The WARN Act protects employees by requiring employers to provide 60 days notice of plant closing and mass layoffs. Below are some FAQ regarding the WARN Act.
Which companies are covered by the WARN Act?
The WARN Act will apply to a company that either:
- Employs 100 or more full time employees, or
- Employs 100 or more employees who in the aggregate work at least 4,000 hours per week (not including overtime). 29 U.S.C.A. § 2101(a)(1).
What circumstances trigger the WARN Act?
The WARN Act will be triggered by a plant closing or mass layoff; such will be considered to occur when for a period of 30 days:
- there is a plant closing that results in loss of employment for 50 or more non-part-time employees;
- there is a mass layoff of at least 33% of a 50 non-part-time employee site; or
- there is a mass layoff of at least 500 non-part-time employees. 29 U.S.C.A. § 2101(a).
The WARN Act will also be triggered if two or more groups at a single site have employment loss less than those provided above but who’s aggregate exceeds the minimum number for a period of 90 days. If the WARN Act is triggered by this provision, an employer may demonstrate that “separate and distinct actions” caused the loss. 29 U.S.C.A. § 2102(d).
Additionally, a layoff that was intended to be less than 6 months but ends up being more will be considered an employment loss unless the layoff is the result of an unforeseeable business circumstances and notice is given when it “becomes reasonably foreseeable that the extension beyond 6 months will be required.” 29 U.S.C.A. § 2102(c).
The WARN will not be triggered if:
- There is a relocation or consolidation and prior to the closing or layoff the employer offers to transfer the employee to another site. There must be less than a 6 month break in employment and the transfer offer must be either: (1) located within a reasonable commuting distance, or (2) regardless of location, the employee accepts an offer, within the later of 30 days or the closing. 29 U.S.C.A. § 2101(b)(2).
- Employees are hired with the understanding that their employment was limited to the duration of a facility or project. 26 U.S.C.A. § 2103(1).
- The closing or layoff constitutes a strike or constitutes a lockout. 26 U.S.C.A. § 2103(2).
Even if the WARN Act is not triggered, and notice is not required, to the extent possible, an employer should still provide notice to employees about a proposal to close a plant or permanently reduce its workforce. 29 U.S.C.A. § 2106.
What rights and duties does the WARN Act create for employers?
An employer has the right to close or layoff; a court may not enjoy the plant closing or mass layoff. 29 U.S.C.A. § 2104(b).
60 days before the closing or layoff, the employer must give written notice of a plant closing or mass layoff. 29 U.S.C.A. 2102(a). This notice must be given to:
- The state or designated entity responsible for carrying out rapid response activities (in Minnesota, the Department of Employment and Economic Development and its Rapid Response Team);
- The chief elected official of the unit of local government within which such closing or layoff is to occur; and
- The effected employee’s representative if there is one, if not, to each affected employee. Notice to each affected employee may either: (1) be included in the employees’ paycheck; or (2) mailed to the employees last known address. 29 U.S.C.A. § 2107(b).
An employer may not be required to provide the full 60 day notice to close or layoff if the:
- Employer was actively seeking capital or business which would have allowed the shutdown to be avoided and the employer “reasonably and in good faith believed” the notice would have prevented the obtainment of such capital or business at the time the notice would have been required;
- Plant closing or mass layoff is caused by business circumstances that were not reasonably foreseeable at the time notice would have been required; or
- Plant closing or mass layoff is the result of a natural disaster, such as a flood, earthquake, or drought, in which case no notice is required. 29 U.S.C.A. § 2102(b).
If an employer is found to have violated the WARN Act and is able to prove to the court that the violation was “in good faith” and the employer “had reasonable grounds for believing that the act or omission was not a violation” then the court may reduce the amount of liability. 29 U.S.C.A. § 2104(a)(4).
What rights and duties does the WARN Act create for employees?
Under the WARN Act employees have the right to a 60-day notice before a plant closing or layoff. If an employer violates the WARN ACT by failing to provide such required notice, then the employee may bring a civil action against the employer and the employer will be liable for:
- Back pay for each day of violation at a rate of compensation either based on the employees regular rate of pay for the last 3 years or the final regular rate, whichever is higher; and
- Benefits under an employee benefit plan if the expenses would have been covered if the employment loss had not occurred. 29 U.S.C.A. § 2104(a)(1).
The employer’s liability amount will be reduced by the employer’s payment of:
- Wages paid to employee during violation period;
- Voluntary and unconditional payments; and
- Payments to a third party or trustee. 29 U.S.C.A. § 2104(a)(2).
Employees may also pursue contractual and statutory rights and remedies that may be available to them. 29 U.S.C.A § 2105. Additionally, if the employee is part of a union, the union may sue for damages running to its workers. United Food and Commercial Workers Union Local 751 v. Brown Group, Inc., 517 U.S. 544, 546 (1996).
Special Case: local government unit: A unit of local government is a general purpose political subdivision of a State which has the power to levy taxes and spend funds, as well as general corporate and police powers. 29 U.S.C.A. § 2101(a)(7). If there is a WARN Act violation with respect to a unit of local government then the employer shall be subject to a civil penalty of not more than $500 for each day of such violation. The employer will not be responsible for this penalty if the employer pays each aggrieved employee the appropriate liability amount within 3 weeks of the ordered shutdown or layoff. 29 U.S.C.A. § 2104(a)(3).
Are there any additional requirements under Minnesota law?
In addition to the responsibilities imposed through the WARN Act, Minnesota Statutes section 116L.976 (2014) encourages employers to give notice as early as possible. When notice is being given in Minnesota, the employer must provide the commissioner with the names, addresses, and occupations of the employees who will be or have been terminated. Id.