Firing replacement workers to allow striking employees to return is not a "mass layoff" under WARN Act.
The Worker Adjustment and Retraining Notification (WARN) Act requires a 60-day notice to employees before a “mass layoff” can take place. A mass layoff is a reduction in force which is not the result of a plant closure, but which results in an employment loss of at least 50 full-time employees at a single site. While the WARN Act does not specifically define “workforce reduction,” federal courts have determined that an employee is part of such reduction when that employee is not replaced after layoff or discharge. The 8th U.S. Circuit Court of Appeals relied on that interpretation of the term “workforce reduction” when it determined that 111 replacement workers - who ultimately were fired to allow a company’s original employees to return from strike - were not entitled to a 60-day mass layoff notice prior to their firings.
Employee Resignations after Employer Announced Business Closing "Not Voluntary Departures" under Federal WARN, Appeals Court Rules
Employees who stopped reporting to work after their employer announced it would close in 12 days if it did not find a buyer for the business have suffered an “employment loss” under the federal Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. §2101 et seq., the federal appeals court in San Francisco has determined.
Ninth Circuit: WARN Act Opinion
The WARN Act requires companies to give at least 60 days' notice of shutdowns and mass layoffs that affect a certain number of people. For example, to be covered, a "mass layoff" must involve an "employment loss" for a group comprised of at least 50 employees who constitute at least 1/3 of the workforce.
Employees who stop coming to work because business is closing are entitled to 60-day notice under the WARN Act.
The Worker Adjustment and Retraining Notification (WARN) Act states that an employer cannot order a plant closing or mass layoff that will affect 50 or more employees without a 60-day written notice to each affected employee. An affected employee is someone who is expected to experience an employment loss as a result of the closure or layoff. For purposes of the WARN Act, an employment loss is an employment termination, other than a discharge for cause, voluntary departure, or retirement. . . . The 9th U.S. Circuit Court of Appeals has held that a group of employees who stopped reporting to work after the owner of the automobile franchise for whom they worked informed them that he would be closing its doors in two weeks did not fall within the voluntary departure exception to the WARN Act and, therefore, were not provided with the requisite 60-day notice of business closure.
A warning for parent corporations subject to the WARN Act (pdf).
The federal Worker Adjustment and Retraining Notification Act (WARN
Act) generally requires covered employers to provide 60 days' notice of a
plant closing or mass layoff. Failure to comply with the requirements of
the Act may subject employers to substantial liability. Furthermore, a
recent decision by Delaware's federal court reminds parent corporations
that they may also be liable for damages under the WARN Act if a
subsidiary lays off employees in a manner that violates the statute.
Drastic Changes to WARN Contemplated in "Forewarn Act" Bill.
Both houses of Congress have introduced bills that would amend drastically the Worker Adjustment and Retraining Notification Act, the federal law that requires employers to provide at least 60 calendar days advance written notice of plant closings and mass layoffs. The proposed Federal Oversight, Reform, and Enforcement of the WARN Act (Forewarn Act) not only would increase the number of employers subject to WARN and increase the number of entities and individuals who must receive WARN notices, but also would require employers to provide 90 days of WARN notices, instead of 60, prohibit waivers of WARN rights unless supervised by the U.S. Department of Labor or the attorney general of a state, and create an administrative enforcement scheme in addition to the existing judicial enforcement scheme, giving the DOL the authority to investigate and prosecute alleged WARN violations.
A WARN Act Refresher Course.
As the steady drumbeat of grim economic news continues, more and more employers are forced to face the unpleasant prospect of laying off valued employees to survive. When times are tough, the last thing a struggling business needs is a class-action lawsuit claiming that the former employees are entitled to 60 days' additional pay under federal or state law.
Fair WARNing for These Harsh Economic Times.
As this Bulletin went to press, the Dow Jones Industrial Average was below 6700, and approximately 6.5 million people are currently unemployed. Given the dire state of our economy, this appears to be an opportune time to review employer obligations under the federal Worker Adjustment and Retraining Notification Act.
Unforeseen Business Circumstances May Relieve Company of WARN Obligation.
The federal Worker Adjustment and Retraining Notification (WARN) Act generally requires that companies of 100 or more employees provide advance notice of plant closings. The purpose of such notice is to allow employees some time to adjust to the prospective loss of employment, and to seek other jobs or retraining. The WARN Act requires 60 days written notice before a closing or mass layoff by covered employers. Companies that violate the Act are liable for back pay and benefits for each day that the required notice is not provided, up to a 60 day maximum.
Federal Court Finds Employer Not Liable for Sudden Layoff under WARN.
An employer satisfied the unforeseeable business circumstances exception under the Worker Adjustment and Retraining Notification Act (WARN) when it implemented a layoff just days after losing its biggest customer, the federal appellate court in Denver has held. Gross v. Hale Halsell Co., No. 08-5028 (10th Cir. Jan. 20, 2009). WARNs unforeseeable business circumstances exception applied because the customers withdrawal, and the attendant 40 percent loss in potential business, was not reasonably foreseeable, the Court concluded, affirming a lower courts grant of summary judgment for the employer.
