Requirements of the WARN Act

Employers Follow WARN Act Requirements in Layoffs and Plant Closings

Getting laid off is the most stressful thing that could happen to this woman who has boxed up her personal items.
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The Worker Adjustment and Retraining Notification Act (WARN Act) offers: "protection to workers, their families, and communities by requiring employers to provide notice 60 days in advance of covered plant closings and covered mass layoffs. Advance notice provides workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market. WARN also provides for notice to State dislocated worker units so that dislocated worker assistance can be promptly provided."

Why did the country need a WARN Act? It's simple. When an employer lays off a large number of people without warning, the economic impact of the layoff hits the employee and their family members hard. The layoff can have a negative impact on family relationships and on their ability to purchase goods and services.

As a result of the inability of the employee and their family to purchase goods and services, the larger, overall community experiences a negative impact on their economic conditions. This widespread impact caused a domino effect as employees with insufficient funds fail to purchase products and services in their communities.

The WARN Act stated further:

"This notice must be provided to either affected workers or their representatives (e.g., a labor union); to the State dislocated worker unit; and to the appropriate unit of local government."

The WARN Act Requires Employers to Give 60 Days Notice

The WARN Act requires that the employer provide 60 days of written notice of the intention to lay off more than 50 employees during any 30-day period as part of a plant closing. The notice must be provided to employees; the State dislocated worker unit and the chief elected official of the unit of local government in which the employment site is located, and any collective bargaining unit.

This requirement does not consider the layoff of employees who have worked for the employer less than six months in the past 12 months, or employees who work, on average, less than 20 hours a week.

Requirements of the WARN Act

Additionally, the WARN Act requires employers to give notice of any mass layoff, that does not result from a plant closing but will result in an employment loss of 500 or more employees during any 30-day period. The Act also covers employment loss for 50-499 employees if they make up at least 33 percent of the employer's active workforce.

This requirement does not consider the layoff of employees who have worked for the employer less than six months in the past 12 months, or employees who work, on average, less than 20 hours a week.

Penalties of the WARN Act

Under the WARN Act provisions, an employer who orders a plant closing or mass layoff without providing this notice is liable to each unnotified employee for back pay and benefits for up to 60 days during which the employer is in violation of the WARN Act. (The employer's liability may be reduced by the amount of any wages or unconditional payments paid to the employee during the violation time period.)

The employer who fails to provide this notice to the implicated local government is charged a civil penalty of up to $500 for each day the employer violates notification requirements. Employers can avoid this penalty if the employer pays each affected employee within three weeks after the plant closing or layoff.

A plant employer in Michigan was forced to lay off 26 employees (non-union) during a potential client bankruptcy situation. No sooner did the laid-off employees hit the unemployment offices in the state then the WARN Act officials were on the phone with the company.

Employees told their tales of woe to the unemployment compensation office workers and predicted that the company was in danger of closing completely. They bemoaned their lost coworkers and predicted that everyone would soon become unemployed. After hearing these stories of fear and concern from many of the laid-off employees, the front line unemployment workers became worried that the stories were true.

The front line workers at the unemployment compensation office notified their supervisors who notified the state. The company was able to tell the WARN Act officials that they had not, and did not intend to violate the WARN Act.

Lessons Learned About the WARN Act

But, the experience was a lesson in how quickly the state reacted to a former employee-spread rumor. It was also a lesson in keeping employees up-to-date by communicating transparently with them over time. Had they received the company's economic data regularly, the layoffs would not have been a surprise. They would have understood that the layoffs were a short-term economic reality measure—not a permanent situation or plant closure.

Since you'll want to hear the end of the story, the short-term cuts helped save the company which is thriving today. No additional employee layoffs were required. The WARN Act was never violated. Several good former employees were rehired.

The lesson for employers? Always follow employment laws that are applicable in your industry, in your community, and as required from all levels of state and federal government. It is how to stay on top of ever-changing employment laws. You'll be happy that you did.

Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and ​employment laws and regulations vary from state to state and country to country. Please seek legal assistance, or assistance from State, Federal, or International governmental resources, to make certain your legal interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.