The federal Worker Adjustment and Retraining Notification Act (WARN) offers protection to workers by requiring employers to give 60-calendar-days’ advance notice of covered plant closings and covered mass layoffs, unless an exception applies. This notice must be given to either the affected workers or their representatives, such as labor unions or bargaining units, as well as the State Dislocated Worker Unit and the appropriate unit of local government.
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 plant closings displace many employees, these liabilities can add up quickly and substantially affect a company. In addition, a violating employer may be liable for civil penalties and attorneys’ fees and costs.
While the federal WARN Act applies to employers of 100 or more full-time employees (and in certain cases part-time employees) and requires advance notice to employees for certain layoff and reduction in force situations,
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.
This term encompasses individually identifiable full- 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 when notice must 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 of an employer to whom such employees are assigned.
Defined in a collective bargaining agreement, employer policy or other agreement, bumping rights are the rights of certain employees to displace other employees upon a layoff or other employment action. Bumping rights are often implemented through a seniority system.
This term encompasses 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 with a reasonable expectation of being recalled) or 100 or more full-time and part-time workers who work at least a combined 4,000 hours per week (not including overtime). The term employer also includes government and quasi-government organizations that are separately organized from regular government and engage in business.
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.
Reassignments or transfers of employees to other positions or employer-sponsored programs, such as retraining or job search activities, may constitute an exception to this definition if the employee continues to be paid and the same is not construed as a constructive discharge or other involuntary termination.
A facility refers to a building or buildings. An operating unit is an organizationally or operationally distinct product, operation or specific work function within or across facilities at a single site of employment. Whether a unit within an organization qualifies as an operating unit depends upon the existence of a collective bargaining agreement, the employer’s organizational structure and industry interpretation as to what constitutes separate work functions.
Under federal WARN, a mass layoff is a reduction in force that:
A part-time employee is an employee who averages less than 20 hours per week or has been employed for fewer than six of the past 12 months before notice under WARN is due, including individuals who work full-time.
Plant closing/business closing
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, if the shutdown causes an employment loss at the single site during any 30-day period of 50 or more full‑time employees.
Single site of employment
A single job location or a group of contiguous locations. Groups of structures forming a campus or industrial park may be considered a single site. The term also includes separate buildings or job locations within a reasonable geographic proximity if they are used for the same purpose and share staff and equipment. If the workers travel, the term includes a home base from which work is assigned or a home base to which workers report.
State dislocated worker unit
The unit designated or created in each state by the Governor under Title III of the Job Training Partnership Act, as amended by the Economic Dislocation Worker Adjustment Act (EDWAA). In Colorado, the state dislocated worker unit is under the Colorado Department of Labor & Employment.
“Affected employees” are entitled to notice. The term “affected employees” means those who may reasonably be expected to experience an employment loss as a consequence of a proposed plant closing or mass layoff by their employer. Each employee is entitled to a full 60-day calendar days prior notice, including part-time employees, employees on temporary layoffs who have a reasonable expectation of recall and regular full-time employees. Importantly, although part-time employees are not counted and temporary employees are counted in determining whether a mass layoff or plant closing has occurred, it is part-time employees and not temporary employees who are entitled to notice. Likewise, you must notify any employees on temporary layoff who have an expectation of recall. For example, you must provide notice to employees out on workers’ compensation, medical, maternity or other similar leave.
WARN does not require employers to give notice to those employees that strike or are part of the bargaining unit involved in the labor negotiations that led to a lockout, temporary workers or non-employees assigned to or contracting with, the business.
If employees are represented by a union, written notice must be served upon the chief elected officer of the union or bargaining agent of affected employees at the time of the notice. If this person is not the same as the officer of the local union(s) representing affected employees, it is recommended that a copy also be given to the local union official(s).
The employer also must notify the chief elected official of the unit of local government within which the layoff or closing will occur, as well as the state dislocated worker unit (the Florida Department of Economic Opportunity’s Reemployment and Emergency Assistance Coordination Team – REACT). If more than one unit of local government is involved, the notice must be provided to the chief elected official of the unit to which the company paid the highest taxes in the previous year.
