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March 30, 2020 | Covid-19From the blog

Are You an Employer Covered by the WARN Act? Three Questions to Consider.

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As the current coronavirus crisis unfolds, many employers are forced to consider laying off their staff, particularly those in the hospitality, wellness and event industries.  Before you alert your team to the new reality, employers should determine whether they are covered by federal and state-level WARN laws. 

For background, Congress passed the WARN Act in the late 1980s to mandate workers receive notice prior to mass layoffs or closing.  The federal law covers businesses with 100 or more full-time workers – not including those who work less than 20 hours per week or have been employed for less than 6 months – that are laying off at least 50 people at a single site of employment.  For workers who primarily travel, the single site of employment is the home base where their employer assigns work.  

If an employer triggers the WARN Act, they must give their employees sixty days written notice prior to termination.  In New York, that notice requirement is extended to 90 days.  An employer who fails to give proper notice could be liable for back pay for each day of non-compliance, and the employer could be susceptible to a civil penalty of $500 per day of violation. In order to ensure compliance, an employer should consider whether their layoff triggers WARN, whether the terminated employees are eligible under WARN, and whether the employer is experiencing circumstances that exempt it from the notice requirement. 

Does the Scope of the Layoff Trigger WARN?

There are multiple layoff scenarios that can trigger WARN in New York.  One is when an employer closes a facility or terminates an operating unit permanently or temporarily, which affects at least 25 employees.  A business can also trigger WARN by laying off 250 employees at a single site during a 30-day period.  Additionally, WARN is triggered if a business lays off between 25 and 249 employees within 30 days and that number constitutes 33% of the total active workforce at a single site of employment. 

Are the Terminated Employees Eligible Under WARN?

Whether WARN applies is heavily determined by the number of employees that have been laid off, but it’s important to note that not all employees are included in these counts.  For instance, part-time employees (workers who average less than 20 hours per week) are generally not counted, nor are employees who retire, resign or are terminated for cause.   Other circumstances include when an employee is merely being transferred to a different job site, provided the transfer does not result in more than 6 months of unemployment and the commute is still reasonable.  This is not an exhaustive list, but employers should generally be aware that not every employee is factored in the equation.

Is My Business Experiencing Circumstances Which Exempt it from WARN?

A business may also be exempt from WARN’s notice requirement in certain circumstances. However, even when these circumstances apply, the employer must still provide notice as soon as practicable and the employer must provide a statement of the reason for reducing the notice requirement time frame to the terminated employees. In New York State, those exceptions are:

  • A faltering company, where a company reasonably believes that providing more notice would have precluded their ability to close on pending capital or business;
  • unforeseeable business circumstances, where circumstances that were not reasonably foreseeable caused the layoff such that the required notice could not be given; or
  • a natural disaster, where the layoff the direct result of a natural disaster such as flood, earthquake, drought storm, tidal wave, or similar effect of nature.

Overall, it’s important to determine the scope of the layoff and whether your business must subsequently comply with federal and state WARN Act notice requirements.  However, employers should note that certain employees do not fall within the scope of the WARN Act and that there are exceptions in the wake of certain circumstances. 

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Tags:  employment law,  WARN Act
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