as business partners, consultants or contract employees assigned to the business but who work for and are paid by another employer or who are self-employed. As noted earlier, employers also are not required to provide WARN notice to union employees who are striking or engaged in a lockout. Employers may, however, be required to provide WARN notice to non-striking employees affected by the strike or lock-out.
Employers cannot require their employees to waive their right to advance notice under WARN. However, when an employer must implement a plant closing or mass layoff, it is permissible to request that employees voluntarily and knowingly waive any claims that they may have against the company under WARN or other employment laws. Requesting such a release may require the employer to offer additional severance pay or benefits in exchange for the release, but a properly drafted release can operate as a waiver of any claims the employee may have against the employer under WARN.
WARN notice is typically provided to affected employees through a representative chosen by the employer (such as a human resources manager or plant manager). In cases where WARN notice is required due to the sale of all or part of a business, the seller is responsible for providing WARN notice of a plant closing or mass layoff that occurs prior to and including the effective date of the sale. The buyer is then responsible to provide notice for all closings and layoffs that trigger WARN after the effective sale date.
The specific content of the WARN notice varies depending on who is receiving the notice (the notice to non-union employees, union representatives, the state rapid response dislocated worker unit and local chief elected government official are each different). All WARN notices must be written in clear and specific language that is easily understood.
The WARN notice provided to each affected non-union employee must plainly set forth:
For union employees, the WARN notice provided to the union representative must plainly set forth:
The WARN notice provided to the state dislocated worker unit and the chief local government official must plainly set forth:
It may not always be possible for an employer to identify the exact date a closing or layoff will occur 60 days in advance. In such circumstances, WARN permits the employer’s notice to identify a 14-day period during which the closing or employment loss will occur.
Inadvertent or minor errors in the employer’s WARN notice do not violate WARN, but notices should be as accurate as possible under the circumstances. In addition, an employer may use any reasonable method to deliver the WARN notice, so long as the notice is received 60 days before the covered closing or layoff. Verbal notices and pre-printed notices provided with or as part of an employee’s pay-stub do not satisfy WARN.
The 60-day period begins to run on the date the notice was received by the employee or union representative. Thus, it is prudent for employers who mail WARN notices to verify that the affected employees or union representative actually received the notice.
Occasionally, a planned closing or layoff may occur later than originally planned and may be extended beyond the specific date or two-week period identified in the WARN notice. If the closing or layoff is postponed for less than 60 days, additional notice should be given by the employer as soon as possible. The notice should make reference to the earlier notice, state the new date when the closing or layoff will begin and provide the reason for the postponement. If the closing or layoff is delayed for more than 60 days, WARN requires an employer to provide a new notice. The additional notice should be treated as an entirely new notice and comply with the requirement.
There are only three situations or exceptions where WARN permits less than 60 days’ notice.
The “business circumstances” exception permits an employer to implement a plant closing or mass layoff before conclusion of the 60-day notice period if the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable at the time the notice would have been required. A business circumstance that is not reasonably foreseeable is generally one that is caused by some sudden, dramatic and unexpected action or condition outside the employer’s control. Examples might include a strike at the employer’s business or at a major supplier, an unexpected termination of a contract or an unexpected cancellation of a major order. Determination of whether a business circumstance is reasonably foreseeable is made by focusing on an employer’s reasonable business judgment and by considering industry standards.
The “faltering company” exception applies only to plant closings (in other words, it does not apply to mass layoffs). To qualify for this exception, an employer must be actively seeking capital or other funding that would enable the employer to avoid or postpone the closing and the employer reasonably and in good faith believes that giving employees notice of the shutdown would prevent the employer from obtaining these resources. In other words, if providing WARN notice would scare away sources of new capital or business needed to keep the employer’s facility open, then the employer may suspend the notice for such time as is practicable for it to obtain the funding or resources.
The “natural disaster” exemption applies to plant closings or mass layoffs that are the direct result of a natural disaster, such as an earthquake, tornado or flood. In such a situation, notice may be given after the natural disaster. This exception does not apply if a plant closing or mass layoff occurs as an indirect result of a natural disaster, for instance, when a disaster disrupts a supply line or causes the market for a product or application to diminish or cease. However, the unforeseen business circumstances exception might apply in such a situation.
