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Law360 (April 10, 2020, 5:02 PM EDT) --
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| Todd Boyer |
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| Arthur Rooney |
The federal WARN Act requires employers to provide 60 days' advance notice to covered employees, unions and government officials prior to a plant closing, mass layoff or relocation at a single site of employment. State mini-WARN laws contain separate and distinct requirements from the federal WARN Act that are easy to overlook.
Given the need of some employers to quickly reduce their workforce, these employers are asking whether they must comply with the WARN Act under the circumstances. The short answer is that if the company is subject to the WARN Act, it must give its affected employees and the applicable government agencies WARN Act-compliant notice even if it cannot give notice within the required notice period.[1]
Is your company subject to WARN?
Employers are covered by the federal WARN Act if they have 100 or more employees, not counting part-time employees who have worked less than six months in the last 12 months or who work an average of less than 20 hours a week.[2] Employers are also covered by the federal WARN Act if they employ 100 or more employees who together work at least 4,000 hours per week.[3]
The federal WARN Act defines a part-time employee as:
Don't forget state mini-WARN statutes.an employee who is employed for an average of fewer than 20 hours per week or who has been employed for fewer than 6 of the 12 months preceding the date on which notice is required, including workers who work full-time. This term may include workers who would traditionally be understood as "seasonal" employees.[4]
A number of states have enacted their own WARN statutes. The list of mini-WARN states includes California, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Tennessee, Vermont and Wisconsin.
In addition, some states have other notice requirements for plant closures or mass layoffs. States that have enacted mini-WARN Acts likely have different standards as to whether an employer is covered by a mini-WARN Act, and may require employers to give WARN notice for a triggering event even if notice would not be required under the federal WARN statute. Thus, employers should not only look at whether WARN notice is required under federal law, but whether notice is required in each jurisdiction where layoffs may occur.
For example, California's WARN Act applies to covered establishments instead of employers. California law defines a covered establishment as "any industrial or commercial facility" that employs (or within the past 12 months has employed) at least 75 or more full- and part-time employees.[5]
However, new hires or those employed for less than six months in the preceding 12-month period do not count as employees for purposes of California's WARN Act. The California WARN Act defines an employee to be "a person employed by an employer for at least 6 months of the 12 months preceding the date on which notice is required."[6]
New York's WARN Act applies to employers that employ 50 employees in New York state, not including part-time employees. New York's WARN Act has the longest notice period — requiring employers provide employees and government agencies 90 days' notice of a triggering event instead of the 60 days' notice required under the federal WARN Act.
Illinois' WARN Act applies to employers who employ 75 or more full-time employees regardless of where they work, or when an employer employs 75 or more employees who in the aggregate work at least 4,000 hours per week, excluding overtime hours.
Has your company suffered a triggering event?
Plant Closings
Under the federal WARN Act, a temporary or permanent plant closing is the shutdown of a single site of employment or of one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss for 50 or more employees during any 30-day period.
To determine if there is an employment loss for 50 or more employees, the employer should not count part-time employees. If there is a plant closure for other full-time employees, however, part-time employees are entitled to WARN Act notice.
Under California law, a shutdown, defined as "a cessation or substantial cessation of industrial or commercial operations in a covered establishment," requires WARN Act notice, regardless of how many employees are impacted.
New York's WARN statute defines a plant closing as the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss during any 30-day period at the site for at least 25 employees.
Illinois defines a plant closing as the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment for 50 or more employees during any 30-day period, excluding part-time employees.
Mass Layoffs
Under federal law, a mass layoff is a reduction in force that is not the result of a plant closing which results in an employment loss at a single site of employment during any 30-day period for at least 33% of full-time employees and at least 50 or more full-time employees; or at least 500 full-time employees. The federal WARN Act does not apply to layoffs of six months duration or less, but if circumstances change and a layoff exceeds six months, notice is required.
The federal WARN Act requires employers to look at employment losses 90 days ahead and 90 days in the past to determine whether federal WARN Act notice has been triggered. As this economic crisis continues, employers may need to make additional layoffs and it is critical to track layoffs using the 90-day aggregation rule, and provide notice if the employer expects a triggering event to occur.
California's WARN Act defines "mass layoff" more broadly than federal law. A layoff of 50 or more employees, full or part-time, within a 30-day period at a covered establishment triggers California WARN Act notice requirements. The California WARN Act applies to layoffs of any duration.
Under the New York WARN Act, a mass layoff is defined as a loss of employment at any single site of employment during any 30-day period involving at least 250 full-time employees or 25 or more full-time employees if these employees comprise at least 33% of the employment site's workforce (excluding part-time employees) that exceeds six months in duration.
