Plant Closings / Mass Layoffs

The Worker Adjustment and Retraining Notification (WARN) Act offers some protection to workers, their families and communities against plant closings and/or mass layoffs, by requiring employers to give their workers sixty days notice before a plant closing or mass layoff. This notice must be provided to either affected workers or their representatives (such as a labor union); to the State dislocated worker unit; and to the appropriate unit of local government. To find out more about whether and how you may be protected by the WARN Act read below.

1. Is my employer covered by the WARN Act?

If an employer has 100 or more full-time employees it is generally covered by WARN. Employees who have worked fewer than 6 months in the last 12 months or those who work an average of less than 20 hours a week are not counted as part of the 100 employees required for coverage.

Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. Regular Federal, State, and local government entities which provide public services are not covered.

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2. Am I covered by the WARN Act?

The WARN Act covers hourly and salaried workers, as well as managerial and supervisory employees. Business partners are not covered and therefore not entitled to notice under the Act.

If you have worked less than 6 months in the last 12 months or worked an average of less than 20 hours a week, you are entitled to receive notice, but you will not be counted when determining whether the WARN Act applies to your employer.

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3. What triggers the requirement for my employer to give me notice?

There are three events that may trigger the need for your employer to give you notice under the WARN Act:

  • plant closings,
  • mass layoffs, or
  • when 500 or more employees are laid off at a single site of employment.

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4. What qualifies as a “plant closing?”

For the purposes of the WARN Act a plant closing happens when your employer shuts down a facility or operating unit within a single site of employment and lays off 50 or more full-time workers during any 30-day period.

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5. What qualifies as a “mass layoff?”

For the purposes of the WARN Act a mass layoff is defined as a reduction in force that is (1) not the result of a plant closing, but (2) leads to an employment loss at the employment site[TE1] of 500 or more employees during a 30 day period, or a loss of 50-499 employees if they make up at least 33% of the employer’s active workforce.

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6. What qualifies as an “employment loss?”

The term “employment loss” means:

  • An employment termination, other than a discharge for cause, voluntary departure, or retirement;
  • a layoff exceeding 6 months; or
  • a reduction in an employee’s hours of work of more than 50% in each month of any 6-month period.

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7. How long before I lose my job must my employer give me notice?

There are exceptions, but if WARN applies, employers are required to give you at least 60 days written notice before a closing or layoff.

It is very important that you receive written notice of your impending job loss. Verbal announcements by your employer, pre-printed notices included with your paycheck, and/or company press releases do not count as notice.

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8. What if my employer didn’t know 60 days before that his or her business was closing? Is my employer in violation of the WARN Act?

Not necessarily; there are three exceptions to the 60-day notice requirement. An employer is not required to give a full 60 days notice if s/he could not reasonably foresee the circumstances that led to a layoff or closing at the time that the 60-day notice would have been required.

The exceptions to 60-day notice are:

Faltering company: The faltering company exception covers situations where a company has sought new capital or business in order to stay open and where giving notice would ruin the opportunity to get the new capital or business. This applies only to plant closings;

Unforeseeable business circumstances: This 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; and

Natural disaster: This applies where a closing or layoff is the direct result of a natural disaster, such as a flood, earthquake, drought or storm.

If an employer provides less than 60 days notice of a closing or layoff and relies on one of these three exceptions, the employer must prove that the conditions for the ex”ception have been met.

Nonetheless, notice must always be provided as soon as it is practicable. When notice is given in less than the 60-day timeframe, the employer must include a statement of the reason for providing less than 60 days’ notice in addition to fulfilling the other information notice requirements.

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9. How do I receive notice if I may lose employment?

It depends on whether you are represented by a union or not.

If a union represents you, your employer must give 60 days’ written notice to the union. Your union representative will decide how and when you are given notice.

If you are not represented by a union, notice must be given to you directly.

However, if your employer has a “bumping system” and there is no union contract things may work differently. Your employer must make a “good faith effort” to determine who will actually lose their job as the result of the seniority system. A bumping system allows a worker whose job has been cut to choose from a number of other jobs, which may lead to other workers being displaced. Because of the complexity of the bumping system, it can be very difficult for your employer to predict exactly who’s going to lose their job.. If your employer cannot exactly predict who will lose their job as a result of a complex bumping system, your employer must give notice to the person whose job is being eliminated even though that person may later bump another worker.

Your employer must also provide notice to the State dislocated worker unit and to the chief elected official of the unit of local government in which the employment site is located.

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10. What must the notice say?

The notice must contain the following information:

  • An explanation of whether the layoff or closing is permanent or temporary, meaning 6 months or less;
  • The date of layoff or closing and the date of your separation. If your employer gives you notice that you will be separated within a two week period, they are required to give notice 60 days before that period;
  • An explanation of bumping rights, if they exist; and
  • Name and contact information for a person in the company who can provide additional information.

