In tough economic times, reductions in workforce are an unfortunate and sometimes unavoidable part of business. The federal Worker Adjustment and Retraining Notification Act (called “WARN” for short) applies to employers with 100 or more full-time employees and requires 60 days advance written notice of terminations that result from certain plant closings or mass layoffs. The advance notice is meant to give workers and their families a transition time to seek other jobs or enter training programs.

The two main triggering events under WARN are plant closings and mass layoffs. “Plant closings” include a temporary or permanent shutdown of an employment facility or particular work unit resulting in the employment loss of any 50 or more employees during any 30-day period. “Mass layoffs” include any employment loss at a single employment site during any 30-day period that results in either a reduction of at least 50 employees who make up at least 33% of the active workforce at that site, or a reduction of 500 or more employees. There is a very limited defense for failing to give 60 days notice if an employer can prove layoffs were the result of an “unforeseen business circumstance” or natural disaster. The courts have made proving this defense very difficult for employers.

The WARN Act also contains an aggregation rule that prevents employers from terminating several small groups of employees over a long period of time to avoid the notice requirements. Two or more groups of separations over any 90-day period can be counted together to trigger the WARN notice requirements. Be aware that any employment losses within any 90-day period might be added together to meet the WARN threshold levels, unless you can demonstrate that the separations were the result of separate and distinct actions and causes.

The WARN notice requirements only apply to layoffs at a “single site of employment.” For example, if you manage two facilities on opposite sides of town, those facilities are treated separately under WARN – layoffs at one site would not be counted with layoffs at the other. Also, WARN applies to the closing of a particular work unit within a single site of employment, not just the closing of the entire site.

Employees to be counted for WARN purposes include hourly and salaried workers, as well as managerial and supervisory employees. Part-time employees are not counted; this includes employees who have worked less than 6 of the last 12 months or who work an average of less than 20 hours a week. You also don’t have to count terminations for cause, voluntary departures, or retirements. Also, “employment loss” under WARN includes a 50% or more reduction in an employee’s hours of work during any 6-month period.

If the WARN act applies, you must provide 60-days written notice to the following: each affected employee or their bargaining representative; Oklahoma’s Dislocated Worker Unit; and the chief elected official of the unit of local government in the area where your closure or layoff will occur.

You must give the notice to all employees who you reasonably expect will be terminated because of the closing or mass layoff. Affected part-time employees need to be given notice even though they are not counted towards the threshold numbers triggering the notice requirement. The Act is specific about what the notices must contain and the required content depends on the recipient. You should consult the Act and the Department of Labor regulations to find out what should be specifically contained in each notice.

Failure to give the required notices may result in extensive liability to your company. Employees can recover pay and benefits for the period in which notice was not given, up to 60 days, and you may be subject to an additional civil penalty of up to $500 for each day of the violation.

If your company is considering a reduction in force, you should get advice as to whether the WARN Act applies and, if so, how you can best structure the reduction in force to minimize any legal risk.

By N. Lance Bryan, lbryan@dsda.com