Volume 7, No.2
Summer 2001

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The Worker Adjustment and Retraining Notification Act (WARN) part 2

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The Worker Adjustment and Retraining Notification Act: WARN
By: Bruce Bernardi

The Worker Adjustment and Retraining Notification (WARN) Act is a federal law which requires that employers with 100 or more full-time employees provide 60 days advance notification of plant closings and mass layoffs in order to protect workers, their families and communities. The first two months of 2001 have seen 54 notices affecting 10,906 workers. Please refer to Part 1 in the Spring issue for detailed information on employer responsibilities and coverage under the WARN Act. Note: For a copy of Part 1 of this article, please contact the editor or click here.

Here are more of the most commonly asked questions:

Q: How does WARN cover the sale of a business?

A: If the sale of a business does not result in any employment loss, no notice is required. However, if it does result in the threshold number* of employment losses, notice is required. The employer, as of the moment of the employment losses, is the entity responsible for actually giving notice. If the layoffs occur one day after the sale, and notice would have been required 59 days before the sale, the buyer is legally liable under the WARN Act, even though the buyer was not yet the employer at the time that notice would have been required.

*Threshold number: employment losses for 50 or more full-time workers within a 30-day period. For a complete discussion of threshold numbers, see Part 1, page 6 in the previous issue. (See Note in the first paragraph above to view Part 1 of the WARN article).

Q: What situations are excluded from WARN coverage?

A: The following three situations are excluded:

• Strikes and Lockouts
Under WARN, strikes and lockouts are not normally considered employment losses for the striking or locked out workers. However, the employer is required to give notice to other affected workers who suffer employment losses as a result of the strike or lockout. Additionally, an employer cannot shut down and circumvent the notice requirements by referring to the shutdown as a lockout. In an economic strike no notice is required if an employer permanently replaces strikers, but notice may be required if an employer tries unlawfully to replace “unfair labor practice” strikers.

• Employee Transfers
If the closing or mass layoff is a result of a relocation or consolidation, employers are excluded if an offer of transfer is made to the workers prior to the closing or layoff and the transfer is within a reasonable commuting distance with less than a six-month break in employment.

• Temporary Facilities
If workers are hired with the understanding that their employment is strictly temporary and limited to the fixed duration of the project, the employer is not required to give advance notice before laying them off. However, temporary workers may be counted toward the numerical threshold requirements in determining whether a covered mass layoff or plant closing has occurred. For example, if an employer closes a temporary project on which 10 permanent and 40 temporary workers are employed, a covered plant closing has occurred although only 10 workers are entitled to notice.

Q: When can the 60-day notice be reduced?

A: Under the following three conditions:

• Faltering Company
If a company can prove it was faltering and that:
a) It was actively seeking capital or business, in a commercially reasonable manner, as of the date that notice would have been required; b) There was a realistic likelihood that the capital or business would be forthcoming; c) The capital or business would have been sufficient to have avoided or postponed the shutdown; and, d) There was an objectively reasonable and good faith belief that giving the required notice would have precluded the employer from obtaining the capital or business. This is a narrow exception and applies only to plant closings, not mass layoffs. Also, the employer must be able to prove specifically the steps taken by the time notice would have been required.

• Unforeseeable Business Circumstances
If a company experiences circumstances such as a major contract loss or a dramatic and unexpected change in business conditions which could not have been reasonably foreseen at the time notice would have been required, the employer is only required to give as much notice as is reasonably possible. The employer must exercise such commercially reasonable business judgment as would a similarly situated employer.

• Natural Disasters
If a company experiences layoffs as a result of a natural disaster, such as a flood or earthquake, the period of notice can be reduced.

Q: How is WARN enforced?

A: The WARN statute provides that the only way to enforce the WARN Act is by filing a lawsuit in Federal district court in the district in which the employer’s facility is located, or in a district where the employer conducts business. The litigation may be initiated by one or more aggrieved workers, their union, or a unit of local government. The person bringing suit can do so on his own behalf, or for other persons similarly situated, or both.

Q: What impact does WARN have on union contracts?

A: WARN sets only a minimum threshold for advance notice. If a union contract requires less than 60 days notice, the specific WARN provisions control. If a union contract requires more than 60 days notice, the contract’s longer period applies. WARN does not supersede collective bargaining agreements requiring longer advance notice. The Act provides that the rights and remedies afforded under WARN are in addition to, and not instead of, any other rights that workers may have under a contract or any other statute.

Q: How can laid off workers get help?

A: One of the reasons that the WARN Act requires notice to the State Dislocated Worker Units is so that State Rapid Response Teams can begin providing the workers with information about accessible Federal re-employment and retraining programs before the actual dislocation has occurred (e.g., during the 60-day period after the notice but before the employment loss). The information provided during on-site Rapid Response can be used by the workers to decide which types of services they desire and to apply for the services before they are laid off. Services are provided through the local Illinois Employment & Training Centers (IETCs).

Q: Where can I get information about WARN notices which have been filed in Illinois?

A: The Illinois Department of Employment Security’s Web site contains monthly WARN listings in .pdf format for the previous two-year period. The site may be accessed at http://www.ides.state.il.us. In addition to the monthly WARN listings, the site contains a copy of the WARN federal regulations, also in .pdf format. Adobe acrobat reader is needed in order to view the information.