By: Lisa M. Watanabe

The recent holiday shopping season was not so merry and bright for a number of U.S. retailers due to price discounts, stagnant wage growth and low consumer spending.  The disappointing results have prompted several retailers to close their stores and announce layoffs.  Employers considering such an action should familiarize themselves with the federal Worker Adjustment and Retaining Notification (WARN) Act and related state laws that require employers to provide notice in advance of any closings or layoffs.  The following is a brief overview of those requirements:

What is the federal WARN Act?

The federal WARN Act was enacted in 1988 to afford workers and their families some transition time in the event of a plant closing or mass layoff to adjust to the prospective loss of employment and to seek/obtain other jobs.  WARN requires covered employers to provide 60 days’ notice to employees, union representatives, state agencies and localities prior to any closings or layoffs.

In addition to the federal WARN Act, the following states have enacted similar laws (aka mini-WARN acts) governing advanced notice: California, Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Montana, New Hampshire, New Jersey, New York, Ohio, Oregon, South Carolina, Tennessee and Wisconsin.  While many state laws mirror the federal WARN Act, there are a few states with more restrictive provisions.  Employers should contact counsel to obtain information on the laws in these states.

Does the federal WARN Act apply to every employer?

No.  WARN applies to employers with 100 or more full-time employees, or 100 or more full-and part-time employees who work at least a combined 4,000 hours per week.

When is an employer required to give advance notice?

The following three events trigger an employer’s duty to provide notice under the federal WARN Act: (1) a facility or operating unit shut downs for more than six months, or when at least 50 full-time employees lose their jobs during any 30-day period at a single site of employment; (2) layoffs of at least 50-499 full-time employees for at least six months during any 30-day period at a single site of employment, if they represent at least 33% of the total active workforce (if the layoff affects 500 full-time employees the 33% rule does not apply); and (3) a series of terminations or layoffs over a 90-day period, none of which individually would be covered under WARN, but which add up to numbers that would require WARN notice.

What type of notice is required?

Absent exceptions for unforeseeable business circumstances or natural disasters, written notice must be provided 60 days prior to the closing or layoffs to employees or their representative, the state/designated unit that offers assistance to dislocated worker units and the local government.

What are the consequences for violating the federal WARN Act?

An employer may be liable for back pay, benefits and civil penalties for each affected employee for each day of defective notice.