None of these exceptions completely relieve an employer from WARN notice to the affected employees. They only excuse the employer from giving the notice 60 days before the closing or layoffs. The employer must still give notice as soon as is reasonably possible when any of these exceptions apply. In addition, the employer must provide a statement of the reason for reducing the notification period to affected employees as soon as is possible and explain the circumstances that cause the employer to conclude that the exception to the 60‑day notice period applied.
WARN can apply when an employer sells all or part of its business, including asset sales. As a general rule, WARN will apply if a plant closing or mass layoff results from the sale. In such a case, the seller is responsible for providing notice of a closing or layoff that will occur up to and including the effective date of the sale (the closing date). The buyer is responsible for providing notice of a closing or layoff that will occur after the effective date of the sale. For instance, if employees are terminated without notice at the instant the sale becomes effective, the seller is the liable party under WARN.
If the buyer offers an employee a similar position with similar terms and conditions of employment and the employee declines the offer, WARN is not implicated. This situation is considered a voluntary departure. However, if the job would encompass significant changes in the employee’s job duties, wages, benefits or working conditions, the offer may be deemed to constitute a constructive discharge and WARN will apply.
WARN does not apply to a bankruptcy trustee who is solely engaged in wrapping up the employer’s business. There are, however, two situations where WARN would apply to an employer who files a petition for bankruptcy and then implements a plant closing or layoff. First, where an employer knew about or anticipated the closing or layoff before filing the bankruptcy petition, the employer cannot escape WARN liability because of the bankruptcy filing. Second, WARN will apply to an employer who, after the filing of the bankruptcy petition, continues to run the business in bankruptcy (for instance, a “debtor in possession”). In such cases, after a bankruptcy petition has been filed, any WARN claim must be filed in bankruptcy court instead of district court.
WARN is enforced through the U.S. federal court system. Affected employees, union officials and local government authorities each have standing to file a civil suit against an employer for WARN violations. An employer may be sued in the federal district where the violation occurred or in a federal district where the employer conducts business.
The penalties under WARN for failing to give timely notice are:
An employer’s WARN liability may be reduced by any wages paid by the employer to the displaced worker during the violation period and by any voluntary and unconditional severance payment that is not required by an existing legal obligation. Thus, an employer is not entitled to a reduction for any payments required by a preexisting severance plan or for any severance payment provided in exchange for a release. However, a properly drafted release that specifically waives an employee’s claims under WARN may exclude the employee from pursuing a claim against the employer under WARN.
Because an employer’s failure to provide WARN notice frustrates and undermines the purposes of WARN, WARN does not recognize or authorize “payment in lieu of notice.” However, since an employer’s maximum liability under WARN is 60 days of unpaid back pay and benefits, an employer who provides its employees with full pay and benefits for the 60‑day violation period effectively precludes any relief against it under WARN. As discussed previously, severance payments required by a legal obligation cannot be deducted from an employer’s back pay liability and thus would not serve as “payment in lieu of notice.”
If an employer fails to provide WARN notice to the chief elected official of the local government unit, the employer is subject to a $500 per day for each day of violation. However, the employer may avoid this penalty if it satisfies its liability to each affected employee within three weeks from the date of the covered closing or layoff. The penalty may also be reduced or eliminated at the court’s discretion if the employer acted in good-faith and reasonably believed that its failure to give notice did not violate WARN.
WARN specifically prohibits courts from requiring employers to perform or refrain from particular action. Therefore, employers cannot be required under WARN to stop or delay a plant closing or refrain from relocating operations or laying-off employees. WARN requires only that the employer provide 60-days, advance notice of the closing or layoff or provide full back pay and benefits to affected employees for each day the employer failed to give notice, up to 60 days.
An employer’s obligations under WARN cannot be reduced by any law or agreement. WARN supersedes state or local plant closing/mass layoff laws and collective bargaining agreements. WARN does not, however, supersede any law or agreement that requires additional notice or that grants additional rights and remedies. For instance, if a collective bargaining agreement requires an employer to provide written notice to the union 75 days in advance of a plant closing or layoff, the agreement complies with WARN because it satisfies WARN’s 60-day notice requirement. If, however, a collective bargaining agreement establishes a 45-day notice period, WARN will supersede this provision of the bargaining agreement and WARN’s 60-day notice provision will apply.
For further information on WARN, please visit the U.S. Department of Labor’s website. The specific text of the law itself, the preamble to the WARN regulations and the WARN regulations may be reviewed at:
General questions and requests for related information on WARN may be addressed to:
Policies and Forms
Chapter 23: Plant closings and mass layoffs