Frequently asked questions (FAQs) about WARN

OTHER LAWS AND CONTRACTS

Does WARN replace other notice laws or contracts?

The provisions of WARN do not supersede any laws or collective bargaining agreements that provide for additional notice or additional rights and remedies. If another law or agreement provides for a longer notice period, WARN notice runs concurrently with that additional notice period. Collective bargaining agreements may be used to clarify or amplify the terms and conditions of WARN but may not reduce WARN rights. For example, if a collective bargaining agreement provides for an employer to issue written notice to the union 75 days in advance of anticipated layoffs, the provision will satisfy the WARN requirement for 60-day advance notice. On the other hand, if a collective bargaining agreement provides a 45-day notice period, the WARN requirement for 60 days' notice supersedes that provision.

EMPLOYER PROHIBITED FROM ORDERING A PLANT CLOSING

Can an employer be forced to keep a plant open or retain employees?

No. Employers cannot be required by the WARN Act to refrain from closing a plant, relocating operations, or implementing layoffs. An employer can only be required to give a 60-day advance notice or provide back pay and benefits to the affected employees for each day that the employer failed to give notice, up to the required 60 days. The law at section 5(b) specifically states, " a Federal court shall not have authority to enjoin a plant closing or mass layoff." There is no injunctive relief available under the Act.

LABOR DISPUTES, STRIKES, AND LOCKOUTS

Is a labor dispute-a strike by a union or a lockout by management-considered a mass layoff under WARN?

No. An employer does not need to provide notice to strikers or to workers who are part of the bargaining unit(s) and are involved in the labor negotiations that led to a lockout when the strike or lockout is equivalent to a plant closing or mass layoff. Non-striking employees who experience an employment loss as a direct or indirect result of a strike and workers who are not part of the bargaining unit(s) that are involved in the labor negotiations that led to a lockout are still entitled to advance notice.

The Act specifically states that WARN does not affect employers' or employees' rights and responsibilities under the National Labor Relations Act. An employer does not need to give notice when permanently replacing a person who is an "economic striker."

TIMING

When do I need to determine if WARN applies to my business?

You need to decide whether WARN applies to a particular employment action about 65-70 days before that action is to occur. If WARN does apply, this gives you the lead time to do what is necessary to give timely notice. You also need to rely on the facts as you know them at the time you have to make your decision. Assuming too much can lead to a significant risk. An example of a question often asked is, "If I close a plant with 53 workers but offer five of them early retirement and they take it, am I liable under WARN?" The legal answer to that question is that there is no liability since only 48 workers will suffer an employment loss, but the practical answer about whether or not to give notice may depend on what you know 65-70 days in advance. If you are absolutely sure that five workers will take the early retirement offer, then there is no requirement that you give notice. If you are not sure that the five workers will take the offer, then you run the risk of liability. If you choose not to give notice and all five accept the offer, there is no requirement that you give notice. However, if two workers do not accept the offer and you have not given notice, you may be liable to 50 workers for pay and benefits. For that reason, it is recommended that employers err on the side of caution and give notice in situations that pose these kinds of risks.

EMPLOYEES-PART-TIME AND FULL-TIME

What timeframe is to be used in calculating whether an employee works an average of fewer than 20 hours per week and is therefore a part-time employee?

The period to be used for calculating whether a worker has worked an average of fewer than 20 hours per week is the shorter of the actual time the worker has been employed or the most recent 90 days.

To determine the average number of hours worked in a week, see the following example:

The calculation to determine whether an employee may be eligible for WARN notice:

TOTAL HOURS WORKED / 13 WEEKS

= AVERAGE HOURS WORKED PER WEEK

Example 1

223 TOTAL HOURS WORKED / 13 WEEKS

= 17.2 HOURS AVERAGE HOURS WORKED PER WEEK

The worker in Example 1 is a part-time worker because the average hours worked per week was less than 20 hours.

Example 2

265 TOTAL HOURS WORKED / 13 WEEKS

= 20.4 HOURS AVERAGE HOURS WORKED PER WEEK

The worker in Example 2 is a full-time worker because the average hours worked per week was over 20 hours.

If a plant closing or mass layoff occurs, part-time workers are also entitled to receive a WARN notice.

In a mass layoff of fewer than 500 workers, do you exclude part-time workers from the total workforce, the group of workers laid off, or both?

Both. In determining whether the 33% threshold for a mass layoff involving fewer than 500 workers has been reached, you divide the total number of full-time workers laid off by the total number of full-time workers. The term "full-time workers" means workers at the single site, excluding part-time workers.