Illinois' WARN Act defines a mass layoff as a reduction in force that is not the result of a plant closing and results in an employment loss at the single site of employment during any 30-day period for at least 25 employees who comprise 33% of the employees at the single site of employment (excluding any part-time employees), or at least 250 employees (excluding any part-time employees.)
Unforeseeable business circumstances establish exceptions to the WARN Act notice period.
The federal WARN statute provides that less than 60 days' notice is required if there are unforeseeable business circumstances. The U.S. Department of Labor has interpreted such business circumstances to include a "government ordered closing of an employment site that occurs without prior notice."[7]
However, the employer is still required to give as much notice as practical given the unforeseen circumstances. Furthermore, to the extent that any employer is providing shortened WARN Act notice to employees and government agencies, it should provide the reason for the shortened notice, such as being required to shut down under government order without notice.
New York's WARN Act also provides that its 90-day notice period may be reduced by business circumstances that were not reasonably foreseeable, such as a government-ordered closing of an employment site that occurs without prior notice. The New York State Department of Labor states that although the 90-day notice requirement is not suspended, the New York WARN Act "recognizes that businesses cannot predict sudden and unexpected circumstances beyond an employer's control, such as government-mandated closures, the loss of your workforce due to school closings, or other specific circumstances due to the coronavirus pandemic."
The New York DOL also stated that if
Thus, it is not clear whether the New York DOL will excuse all failures to provide 90 days' notice due to COVID-19-related issues, so employers should provide the New York DOL with immediate notice sufficiently detailing the reasons the employer was unable to do so. The longer businesses wait to provide notice, the harder it will be to argue the closings and layoffs were unforeseeable.an unexpected event caused your business to close, please provide as much information as possible to the Department of Labor when you file your notice about the circumstances of your closure so we can determine if an exception to the WARN Act applies to your situation.
Illinois' WARN Act provides for a similar exception to the notice provision but only for plant closings (but not for mass layoffs). Under the act, an employer is not required to comply with the notice requirement if the Illinois Department of Labor "determines that the need for a notice was not reasonably foreseeable at the time the notice would have been required."[8] Instead, the employer must only provide as much notice as is practicable and explain the basis for reducing the notification period.
California WARN has no similar unforeseeable business circumstances exception to the 60-day notice period. However, on March 17, California's governor issued Executive Order N-31-20, waiving the requirement that employers provide at least 60 days' notice of a triggering event such as a mass layoff, plant closing or relocation, to employees impacted by COVID-19-related business shutdowns.
Although covered California employers that experience a WARN Act-triggering event for COVID-19-related reasons do not need to provide 60 days' advance notice, these employers do need to provide written WARN notice to employees, any applicable union and the required government entities as soon as practicable. According to the executive order, the waiver of the 60-day notice requirement is only effective if the mass layoff, relocation or termination was caused by COVID-19-related "business circumstances that were not reasonably foreseeable as of the time that notice would have been required," and the employer takes the following actions:
- Gives WARN Act-compliant written notice to the affected employees, applicable union if any, and the required government agencies as soon as practicable;[9] and
- Provides WARN Act notice that, in addition to the statutory notice requirements, contains:
- A brief statement of the basis for reducing the 60-day notification period in the WARN Act notice; and
- The following statement: "If you have lost your job or been laid off temporarily, you may be eligible for Unemployment Insurance (Ul). More information on Ul and other resources available for workers is available at Iabor.ca.gov/coronavirus2019."
- A brief statement of the basis for reducing the 60-day notification period in the WARN Act notice; and
Thus, it is imperative that employers who have had a triggering event provide immediate WARN Act-compliant notice to affected employees and the appropriate government agencies in order to qualify for the waiver of the statutory notice period. Failure to provide the required notice may subject the employer to WARN Act penalties, which includes employee back pay for each day of noncompliance.
What are immediate next steps for employers?
Employers should first determine whether they are subject to the federal WARN Act or any other state mini-WARN statute. If so, determine whether a triggering event occurred or will occur under all applicable WARN statutes.
Employers will also need to track layoffs, keeping in mind the 90-day aggregation rule and similar state aggregation rules. If a triggering event occurred or will occur in the near future, immediately provide WARN Act-compliant notice to the affected employees, unions (if any) and the applicable government entities, and include the reasons for any shortened notice period.
Todd K. Boyer and Arthur Rooney are partners at Baker McKenzie.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] 29. U.S.C. 2102(b)(3).
[2] 29 U.S.C. 2101(a)(1)(A).
[3] 29 U.S.C. 2101(a)(1)(B).
[4] 20 CFR § 639.3(h).
[5] Cal. Lab. Code § 1400(a), (b).
[6] Cal. Lab. Code § 1400(h).
[7] 20 C.F.R. § 639.9(b).
[8] 820 ILCS 65/115(a)(2).
[9] For specific county by county contact information see here.
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