Plant closings and mass layoffs — Minnesota

The Worker Adjustment and Retraining Notification Act 

The Worker Adjustment and Retraining Notification Act (WARN Act) generally requires covered employers to provide written notice at least 60 days in advance of covered plant closings and mass layoffs. The notice must be given to specific persons – affected workers or their representatives (for example, a labor union), the state Rapid Response Dislocated Worker Unit, and local elected officials. The purpose of the WARN Act is to provide displaced workers and their families some time to prepare for the prospective loss of employment by looking for alternative employment, and, if necessary, entering a training or retraining program to obtain necessary skills to compete for available jobs. The advance notice also allows time for state and local officials to provide dislocated worker assistance.

Covered employers

The WARN Act applies to private for-profit businesses, private nonprofit businesses, and governmental or quasi-governmental entities that function in a commercial context and are separately organized from the regular government, if they employ either:

1. 100 or more employees, not counting part-time employees (a term that is oddly defined to mean those who have worked fewer than six out of the last 12 months, or who average fewer than 20 hours per week)
2. 100 or more employees who work at least a combined 4,000 hours per week.

Regular federal, state, or local government entities that provide public services are not covered by the WARN Act.

Employees covered by and entitled to notice under the WARN Act include all hourly and salaried workers, as well as managerial and supervisory employees. Part-time employees who are not counted for purposes of determining whether an employer is required to provide notice under the WARN Act are still covered by the Act and entitled to notice if they work for a covered employer.

Employees on temporary layoff or leaves of absence who have a reasonable expectation of recall (for example, employees on workers’ compensation, medical, or maternity leave) are covered by the WARN Act.

The WARN Act does not apply to the following persons:

• strikers, or workers who have been locked out in a labor dispute
• workers on temporary projects or working at temporary facilities who were informed of the temporary nature of the work when hired
• business partners, consultants, or contract employees paid by a different employer or who are self-employed
• regular federal, state, or local government employees.

Events that trigger notice

The notice requirements of the WARN Act are triggered when a covered employer does any one of the following:

• Plant closings - A plant closing occurs for purposes of the WARN Act if an employer closes a facility (a separate building or buildings) or discontinues an operating unit (a distinct product, operation, or specific work function within or across facilities at a single site) within a single site of employment and lays off at least 50 full-time employees.
• Mass layoffs - A mass layoff occurs for purposes of the WARN Act if an employer either:
  1. lays off 500 or more employees (excluding part-time employees) at a single site of employment during a 30-day period
  2. lays off 50 to 499 employees (excluding part-time employees) at a single site of employment if that number is 33% or more of the number of employees (excluding part-time employees) at the single site of employment.
• Extensions of temporary layoffs - A temporary layoff of less than six months that meets the criteria stated earlier, which is then extended by an employer for more than six months, will be treated as triggering the notice requirements under the WARN Act for the original layoff, unless the reasons requiring the extension were not reasonably foreseeable at the time the layoff was originally announced.
• Reductions in hours - A WARN Act notice also is required if an employer reduces the hours of work for 50 or more employees by 50% or more for each month in any six-month period.

In determining the number of employees who have suffered an employment loss as a result of a plant closing or mass layoff, the employer need not consider any employee who is terminated for cause or who voluntarily resigns or retires.

Impact of the COVID-19 pandemic

The speed with which businesses reacted to the COVID-19 pandemic, mostly in compliance with emergency declarations requiring non-life sustaining businesses to cease physical operations no doubt serve as a defense to claims based on the failure to provide the 60-days’ advance notice ordinarily required by WARN. But even when the original decision to close or engage in a mass layoff is unforeseen at the outset, businesses must still provide WARN notices as soon as practicable. As COVID-19 cases continued to affect workplaces, many businesses may be hit with new reasons to curtail their operations. Thus, employers need to be vigilant about providing WARN notifications “as soon as practicable” if new shutdowns occur.

What does not trigger notice

The WARN Act does not apply:

• when a covered employer closes a temporary facility or completes a temporary project for which employees were hired with the understanding that the facility or project would be temporary and their employment would end with the closing of the facility or completion of the project
• when a covered employer closes a facility or operating unit due to a strike or lockout
• if a plant closing or mass layoff results in fewer than 50 layoffs at a single site of employment
• if 50 to 499 workers are laid off at a single site of employment, but that number is less than 33% of the employer’s total active workforce at that site
• if a layoff is for six months or less.