EMPLOYEE TRANSFERS

How do I determine if the transfer I am offering employees is of a reasonable commuting distance? Is it based on time, mileage, local custom, or some combination?

There is no set "rule of thumb." However, one would look at the circumstances of the individual case. Consideration should be given to the following factors: geographic accessibility of the place of work, quality of the roads, commonly available transportation, and the usual travel time. In addition, collective bargaining agreements may have to be taken into consideration if they are applicable. Travel time is measured from an employee's home, not the former work site.

WHEN AFFECTED EMPLOYEES CANNOT BE IDENTIFIED

Should I give notice to everyone when affected employees cannot be identified?

No. The Preamble to the WARN regulations provides that "where it is not possible at the time notice is required to be given to determine who may reasonably be expected to experience an employment loss, it may be advisable for an employer to give notice to other workers who may lose their jobs as a result of the seniority system, both to forewarn them and to avoid liability. However, it is not appropriate for an employer to provide blanket notice to workers."

BUMPING

What obligations do I have to give notice when there is an established bumping rights system?

Where there is no union, the employer must attempt to identify the individuals who will finally lose their jobs as a result of the bumping system. If the employer cannot reasonably identify these workers, it must give notice to the incumbent workers in the jobs being eliminated.

When providing notice to a union representative, it is not necessary for the employer to identify bumpees. The employer must, however, identify the positions affected by the closing or mass layoff.

INCREASED WORKERS' COMPENSATION CLAIMS AND POTENTIAL SABOTAGE

Should I be concerned about increased workers' compensation claims when notice is given?

Generally, when employees are given adequate notice of a layoff, workers' compensation claims do not increase. One major company found that when it gave notice and had planned on receiving more claims (and in fact set aside significant funds to cover these expected costs) , they actually spent none of that money. As with concerns of sabotage, providing notice shows goodwill on the part of the employer, and employees are more likely to feel that they have been treated fairly despite the situation in which they find themselves.

Is sabotage a concern when notice is given?

Employers have occasionally expressed concern that providing workers with advance notice of layoffs and closings may result in an incident of sabotage by an affected worker. Experience of the state Rapid Response specialists, however, indicates that the opposite is generally true. Providing advance notice, along with early intervention services that boost morale, limit bitterness and apathy, and enable workers to plan their future before they lose their jobs, minimizes the occurrence of sabotage. This action of goodwill on the part of the employer also helps to maintain productivity, lower unemployment insurance costs, and present a more positive image of the company to the communities affected by the layoff or closing.

SALE OF A BUSINESS

In a hostile takeover situation, if the seller refuses to give notice, should the buyer give notice before actually buying the company?

Yes. The buyer is responsible for providing notice for any covered plant closing or mass layoff that occurs after the sale. The practical problem is that the buyer is not the employer at the time notice must be given. If the seller does not cooperate, the buyer may not know the names and addresses of everyone who will be affected so that it can give individual notice. However, written notice is still required.

When an employee is offered employment with the buyer but refuses, is this considered an employment termination or a voluntary departure?

This situation is considered a voluntary departure, unless the offer constitutes a constructive discharge (see glossary), which could include situations where significant changes are made in employee's wages, benefits, working conditions or job description.

If employees are terminated without notice at the instant the sale becomes effective, which party is liable-the seller or the buyer?

The seller. In the case of the sale of part or all of a business, the seller is responsible for providing affected employees with notice of any plant closing or mass layoff that takes place up to and including the effective date (time) of the sale, and the buyer is responsible for providing notice of any plant closing or mass layoff that takes place thereafter.

If the buyer retains the employees for a brief period after the sale but then terminates them within 60 days after the sale, is the buyer liable for the full 60-day notice or is liability allocated between the seller and the buyer based upon time of employment with each during the 60-day period preceding the termination?

The buyer is liable for the full 60 days. If the seller is made aware of any definite plans on the part of the buyer to carry out a plant closing or mass layoff within 60 days of purchase, the seller may give notice to affected employees as an agent of the buyer, if so empowered. If the seller does not give notice, the buyer is nevertheless responsible to give notice. If the seller gives notice as the buyer's agent, the responsibility for notice still remains with the buyer.

When a buyer chooses to continue the seller's employees in their previous jobs but at a substantial reduction in wages and fringe benefits, has the buyer constructively discharged the employees, and what would constitute a constructive discharge/involuntary departure?