All notices must be in writing. Any reasonable method of delivery designed to ensure receipt 60 days before a closing or layoff is acceptable.

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11. Does an employer have to comply with the WARN Act if it closes a temporary facility?

No, an employer does not need to give notice if a plant closing is the closing of a temporary facility, or if the closing or mass layoff is the result of the completion of a particular project or undertaking. This exemption applies only if the workers were hired with the understanding that their employment was limited to the duration of the facility, project or undertaking. An employer cannot label an ongoing project “temporary” in order to evade its obligations under the WARN Act.

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12. Does the WARN Act cover me if a plant is shut down because of a strike or lockout?

The WARN Act only covers you if you are a non-striking employee who lost your job as a direct or indirect result of a strike. Strikers and workers who have been locked out in labor disputes are not protected under the Act.

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13. Am I protected if my employer sells its business?

If your employer sells all or part of its business, there are certain protections for all affected employees:

  • If the sale by a covered employer results in a covered plant closing or mass layoff, the required parties must receive at least 60 days notice.
  • The seller is responsible for providing notice of any covered plant closing or mass layoff which occurs up to and including the date/time of the sale.
  • The buyer is responsible for providing notice of any covered plant closing or mass layoff which occurs after the date/time of the sale.
  • No notice is required if the sale does not result in a covered plant closing or mass layoff.
  • Employees of the seller (other than employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week) on the date/time of the sale become, for purposes of the WARN Act, employees of the buyer immediately following the sale. This provision preserves the notice rights of the employees of a business that has been sold.

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14. I didn’t lose my job, but my hours have been cut in half. Am I covered by the WARN Act?

Yes. Included in the legal definition of “employment loss” in the WARN Act is a reduction in an employee’s hours of work of more than 50% in each month of any 6-month period.

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15. If I am required to transfer, am I covered by the WARN Act?

It depends. If you are offered a transfer by your employer within a reasonable commuting distance, or if you accept a transfer within 30 days of losing your job, your transfer is not “employment loss” for the purposes of the WARN Act.

In both cases, the transfer offer must be made before the closing or layoff, there must be no more than a 6 month break in employment, and the new job must not be deemed a constructive discharge. A constructive discharge is when significant changes are made to an employee’s wages, benefits, working conditions, or job duties.

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16. I’ve been laid off, but only temporarily. Am I covered by WARN?

It depends on how long you have been laid off. The definition of “employment loss” in the WARN Act requires that an employee be laid off for a period exceeding 6 months. If you have been laid off for 6 months or less you will not be covered by WARN.

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17. I was only hired for work temporarily. Do the WARN rules apply to me?

No. If you were hired with the understanding that your employment would be limited to the duration of the facility, project, or undertaking, your employer does not need to give you notice.

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18. My employer verbally announced at an all-employees’ meeting that the plant was closing. Does this count as notice?

No. discussed earlier, all notices must be in writing. A verbal announcement at an all-employees’ meeting, or smaller employees/supervisor staff meeting does not meet the WARN Act requirements.

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19. How do I determine whether I am considered a full- or part-time worker for the purposes of receiving a WARN notice?

If you work a regular schedule of 20 hours or more each week and have worked for your employer for more than 6 of the last 12 months, you are a full-time worker. If you work a varying schedule, you determine whether you work an average of fewer than 20 hours by looking at:

  • The period since you became employed, if your total period of employment is less than 90 days; or
  • The most recent 90 days.

Overtime is not included in this determination. See The Worker Adjustment and Retraining Notification (WARN) Act Guide to Advance Notice of Closings and Layoffs for examples.

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20. Who enforces the WARN Act?

United States Federal courts are responsible for enforcing WARN. Workers, representatives of employees, and units of local government may bring individual or class action suits.

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21. What remedies are available to me?

An employer who violates the WARN provisions by ordering a plant closing or mass layoff without providing appropriate notice is liable to each aggrieved employee for an amount including back pay and benefits for the period of violation, up to 60 days. The employer’s liability may be reduced by such items as wages paid by the employer to the employee during the period of the violation and voluntary and unconditional payments made by the employer to the employee.

An employer who fails to provide notice as required to a unit of local government is subject to a civil penalty not to exceed $500 for each day of violation. This penalty may be avoided if the employer pays each affected employee within 3 weeks after the closing or layoff is ordered by the employer.

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22. How do I file a complaint/How long do I have to file?

If you think that you have a claim under the WARN Act, contact an attorney right away. Although it varies from state to state, there are strict time limits in which claims under the WARN Act must be filed. It is very important to check your state laws to determine the statute of limitations for your claim; these can vary from a few months to a few years.

As you might have other legal claims with shorter deadlines, do not wait to file your claim until your time limit is close to expiring!

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