WARN can apply when an employer sells a part of its business or its assets. Whether the seller or the buyer is responsible for giving notice depends on when the plant closing or mass layoff is to occur. Generally, if it occurs before or on the day the sale becomes effective, then the seller is responsible. If it is after the day the sale becomes effective, then the buyer is responsible. In such a case, the buyer would be responsible for providing the full 60– days’ notice. If the seller knew of the buyer’s intentions and was empowered to give notice as the buyer’s agent, it could give notice on behalf of the buyer. Even so, under WARN, responsibility would remain with the buyer. If an employee is offered, but refuses, employment with the buyer, this is considered a voluntary departure and does not constitute an employment loss. However, this situation could constitute constructive discharge if employment with the buyer would result in a significant change in wages, benefits, working conditions or position and, as a result, trigger the notice requirement.
For purposes of WARN, if employees of the seller become employees of the buyer and did not suffer an employment loss where employees were idled or deprived of income, notice obligations are not triggered. However, if a plant closing or mass layoff results from the sale, then WARN would apply. Given the complexities of this analysis, employers should consult with legal counsel to determine their notice requirements in the event of a sale or purchase of a business.
WARN provides for three situations in which the notification period may be less than 60 days. An employer qualifying for one of the following reductions in the 60-day notification period must provide as much notice as practicable under the circumstances. Also, the notice must contain a brief statement summarizing the reason(s) why giving the normal 60 days of notice was not possible.
Under the natural disaster exception, an employer may give less than 60-days’ notice of a plant closing or mass layoff that results from a natural disaster such as a flood, earthquake, drought, storm, tidal wave or tsunamis or similar effects of nature. The employer can give notice after the event if it can establish that the closing or layoff is a direct result of the natural disaster. Where a plant closing or mass layoff occurs as an indirect result of a natural disaster, this exception does not apply, but the unforeseeable business circumstances exception described below may be applicable.
The faltering company exception is to be construed narrowly and applies only to plant closings; it does not apply to mass layoffs. Under the faltering company exception, the notice period may be reduced if all the following criteria are met:
However, should an employer attempt to rely on the faltering company exception, it will not be able to restrict its analysis to the financial condition of the facility, operating unit or site to be closed. In addition, a causal connection must exist between the ultimate plant closing and the employer’s failure to obtain capital or business.
Unforeseeable business circumstances
The unforeseeable business circumstances exception is intended to apply to situations where a plant closing or mass layoff is caused by some “sudden, dramatic and unexpected” event that, at the time notice would otherwise have been due, was both:
In order to be reasonably foreseeable, the event must have been probable (not possible) – that is, when the objective facts reflect that the plant closing or mass layoff was more likely than not. This inquiry is fact-specific and turns on whether the employer, in failing to anticipate the circumstances that caused the closing or layoff, exercised the same business judgment as would a similarly situated employer facing the same situation. Examples of such situations would include the unexpected termination of a major contract, a strike at the business of a major supplier or an unannounced government-ordered closing.
Extension of layoff period
If an employer needs to extend the date of the plant closing or mass layoff beyond the date or the ending date of any 14-day period announced in the original notice, additional notice is required. This notice should contain the following:
Employment losses of smaller groups of employees occurring at one employment site may be combined in certain situations. In order for the requisite number of employment losses to trigger WARN obligations, these employment losses must occur during any “rolling” 30-day period. For example, if an employer with 100 employees lays off 40 workers and then lays off the remaining 20 workers 25 days later, the 50-employee threshold has been met and WARN would apply. Notice would be required for both sets of employees. Under some circumstances the 30-day window is enlarged to 90 days. Once the 50-employee threshold is met, the 30-day window period closes. Then, if additional employment losses occur at a single site of employment within 90 days, the groups may be aggregated even if the later layoffs alone are not large enough to trigger WARN obligations. For example, the employer should look ahead 90 days and behind 90 days to determine whether employment actions both taken and planned (each of which separately is not of sufficient size to trigger WARN coverage) will, in the aggregate for any 90-day period, reach the minimum numbers for a plant closing or a mass layoff and thus trigger the notice requirements.
