WARN Act: The Worker Adjustment and
Retraining Notification Act
That's a mouthful! In general, this statute is designed to require
employers to provide employees with 6o days notice of layoffs due to plant
closings, sale of business or financial hardship. It is a complicated
statute, filled with nuances and exceptions, so click here to read a more
complete analysis on the Act issued by the United States Department of Labor.
Here is a general synopsis of the Act, and a few important tips to remember:
1) WARN only applies to employers that have 100 or more full-time workers;
2) WARN applies to all private and publicly-trade companies, whether they
are for profit or not for profit;
3) WARN notice must be provided to all affected employees, whether hourly
or salary, management or line personnel;
4) WARN notice must be given if there is a plant closing or "mass
For plant closings, the test is: if one or more facilities or
operating units in a given location anticipate a shut down that will affect
more than 50 workers AND last more than 30 days, WARN Act notice must be given.
For mass layoffs, the test is: if a series of layoffs over a
30 day period will result int he loss of 500 or more employees, Warn Act Notice
must be given. Also, if a series of layoffs of more than 50 or less than
500 employees over a 30 day period will result in a loss of 1/3rd of the
workforce, WARN notice must be given.
The Act applies to the above situations and targets situations involving "loss
of employment." Terminations for cause, voluntary resignations
and retirements are not considered "loss of employment" under
In addition, employees who refuse a transfer to a different work site
"within a reasonable commuting distance" are are not deemed to have
suffered a "loss of employment."
Employers who fill to give WARN Act notice are required to pay affected
employees all wages and compensation to which they would have been entitled
over a 60 day period. However, employers are entitled to a set-off equal
to the amount of compensation/benefits they paid to the employee over his/her
last 60 days of employment.
Private parties (i.e. workers) are allowed to bring WARN Act cases in federal
court, and may be entitled to an award of attorneys fees and costs if they win.
The WARN Act: A Paper Lion
As a practical matter, the WARN Act is a bit of a toothless tiger. As
long as an employer pays its employees up to the last day of work, their
liability for violations of the WARN Act are pretty insignificant, and thus
their exposure to potential WARN Act litigation is pretty minimal.
Company employs all of its workers until suddenly giving notice on a Friday
that it was closing operations, effective immediately. It had been paying them
on time throughout the final 2 months of their employment, and on the Friday
following the shutdown issues its final payroll to all employees.
What is the harm to employees? Well, there is no direct, immediate
financial harm because they have been paid in full for their labor.
But....it is easier to get a job when employed than when unemployed.
In addition, they have suffered a sudden and unexpected loss of income for
which they were unable to plan. In smaller towns, or in more specialized industries,
they are now immediately competing with 500 co-workers at exactly the same
time. They are understandable angry at the company's failure to give WARN
Act notice, and what to take action against their (former) employer.
They call a lawyer, who tells them that, indeed, WARN has been violated,.
it's clear, but she doesn't have any interest in taking the case.
Because, given that they have all been paid for their labor, the employees do
not have any direct financial damages. A federal statute has been
violated, that is true, and people have been hurt, that is true, but the
employees cannot prove any financial damages, and under the WARN Act they are
not entitled to recover for anything else.
The WARN Act: A Toothless Tiger
The WARN Act is a paper lion because it limits employees' damages to their loss
of wages and benefits over the last 60 days of their employment. Thus, an
employer who fails to give notice under the Act is essentially immune from any
liability as long as they pay all compensation due their employees through
their last day of work. Companies figure, 'Why give the notice, and risk a mass
exodus of workers, when violation of the Act will not result in any penalty?'
Thus, the Act's lack of "teeth" significantly undermines its true
purpose: to give employees a reasonable, 60-day opportunity to find work in
advance of their loss of employment.
Read more articles
about employment law issues at Philadelphia Area Employment Lawyer, a blog
by John A. Gallagher.
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