With unemployment rates projected to reach all time highs in April, many U.S. employees are displaced due to the sudden halt of everyday business across the country. Passed by Congress in 1988, the Worker Adjustment and Retraining Notification Act (WARN) is the preeminent piece of federal legislation that sets guidelines for how companies can legally layoff or otherwise reduce a significant portion of their workforce.
If your law firm currently handles employment-related casework, then you are likely familiar with WARN, but a basic review of this Act may be useful for those less acquainted. Note – these basic points are not exhaustive of the Act in its entirety. The Act itself can be accessed here.
- The WARN Act applies to businesses with 100 or more full-time employees, or businesses with 100 or more employees who total a minimum of 4,000 hours worked per week.
- Except for certain circumstances, an employer is not allowed to shut down a “plant” or institute “mass layoffs” (over 50 employees) without giving a 60-day notice. These layoffs or shutdowns must be expected to last longer than 6 months.
- Employers who violate the WARN Act are subject to civil actions such as a $500.00 fine for each day of violation and payment of backpay, including benefits, to the affected employees. The employer could also be ordered to pay a “reasonable attorney’s fee.”
WARN does make certain exceptions for notice requirements in the event of “not reasonably foreseeable” business circumstances or natural disasters. It could be argued that COVID-19 would qualify as “reasonably unforeseen”, but the U.S. Department of Labor has not released any guidelines that would offer employers, employees, or their counsel much clarity on this matter.
However, certain state laws, or “mini-WARN” laws exist in several states and typically offer more protections for employees and put more onus on their employers related to notification of mass layoffs or closures. This intersection of federal and state law deserves further examination, as it could highlight opportunities for employment lawyers, or those looking to explore this area of law for their firm. A summary of three mini-WARN laws are included below.
New York WARN
- Applies to companies with 50 or more full-time employees.
- Covers mass layoffs or plant closures that affect 25 or more workers.
- 90-day warning must be issued before mass layoff, plant closure, or certain relocation/reduction in hours.
- The NY DOL specifically states that the 90-day warning requirement has not been suspended due to Coronavirus. The NY DOL acknowledges that the NY WARN Act already accounts for unexpected events, so employers are encouraged to provide as much information as possible to the DOL for them to determine if an exception is warranted
- Applies to companies with 75 or more full-time or part-time employees.
- Covers plant closures that affect any number of employees and covers layoffs of 50 or more employees.
- 60-day warning must be issued before mass layoff, plant closure, or relocation over 100 miles.
- Unlike federal WARN, Cal-WARN did not provide any exception for notice due to unforeseeable business circumstances. However, on March 17th this was suspended to allow for employers to enact mass layoffs or shutdowns without notice starting March 4th (backdated) through the end of the declared State of Emergency in California. Employers are still required to notify employees as soon as such notification is practical.
Maryland Economic Stabilization Act
Maryland’s version of WARN is unique because it is voluntary, meaning that employers are only held liable to federal WARN. Due to the voluntary nature of this act, the points below are better viewed as guidelines rather than requirements.
- An “employer” under this Act refers to companies of 50 employees or more.
- A “reduction in operations” is defined as relocation of the workplace from one site to another or the reduction of staff equal to at least 25 percent of the employees or 15 employees, whichever is greater.
- It is suggested that a 90-day written warning be issued to employees.
- Employers are encouraged to offer Post Termination Benefits and encouraged to consider Special Termination Benefits, such as an allowance for retraining or a formal severance package.
Other states that have mini-WARN Acts or similar statutes include Delaware, Hawaii, Illinois, Iowa, Maine, Massachusetts, Minnesota, New Hampshire, New Jersey, North Dakota, Ohio, Oregon, Tennessee, Vermont and Wisconsin.
During these challenging times, employees deserve to know their rights. The often-confusing intersection between federal and state requirements can leave employers and employees alike confused about their options. If your firm routinely handles employment cases, eGenerationMarketing has recently introduced employment law case leads, which will allow any firm to increase the number of cases they have ongoing. For more information on our service, contact us at 617.800.0089.