The federal Worker Adjustment and Retraining Notification (WARN) Act requires certain employers to provide advance notice before plant closings, mass layoffs, and other qualifying workforce reductions. Determining whether the law applies and the manner in which it does, however, is not always straightforward. Factors including employee headcount, temporary workers, the reasons and scope of a workforce reduction, and the occurrence of multiple layoffs over time can all affect an employer’s obligations.
Below are several WARN Act compliance considerations discussed during a recent Varnum webinar.
Which Employers Are Covered by the WARN Act?
The WARN Act generally applies to employers with “100 or more employees,” but determining whether an employer meets that threshold is not always straightforward. For example:
- Open questions may exist regarding the need to count the employees of parent, subsidiary, or affiliated entities, or contractors and their employees, depending on the nature of the relationship between the employer and such entities. Special rules also exist defining when the employer needs to count employees on temporary layoff and employees who are based abroad.
- The WARN Act also excludes “part-time” employees from the counts to determine employer coverage or the occurrence of a WARN event, but defines part-time employees differently than employers may expect. Both employees who have worked fewer than six of the previous 12 months, and employees who work an average of fewer than 20 hours per week are considered “part-time” for WARN purposes, even though the first category of such employees may otherwise work a full-time schedule.
What Events Trigger the WARN Act?
An employer’s obligations under the WARN Act are triggered by events that constitute a “plant closing” or “mass layoff” as defined by the Act. Both of these events are defined, in part, by the expectation of “employment loss” affecting enough employees to meet the statutory thresholds.
Employment loss may include:
- Terminations
- Layoffs exceeding six months
- Significant reductions in work hours
WARN Act triggering events are not measured by employment loss on one particular date, however. Rather, the measurement is employment losses over any 30-day period. The regulations require employers to evaluate workforce reductions over both 30-day and 90-day aggregation periods to determine whether smaller actions, combined, constitute a WARN event.
How Are Temporary Workers Treated?
There is much confusion about whether and when the WARN Act applies to “temporary” workers. The answer depends on the nature of the relationship. Workers hired directly by the employer in a temporary capacity for a project are treated differently from employees supplied by an independent staffing agency. The former may need to be counted in determining whether a WARN event has occurred, but the latter may not, if the relationship is such that the temporary agency is the bona fide employer of such workers. Employers should evaluate who hires, pays, supervises, and controls temporary workers when determining whether they must be included in WARN calculations.
What Notice Does the WARN Act Require?
When the WARN Act applies, employers must provide 60 days’ advance, written notice to:
- Affected employees or their union representatives
- The appropriate state dislocated worker unit
- The chief elected official of the local government
Notice requirements vary by recipient but generally include the timing and nature of the employment action, anticipated separation dates, affected job titles, and company contact information. Although limited exceptions may permit less than 60 days’ notice, employers must still provide as much notice as practicable.
Plan for Workforce Reductions
Employers considering a plant closing, mass layoff, or other significant workforce reduction should begin the WARN Act analysis early, continue monitoring workforce changes, and evaluate whether any state mini-WARN laws also apply.
For questions about the WARN Act or workforce reduction planning, contact a member of Varnum’s Labor and Employment Practice Team.
