The Worker Adjustment and Retraining Notification Act (WARN)

Businesses must make difficult decisions during difficult economic times. These decisions sometimes include closing parts of a business and laying off workers. When a company reaches a certain size, affected employees must get written notice of layoffs. How can you tell if your employees should get a notice of an impending layoff or shutdown?

The Worker Adjustment and Retraining Notification Act (WARN) explains what the federal act covers. It also explains how businesses must notify their workers in the event of a business-wide layoff. Some states have similar laws, known as "mini-WARN acts," that resemble the federal WARN Act.

This article helps explain what these acts require a covered employer to do when economics force a business to close.

What Is the WARN Act?

During the 1980s, downsizing and layoffs were the order of the day. Congress enacted WARN in 1988 to give laid-off employees time to look for other employment after a layoff.

Applying for unemployment insurance and other employee benefits takes time. So, the WARN Act contains a provision allowing workers to begin that process while still working and drawing a paycheck at their old job.

Another WARN Act rule is a notification to local authorities, such as the mayor or city council. This helps minimize the economic impact of the plant closure and lets civic response agencies prepare for the effects.

Who Does WARN Cover?

The federal WARN Act applies to businesses with more than 100 full-time employees. Small business owners with fewer workers aren't affected by WARN regulations.

But your duty may not end there. State laws can be more restrictive than federal laws. For instance, California's version of the WARN Act applies to businesses with 75 full- or part-time employees.

Covered employers must give affected workers a 60-day notice of a plant closing or mass layoff. This rule is subject to several other conditions and exemptions.

How WARN Works

Under the federal WARN Act, WARN is "triggered" when a plant closing or mass layoff will last more than a certain amount of time or affect a specific number of people. State mini-WARNs function the same way. The notice requirement affects all employees, not just the subjects of the layoff.

Although it sounds industrial, a "plant" means any site of employment or any facility or operating unit. If you have 75 employees in a print shop and 30 employees upstairs in the office, you have 105 workers at your "plant."

A "plant closing" is the permanent or temporary shutdown of any single site or one or more facilities at the site. It is a plant closing if you shut down a facility, leading to a total employment loss of more than 50 employees for any 30-day period. If you close your upstairs office, and the closure leads to you needing to lay off 20 of your printers, you have had a plant closing.

A covered plant closing happens when:

• The plant shuts down for more than six months; or
• 50 or more employees lose their jobs during any 30-day period at a single site of employment

A covered mass layoff happens when:

• 500 or more workers are affected by a layoff of six months or longer; or
• 33% of the employer's workforce when the layoffs affect between 50 and 499 workers

The number of affected workers is the total number laid off during a 30-day period (in some cases, a 90-day period).

WARN does not apply when:

• Temporary facilities close or the workers were hired for a short-term project. WARN isn't triggered in situations where layoffs coincide with known end dates.
• A "faltering company" is closed when the owners are seeking funding in good faith and believe advance notice would impact their chances of receiving funding.
• There are unforeseeable business circumstances, such as a government shutdown. The COVID lockout would be an example of an unforeseeable circumstance.
• The job losses are due to major disasters such as hurricanes or wildfires.

WARN Notice Exemptions

Workers are not included in the WARN Act trigger if:

• They are part-time employees (unless your state law requires it).
• They resigned, retired, or were terminated for cause, and their final work day falls during the 60-day periods.
• The employer offered them a transfer to another location inside or outside a reasonable commuting distance if the shutdown is part of a consolidation or relocation.

Employer Consequences of Violating WARN

WARN violations are civil penalties enforced through federal courts. Employers who fail to give adequate notice are liable to each employee for back pay and benefits for the period of violation. Employees may file individual suits, class action suits, or mass tort actions in U.S. district courts to recover back wages. Attorney's fees and costs can be part of the judgment.

Failing to notify the state Rapid Response Dislocated Worker Unit and local officials may result in fines for each day of violation. Employers can avoid this penalty under WARN provisions.

Get Legal Advice

Complying with the WARN Act is not complicated. If you don't meet the active workforce threshold, you aren't required to give notice of layoffs. But if you do, the calculations for when you must provide advance notice can be tricky.

If you're unsure whether your small business is big enough to trigger the WARN Act, talk with an employment law attorney. Learn more about your federal and state responsibilities.