During Layoffs, Remember to Give Fair WARNing
Security Management has partnered with SHRM to bring you relevant articles on key workplace topics and strategies.
When conducting large-scale layoffs, U.S. employers must follow the federal Worker Adjustment and Retraining Notification (WARN) Act, which protects workers from the impacts of suddenly and unexpectedly losing their jobs without notice.
The WARN Act requires employers who meet certain criteria to give a minimum 60-day notice of mass layoffs or plant closings.
State-sponsored IP theft is on the rise. Read how Strider used open-source intelligence to identify the PRC’s plans to leapfrog competitors and advance its quantum technologies.
Employers subject to the law have at least 100 employees who work at least 4,000 hours a week, collectively. Employers must provide this 60-day notice if closing a facility will eliminate the jobs of at least 50 workers, or at least 500 employees who’ve worked at a single worksite for 30 days. Workers covered by the WARN Act must work, on average, 20 hours a week.
In addition, a “mass layoff” must happen at a single location. For example, a company with headquarters in Seattle, Washington, and employees stationed across the country wouldn’t necessarily have to provide notice of a pending layoff.
The WARN Act, which took effect in 1989, is designed to prevent a large number of people in the same community from being suddenly unemployed, which puts economic strain on a region. A 60-day notice gives those employees time to find new jobs.
However, many leaders forget they need to comply with it, says George Morrison, an attorney with Buchanan Ingersoll Rooney in Philadelphia, Pennsylvania.
“When a company finds itself in financial distress and has to lay off a group of workers, many decisions are being made by higher-level executives, and a number of times they don’t go about this in a coordinated or planned way,” Morrison says. “People sort of get tunnel vision and lose sight of what their legal obligations may be, and then they get hit with a lawsuit on the back end.”
Five former employees of Twitter brought a class-action lawsuit against the company in early November, claiming Twitter violated the WARN Act when it laid off half of its workforce (3,700 employees) without the required 60-day warning.
The financial penalties for not complying with WARN are stiff, Morrison says.
“Probably the biggest one is that, if it’s determined that a notice wasn’t issued, employees will be entitled to payment of wages during [the 60-day] period,” he says. “When you take that across a group termination, depending on the size of the company, the cost can become very substantial.”
If employers compensate workers with this back pay—as well as benefits—they can avoid fines, which could amount to $500 for each day of the violation.
Dana Wilkie is a freelance writer based in Ormond Beach, Florida.
© 2023 SHRM. This article is reprinted from SHRM.org with permission from SHRM. All rights reserved.