Special circumstances

• Sale of a business - The notice requirements of the WARN Act may or may not be triggered by the sale of a business. No notice is required if the sale does not result in a covered plant closing or mass layoff. If the sale does result in a covered plant closing or mass layoff, the seller is responsible for providing notice of any closing or mass layoff that occurs up to and including the date of the sale. The buyer is responsible for providing notice of any covered plant closing or mass layoff that occurs following the date of the sale.
• Exceptions to the full 60-day notice requirement - There are three exceptions to the requirement that a WARN notice be provided 60 days before a plant closing or mass layoff. An employer bears the burden of proving that the exception applies, and must provide as much notice as is practicable.
  • Faltering company: This exception applies to circumstances in which a company is actively seeking new capital or business in order to continue operating and reasonably believes that providing advance notice would preclude its ability to obtain the new capital or business. This exception applies only to plant closings, and it is narrowly construed by the courts.
  • Unforeseeable business circumstances: This exception applies to a plant closing or mass layoff caused by business circumstances outside the employer’s control that were not reasonably foreseeable at the time 60 days’ notice otherwise would have been required (for example, the sudden cancellation of a large order by a major customer).
  • Natural disaster: This exception applies when a plant closing or mass layoff is the direct result of a natural disaster, such as a flood, earthquake, drought, storm, or other similar act of nature or weather-related event.

Contents of the required WARN Act notice

The WARN Act’s basic requirement is that an employer must provide written notice to affected employees, including part-time employees, at least 60 calendar days prior to a plant closing or mass layoff. The notice may identify a 14-day period during which the employment loss will occur, without providing a specific date. When the employee is represented by a union, the employer must provide notice to the union – not the employee. The union then decides when and how to notify the employee. The local government’s chief elected official where the employment site is located and the State Rapid Response Dislocated Worker Unit must also receive notice of plant closings or mass layoffs.

A verbal announcement does not satisfy the notice requirements, even when the announcement occurs at an all-employee meeting.  Notices to the media also do not satisfy the requirements of the WARN Act.

Notice to unrepresented employees

A notice sent to individual, unrepresented employees must be written in clear and easily-understood language and must contain the following information:

• a statement as to whether the layoff is permanent or temporary (six months or less)
• if the entire plant is to be closed, a statement to that effect
• the expected date when the plant closing or mass layoff will begin, and the expected date when the individual employees will be laid off
• an explanation of any “bumping rights” an employee may have to displace other employees, such as those with less seniority
• the name and telephone number of a company official to contact for further information.

Notice to state dislocated worker unit/chief local official/union representative

A WARN Act notice must also be sent to the state’s Rapid Response Dislocated Worker Unit and the chief elected official of the local government unit where the plant closing or mass layoff will take place, and it must contain the following information:

• the name and address where the plant closing or mass layoff will take place, along with the name and telephone number of a company official to contact for further information
• a statement as to whether the layoffs will be temporary or permanent and whether the entire plant will be closed
• expected date of the first layoffs, along with a schedule of any additional layoffs
• the job titles of positions affected and the number of employees in each such affected position
• a statement as to whether employees have any bumping rights
• the name of each union representing affected employees and the name and address of the chief officer of each union.

Notice to represented employees

The requirements for the notice to be sent to the bargaining agent or union representative of affected employees are essentially identical to the requirements for the notice to the state Dislocated Worker Unit and local government officials.

Anomaly of temporary and part-time employee treatment

One of the most confusing WARN Act rules is that part-time employees are not counted for purposes of triggering the WARN Act (but they are entitled to notice), while temporary employees are counted for purposes of triggering the WARN Act (but they are not entitled to WARN notice).

The WARN Act defines a “part-time” employee as one who is employed for an average of fewer than 20 hours per week or who has been employed for fewer than six of 12 months preceding the date on which notice is required, including workers who work full-time. Part-time employees are not counted for purposes of whether the WARN Act is triggered. However, if WARN is triggered, those part-time employees experiencing an employment loss are entitled to notice.

On the other hand, temporary employees are counted for purposes of whether the WARN Act is triggered. However, temporary employees are not entitled to notice even if they experience an employment loss.

Enforcement

The WARN Act is enforced through the federal or state courts. Employees, their unions, and local governments may bring individual or class action lawsuits against employers they believe are in violation of the WARN Act. However, a court does not have the authority to stop a plant closing or mass layoff.

Instead, failure to provide notice to an employee subjects the employer to liability in the amount equal to back pay and benefits for the period of violation, up to 60 days. For this reason, while not authorized by the WARN Act, some employers choose to provide these benefits instead of providing notice. While notice is required under the statute, if the employer pays the benefits then it has satisfied the penalty provided under the WARN Act.

Failure to provide notice to a unit of local government also subjects the employer to a civil penalty not to exceed $500 each day of the violation. The employer may avoid this penalty if it satisfies its liability to each affected employee within three weeks from the date of the plant closing or mass layoff. The court also has the discretion to reduce the penalty if it determines that the employer acted in good-faith and reasonably believed that it had not violated the WARN Act by failing to provide notice.

In any suit, the court may, in its discretion, award the prevailing party reasonable attorneys’ fees.

Where to go for more information

For general information concerning the WARN Act, contact:

Or visit:

• http://webapps.dol.gov/elaws/elg/layoffs.htm
• https://www.dol.gov/agencies/eta/layoffs/warn

For information regarding contacting a State Rapid Response Dislocated Worker Unit, contact the National Toll-Free Help Line at (877) 872-5627.