Running Your Business

What Is the WARN Act? Here’s Everything Employers Need to Know

  • The WARN Act is designed to provide notice of mass layoffs or closures and help employees prepare

  • The act has exceptions, which are likely affected by the COVID-19 pandemic

  • The penalties for not following the act can be high

Posted by September 30, 2020

During the COVID-19 pandemic, the WARN Act has become more relevant than ever. But what is the WARN Act? First instituted in 1988, this act requires a certain amount of notice to be given to employees before a plant closure or a mass layoff, and it explains what circumstances qualify as exceptions.

There are stiff penalties for not following the WARN Act, so you’ll want to be aware of how it works and your obligations. To make this easier, we’re breaking down what the WARN ACT is, how it came to be, and what it requires from employers.

What Events Fall Under the WARN Act

The WARN Act is designed to help employees adjust to major forced transitions. Employers with 100 or more full-time workers must give a 60-day written notice about a qualified mass layoff or worksite closing. When they happen within a 30-day window, these events trigger the WARN act:

  • Closings of a facility or multiple facilities that affect at least 50 full-time workers.
  • Mass layoffs that affect 500 or more full-time employees at one site.
  • Mass layoffs of 50 to 499 full-time employees at one site if it accounts for 33% or more of the active workforce.

There are additional situations that trigger the WARN Act, such as temporary layoffs that last more than six months and when the hours of 50 or more full-time employees are reduced by at least 50% every month over six months. In addition to the federal requirements, some states have mini-WARN acts with additional requirements. Determining whether your event falls under the WARN Act can understandably be difficult, so consult your lawyer for help.

What the WARN Act Requires From Employers

If your event does qualify under the WARN Act, you must provide notice to affected employees (or sometimes a union representative) as well as your state’s Rapid Response Dislocated Worker Unit and its overseeing elected official. Violating the act can result in large penalties, including back pay and benefits, $500 for each day notice wasn’t given and more. So it’s best not to ignore the act.

Why the WARN Act Was Created

According to the United States Department of Labor, “The Worker Adjustment and Retraining Notification (WARN) Act helps ensure advance notice in cases of qualified plant closings and mass layoffs. The U.S. Department of Labor has compliance assistance materials to help workers and employers understand their rights and responsibilities under the provisions of WARN.”

When notice is given, the Rapid Response Dislocated Worker Unit coordinates with the employer to provide employment and retraining services before layoffs happen. This can include job placement assistance, on-the-job training, classroom or entrepreneurial training or referrals for basic education. These services can be extremely helpful to your employees if they are laid off.

Some Exceptions to the WARN Act

There are some exceptions to WARN, such as when:

  • Jobs or projects were temporary and employees were hired with this clear understanding.
  • Closings occur due to strikes or lockouts and not to evade the act.
  • Struggling companies seek capital in good faith and notice would’ve hurt their ability to do so.
  • Closings were unforeseeable and out of the employer’s control.
  • Natural disasters affect business operations.

The COVID-19 pandemic can make all of this a bit more complicated. For example, some companies experiencing pandemic-related challenges may qualify for the “seeking capital in good faith” or unforeseeable circumstances exceptions. Sit down with an attorney to discuss any questions you have about the WARN Act. That way, you can act accordingly and avoid potential penalties along the way.

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