If a drastic change in wages or working conditions causes a person to believe he or she was being fired or would be unable to continue working for that employer, this could constitute a constructive discharge. The test is usually a matter of state law and the test is often a strict one.

BANKRUPTCY

How is WARN applicable to bankruptcy situations?

WARN remains applicable to an employer that declares bankruptcy in some circumstances. If an employer declares bankruptcy and then orders a plant closing or mass layoff, it may still be liable under WARN. There are two situations in which WARN may apply in a bankruptcy. The first is when the employer knew about the closing or mass layoff before filing bankruptcy and should have given notice but seeks to use bankruptcy to avoid giving notice. The second is when the employer continues to run the business in bankruptcy, usually as a "debtor in possession." WARN does not, however, apply to a trustee in bankruptcy whose sole function is to wind up the business. The exceptions to the notice requirement, known as the faltering company and unforeseeable business circumstances exceptions, often come up in bankruptcy cases. The bankruptcy proceeding does change the court in which any WARN claim must be filed, from the District Court to the Bankruptcy Court.

WAIVING THE RIGHT TO WARN NOTICE

Can I ask my employees to waive their rights to notice under WARN?

Employees cannot be required to waive their rights to advance notice under WARN. WARN requires notice, making no provision for any alternative. However, when you close a facility or have a layoff, you may ask employees to sign a document waiving their rights to make claims against your company. (Waiving the right to make claims against the company means the employee agrees not to sue the company for additional financial compensation or any other benefit because of the employee's job loss, or in some cases, from anything else that may have occurred during the worker's employment.) Requesting that employees voluntarily and knowingly waive any claims under WARN, or other employment-related laws, may involve offering some additional severance pay or extended health benefits. If something of value such as additional pay or benefits is received by the employees for signing the waivers, they may have waived any claims that they have under WARN or other employment-related laws.

PAY IN LIEU OF WARN NOTICE

Can I pay my workers their salary and benefits for 60 days in lieu of notice?

Neither the Act nor the regulations recognize the concept of pay in lieu of notice. WARN requires notice, making no provision for any alternative. Failure to give notice does a significant disservice to workers and undermines other services that are part of the purpose of the WARN Act. However, since WARN provides that the maximum employer liability for damages, including back pay and benefits, is for the period of violation up to 60 days, providing your employees with full pay and benefits for the 60-day period effectively precludes any relief.

What if I pay my workers for 60 days in lieu of notice and then an employee gets another job within what would have been the notice period, am I required to continue making payments to the employee through the notice period?

No. If an employee gets another job within the 60-day period, this is viewed as a voluntary termination that makes the employee ineligible to collect damages.

Can severance pay offset WARN damages?

WARN allows "voluntary and unconditional" payments that are not "required by any legal obligation" to be offset against an employer's back pay liability. In many cases, however, severance pay is required by contract, including an employer's personnel policies and handbooks. These payments do not offset WARN damages and thus would not serve as pay in lieu of notice.

EMPLOYEE ACCESS TO ACCRUED VACATION TIME

Can I decide not to give employees paid vacation in a closing or layoff situation?

Vacation pay may be considered wages or a fringe benefit in some situations. If an employee has "earned" the vacation pay, that is, if he/she has a legal right to it by contract or otherwise, then an employer must pay it as part of WARN damages. These obligations are generally governed by contract and sometimes by the Employee Retirement and Income Security Act. Call 1-800-998-7542 or visit www.dol.gov/ebsa for more information.

SINGLE SITE OF EMPLOYMENT

Where is the "single site" of an office whose employees travel widely within large geographic regions-for example, salespersons?

For workers whose primary duties require travel from point to point, who are outstationed, or whose primary duties involve work outside any of the employer's regular employment sites (for example, railroad workers, bus drivers, or salespersons), the single site of employment to which they are assigned as their home base, from which their work is assigned, or to which they report will be the single site in which they are covered for WARN purposes.

NOTICE MAILING REQUIREMENT

When notice is mailed, at what point does the 60-day timeframe commence-from the date of mailing, the date of receipt, or a reasonable time after the mailing?

From the date of receipt. Workers must receive notice at least 60 days before separation. This does not mean that if one or two notices are not delivered through no fault of the employer, there is a violation. It is prudent, however, to make sure that the workers who were sent notices actually got them.

ATTORNEY FEES IN WARN CASES

Are attorney's fees available in WARN cases?

Employers may be liable for actual attorney fees and costs incurred if a Federal District Court so rules in the event that the workers prevail in a WARN lawsuit.