An employer is not required to give notice if it can show that the individual events occurred as a result of separate and distinct actions and causes and not the employer’s attempt to evade its obligations under WARN. Therefore, when an employer makes a reduction in force, it must look forward and backward 90 days from each employment loss to determine whether WARN is triggered, obligations arise and notice must be given.
Notice must be delivered in a reasonable manner such that affected employees will receive the written notice at least 60 days before separation. Neither preprinted notices included in each employee’s paycheck or pay envelope nor verbal notices meet these requirements. Conversely, first-class mail and personal delivery are viable options or any other reasonable method of delivery that is designed to ensure receipt 60 days before a closing or layoff is acceptable. If the notice is mailed, it is not effective until it is received.
Written notice to employees who are not represented by a bargaining agent must contain the following information:
Notice to individual employees must be written in clear and specific language such that employees can easily understand the terms.
Representatives of affected employees
Written notice must be served upon the bargaining agent/chief elected officer of each the exclusive collective bargaining representative(s) or bargaining agent(s) of affected union employees or local union official and must contain the following information at the time of the notice:
State dislocated worker unit and local chief elected official
Notice to the State Rapid Response Dislocated Worker Unit and local chief elected official of the unit must contain:
Alternatively, WARN regulations also provide for a short form notice to the State Rapid Response Dislocated Worker Unit and to the chief local elected official. This alternative short form notice must be in writing and must provide the following information:
If the employer provides this alternative short form notice, the employer also must make available to government officials the information that would have been included in the full notice. A failure to provide the necessary information upon request is deemed a failure to give the required notice.
A worker who experiences a loss of employment without timely notice of mass layoff or plant closing as required by WARN can bring a lawsuit against the employer. The employer is liable for back pay for each day of violation at a rate of compensation determined by the statute. In addition, the employer may be liable for benefits under employee benefit plans, including medical expenses incurred during the employment loss which would have been covered by the benefit plan had the employment loss not occurred.
Lawsuits against an employer may be brought by a local government, employees or the representatives of employees. An employer can be sued in any federal district in which it does business or where the violation occurred.
An employer is liable to an employee for the period of the violation, up to a maximum of 60 days, but not to exceed more than one-half of the number of days the employee worked for the employer. Employer liability for failing to conform to the act’s notice requirements with respect to a unit of local government is limited to $500 per day for each day of violation, up to the ceiling of 60 days.
The remedies provided for in WARN are the exclusive remedies for any violation of the act. Federal courts have no power to prohibit or postpone mass layoffs or plant closings.
The amount of liability must be reduced by any wages or benefits paid to employees during the period of violation and by any “voluntary and unconditional payment” by the employer to the employee that is not required by any legal obligation. Thus, although WARN does not specifically allow pay in lieu of notice, as it would defeat the purpose of WARN, an employer can preclude relief if the employer provides full pay and benefits for the 60-day period. An employer cannot offset its WARN obligations with payments that already were due, such as, severance payments that are required by contract or company policies. The employer’s liability also may be reduced at the discretion of the court, if the employer proves to the satisfaction of the court that the act or omission that violated WARN was in good faith and the employer had reasonable grounds for believing that the act or omission was not a violation of the act.
A prevailing party in a lawsuit filed under WARN may, in the discretion of the court, recover reasonable costs and attorney’s fees.
For further information on WARN, please visit the U.S. Department of Labor’s website at:
to review the specific text of the law itself, the preamble to the WARN regulations and the WARN regulations.
U.S. Department of Labor
Employment and Training Administration
200 Constitution Ave, NW
Washington, DC 20210
Phone: (866) 487-2365
State Rapid Response Coordinator
Colorado Department of Labor & Employment
Attention: WARN Coordinator
633 17th St.
Denver, CO 80202
Phone: (303) 318-8000
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