The Warn Act of 1989

The Worker Adjustment and Retraining Notification Act, or WARN Act, was enacted on August 4, 1988 and was made effective on February 4, 1989 (www.doleta.gov). The WARN Act is a requirement put in place that mandates companies to provide sixty days written notice to employees affected by either plant closings or mass layoffs. This includes both salaried and hourly workers, as well as managers and supervisors. In the case of a unionized workplace, the notice must be provided to the union representative. The written notice must also be submitted to the state dislocated worker unit and the appropriate local government unit. The companies are covered under WARN if they have more than 100 employees excluding those who have worked less than six months out of the last twelve, or employees who work an average of less than twenty hours per week (www.doleta.gov). All types of companies are subject to the act with the exception of Federal, State and local government agencies that provide public services.

The Purpose of WARN
The intent of the WARN Act passed by Congress was attempt to maintain economic stability in a given geography. As we are now extremely aware, an employed population is one that spends, thus helping maintain a healthy economy. WARN allows employees and their family sufficient time to prepare for and find jobs in the case that their current employment is ending. This could include assisting the soon to be displaced employees with locating job openings, or giving them access to new career training prior to the actual job loss.

Triggers for WARN
There are two main occurrences that trigger the need for WARN compliance. The first one is a facility closure or discontinuation of an operating unit. In this instance, if the aforementioned event results in the layoff of at least 50 employees, excluding part-time employees, WARN would need to be followed. The second incident that would require compliance to WARN is a mass layoff of 500 or more workers at a single site within thirty days. The same treatment is to be given in the case of lay-offs of 50-499 employees excluding part-time, if the total number affected is equal to or greater than thirty three percent of the total active workforce (www.doleta.gov).

Exceptions to WARN
In addition to the thresholds listed above not being met, there are some circumstances that would not activate the need for WARN. The first category covered as exceptions surround unpredictable reasons for the workforce reduction. The three such reasons are faltering company, unforeseeable business circumstances, and natural disaster. The faltering company is only applicable when the act of giving the notice to employees could jeopardize sought after new capital or business and is reserved for plant closings. The unforeseeable business circumstances exemption applies to both site closings and mass layoffs, but only comes into play when the circumstances were not reasonably predictable or anticipated. Finally, natural disaster only applies when a closing or layoff is the direct result of a natural disaster. All of these exemptions leave the burden of proof that any of these conditions have been met on the employer, and they are still expected to give written notice as soon as is practical.

The next area of exceptions involves something that can be foreseen. There are two areas that qualify as an exception. The first is when the layoffs or closure surrounds a temporary project or site where the employees have been given the clear notification upon hire that their employment will be terminated upon project completion. The second reason WARN would not be triggered in this area is if the closure is a direct result of a lockout or strike. The reasons, however, can not be used for the purpose of avoiding WARN.

Federal versus State Regulations
States are given the leeway to modify WARN as they see fit, but the Federal requirements are always the minimum. Two examples of the different approaches that states take can be seen by comparing New York and Connecticut. Connecticut simply mirrors the Federal guidelines (www.ctdol.state.ct.us), while New York goes a step beyond. On February 1, 2009 they extended the required notice period to ninety days while reducing the number total number of employees to fifty and the layoff threshold number to twenty-five (www.labor.state.ny.us). Each individual state’s guidelines can be found on their Department of Labor website and must be complied with in a company’s state of operation.

The Impact of WARN on the Workplace
WARN has a profound impact on the workplace from a company’s perspective. As companies contemplate the current trend of outsourcing work overseas or even within the United States, they must plan ahead to make sure they are not subject to litigation when deciding on their business case. Company leaders must also take into consideration the potential loss of productivity of a workforce that knows they are coming to the end of their tenure with a firm. How will this impact their customer experience when dealing with a potentially unmotivated workforce? What impact will this have on the company’s reputation once the closure and layoffs are known and on public record 60 or more days before they occur? Will this impact the customers comfort level with the company’s services or products?

WARN has a different impact on the employee. It allows a certain level of comfort in knowing that if a company decides to make a substantial change in its operations, they will be provided the notice and the resources to prepare them for the next leg of their career. The act can soften the impact of such a dramatic change. It mandates a certain level of accountability for company leaders to their employees, or at least make a fair effort to forewarn the employees that they will be experiencing a major life change in the near future. It also removes the uncertainty of rumors surrounding a potential layoff or closure with an actual statement in writing that the changes are going to occur.

Violations and Penalties
Violations to WARN would include not being compliant to your state’s provisions if your company meets any of the criteria set forth above in the “Triggers for WARN” section. There are costly penalties for violating the WARN Acts include liability to each aggrieved employee who experiences an employment loss as a result of the mass layoff or plant closing. An employer is liable for a maximum of 60 days of back pay and benefits payable to each impacted employee. If there are a substantial number of such employees, then the dollar amount of penalties could be quite high. In addition, failure to notify the required governmental entity may result in a penalty of up to $500 per each violation day (www.doleta.gov).

The Role of Human Resources with WARN
All employees are affected when it comes to a major change in the operations of their firm. This is especially true when that shift involves layoffs and site closures. The government sanctions for not complying with WARN combined with the potential unrest amongst the employees, both those losing their employment as well as those who do not, clearly dictate that Human Resources needs to be highly leveraged in the decision process. Human Resources needs to be there to make sure at a minimum that the guidelines surrounding compliance to the WARN Act are met. They must be involved while the company weighs potential repercussions and impact on the business case. In essence, they need to be involved every step of the process to mitigate against any potential legal proceedings that may ensue, as this decision is likely to solicit a very emotional response from the affected employees. In this litigious society, some people unfortunately will always turn to lawsuits. Companies need to make sure that they follow the guidelines precisely to eliminate their exposure to such actions. HR will also be the likely recipient of the fallout of the displaced as well as the remaining employees. As such, they would need to fully understand the decision process so they can converse openly with the employees.

The Future of WARN
Currently there has been Legislation introduced to reduce the triggers of WARN from a Federal front. On May 1, 2009, the Alert Laid-Off Employees in Reasonable Time (ALERT) Act would expand from the current single site limitation to include all of the employer’s operations (hrpolicy.org 2009). This would mean small handfuls of employment losses at several facilities located miles away from each other could constitute continuous “mass layoffs” for large corporations. As of the writing of this paper, it has not been passed as it is very recent.

References

www.ctdol.state.ct.us. Retrieved May 2, 2009 from
http://www.ctdol.state.ct.us/progsupt/bussrvce/rrwarn.htm

www.doleta.gov. Retrieved May 2, 2009 from
http://www.doleta.gov/programs/factsht/warn.htm

www.hrpolicy.org (2009). Retrieved May 2, 2009 from http://www.hrpolicy.org/portal_story.aspx?GID=204&SID=705

www.labor.state.ny.us. Retrieved May 2, 2009 from
http://www.labor.state.ny.us/workforcenypartners/warn/warnportal.shtm

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