A WARNing for Employers Conducting Reductions in Force

With the collapse of the global economy, news of mass layoffs has been rampant as some of the largest employers have been forced to reduce expenses and downsize their workforce. In 2008, Citibank slashed over 73,000 jobs, General Motors laid off nearly 34,000 employees, and other Fortune 100 corporations were forced to conduct staff reductions. Not surprisingly, this unpleasant trend has carried over into 2009 as January was one of the worst months for layoffs ever, with nearly a quarter million job cuts grabbing headlines. Given the grim prospects for 2009, many employers undoubtedly will be forced to conduct additional reductions. Those employers, however, must comply with the federal Worker Adjustment and Retraining Notification Act (“WARN”), as well as some recently enacted state laws, known as “mini-WARN” acts, which were intended to close the loopholes in the federal statutory scheme. Some of these new state laws, including those enacted by New York and New Jersey, impose additional obligations upon employers. Thus, the unwary employer may be subjected to substantial penalties, including statutory severance payments, for even inadvertent violations.

WARN mandates that employers with 100 or more employees (with certain narrowly tailored exceptions) provide advance written notice of a “plant closing” or “mass layoff” to its employees and various governmental officials. Under WARN, a “plant closing” is the “permanent or temporary shutdown of a single site of employment . . . if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees…” A “mass layoff” is a reduction in force that results in an employment loss at a single site of employment during any 30-day period for at least 33 percent of employees and at least 50 employees, or at least 500 employees. Under WARN, employment losses as a result of a plant closing or mass layoff will be aggregated if the number of job losses reaches the threshold level during any 90-day period, unless the employer demonstrates that the employment losses are the result of separate and distinct actions. Depending upon the circumstances, even the sale of a business can trigger WARN’s notice requirements.