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Top Four WARN Mistakes

White and Williams Labor and Employment Alert | August 21, 2012
by: George C. Morrison

Employers continue to struggle with the workforce reduction notice requirements imposed under the federal WARN law (the Worker Adjustment and Retraining Notification Act). This has become more complicated by a number of increasingly more onerous and confusing WARN-type state laws.

The following constitute the most common mistakes employers make involving WARN:

When Notice is (and isn’t) Required

WARN notices are required 60 days before a “plant closing” or “mass layoff.”  However, these terms are misleading. Keep in mind:

  • Many WARN “plant closings” do not involve the closing of an entire plant.
  • Many WARN “mass layoffs” involve employment terminations and not layoffs.
  • Hours reductions can be considered a “plant closing” or a “mass layoff” triggering notice requirements.
  • An entire plant shutdown can lawfully occur without notice if the shutdown will last six months or less.

Severance Pay Confusion

Employers under WARN generally do NOT get credit for providing severance pay required under a preexisting severance plan.

  • Giving employees post-termination severance pay is not the same as sending valid WARN notices (which, if required, must be received 60 days before the triggering employee separations occur).
  • WARN liability can be reduced or eliminated by “voluntary and unconditional” payments that are “not required by any legal obligation." But this generally excludes severance conditioned upon a release; this also excludes severance pay "required" under existing severance benefit plans.
  • However, existing severance benefit plans – though not given credit under WARN – can themselves be crafted or amended in a manner that potentially reduces the amount of required severance pay by any advanced written notice that is required or received by the employee. 

WARN Exceptions Are Not Exceptions

Most employers understand that WARN has three so-called “exceptions” that potentially apply if the full 60-days notice is precluded by one of the following:

  • Unforeseeable business circumstances
  • A natural disaster
  • A company actively seeking capital or business to avoid a plant closing where timely notices would have precluded the employer from obtaining the needed capital or business

However, the above exceptions will not apply unless the employer issues written WARN notices, even if these notices can only be issued after the fact. WARN provides that any employer hoping to rely on these exceptions must still give “as much notice as is practicable” with a “brief statement of the basis for reducing the notification period.”

WARN also contains complex exemptions and exclusions dealing with certain types of sales, relocations, and consolidations, strikes and lockouts, and temporary projects or undertakings.  Employers should carefully evaluate WARN and applicable regulations and obtain experienced legal advice concerning WARN compliance.

Recognize State/Local Notice Laws

An increasing number of states have enacted their own WARN-type laws.

  • State notification laws exist, for example, in New York, New Jersey, Illinois, Wisconsin, California, and other states.
  • Existing state notice laws in many respects differ dramatically from WARN, triggering notice obligations in circumstances when a WARN notice is not required (e.g., in some cases imposing more than 60-days notice), and with exceptions and other specialized provisions that are dissimilar to WARN.

In conclusion, employers that anticipate a "plant closing" or "mass layoff" should consult with legal counsel to determine its legal obligations under WARN and WARN-type state laws. If employers fail to provide proper notice, employees can generally recover pay and benefits. Given the amount of notice that is required, employers are encouraged to consult with their attorneys as soon as a "plant closing" or "mass layoff" may become possible.

For more information regarding this alert, please contact George Morrison in our Lehigh Valley office at 610.782.4911 or morrisong@whiteandwilliams.com.   

This correspondence should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation and legal questions.
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