How to Stay WARN-Act Compliant When Conducting Layoffs
With the possibility of recession looming, many companies are starting to lay off workers, especially in the tech industry. While there’s no cause to panic, it’s important to be prepared in case layoffs do come to your organization.
In particular, laying off multiple employees may trigger the WARN Act, a 1988 law that protects workers from a sudden loss of work in certain cases. Read on to learn more about what the WARN Act is, who is affected, and how you can keep your organization compliant.
What Is the WARN Act?
The Worker Adjustment and Retraining Notification Act of 1988 is a U.S. labor law that requires employers to give workers 60 days’ written notice before a covered plant closing or mass layoff. The Department of Labor has published an exhaustive Employer’s Guide to Advance Notice of Closings and Layoffs, but it can be hard to make sense of such a complex document. Because this is a legal issue, definitions are especially important, so here are the key terms that can help you understand when the WARN Act provisions are triggered:
- A plant closing occurs when an employment site (or one or more units within it) shuts down either temporarily or permanently. The site doesn’t have to be a “plant” in the traditional sense: any single site of employment—or one or more units within one—counts as a plant as long as the closing leads 50 or more employees to face employment loss within a 30-day period, even if they’re not all in the unit that shut down.
- A mass layoff is a reduction in workforce that is not the result of a plant closing but does meet certain parameters. Either:
- 500 or more employees at a single site of employment lose work, or,
- 50 or more employees lose work, and that number represents at least one-third of the active workforce at the site.
- In either case, employment loss means any one of these three scenarios:
- An employee is terminated for any reason besides due cause, resignation, or retirement.
- An employee is laid off for more than six months.
- An employee’s hours are reduced by more than 50% for every month in a six-month period.
If any of these conditions are met, that employee has experienced employment loss.
Who Is Affected by the WARN Act?
Terms like “mass layoff” bring to mind huge mega-corporations laying off hundreds of workers at once, but the WARN Act’s provisions can apply to small and midsize businesses as well. Any organization that employs 100 or more full-time workers could trigger the act, and in this case, anyone averaging over 20 hours a week qualifies as full-time—as long as they have worked for your organization for at least six out of the last 12 months.
If your company employs over 100 workers who meet these hourly criteria, and you’re faced with the possibility of laying off at least 50 of them, you may need to provide notice 60 calendar days in advance under the WARN Act.
How to Stay Compliant with WARN Act Provisions
The best way to stay compliant with the WARN Act is to avoid laying off employees in large numbers. But if that’s not possible, and you absolutely have to reduce your workforce, you can follow these steps to make sure you comply with its requirements.
- Determine whether the act applies to your organization. Count up your employees who have been working for your organization for at least six months and work an average of over 20 hours a week. If the total is over 100, the WARN Act applies to you.
- Give 60 days’ written notice. There are some exceptions to this requirement, but if you provide sufficient notice before laying off employees, you can be confident you’re compliant with the WARN Act.
- Check for exceptions. If you simply can’t give your workers the requisite notice, you may qualify for an exception if your situation meets one of the following conditions:
- Faltering company. This exception may apply if the business can prove that it is seeking out opportunities that are likely to prevent the layoffs, and that providing notice would disrupt these opportunities.
- Unforeseeable business circumstances. The “unforeseeable” part of this provision makes for murky waters, but a company may be able to claim an exception if an unexpected catastrophic event out of the company’s control, such as suddenly losing a major contract, occurs within the 60-day notice period.
- Natural disaster. The WARN Act does not apply if a plant closing or mass layoff occurs because of a natural disaster such as a flood, drought, earthquake, storm, or tidal wave. There is some precedent for claiming the COVID-19 pandemic as a natural disaster under these terms, but so far, such efforts have not been successful in court.
Keeping abreast of possible WARN Act triggers in your organization is crucial for staying compliant while navigating layoffs, and disregarding it can be costly. If a court finds you have not followed the act’s provisions, you can be liable for back pay for every day of noncompliance for each employee—and in mass layoff situations, that adds up fast.
But in addition to compliance concerns, giving notice before layoffs is just good practice. Even if your company is too small to fall under WARN Act provisions, or you’re laying off fewer than 50 people, it’s important to treat employees with fairness and compassion. The more notice you can give in advance of hard situations like layoffs, furloughs, or pay cuts, the easier the transition will be. Plus, former employees’ impressions of how you treated them will impact your company’s reputation. Handling layoffs gracefully and compassionately not only keeps you compliant—it’s also the right thing to do.
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