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Editor's Note: WARN's basic notice requirement provides that an employer cannot order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of the plant closing or mass layoff to: (1) each representative of the affected employees or, if there is no such representative, to each affected employee; and (2) the state, or an entity designated by the state, and the chief elected official of the local government unit within which the plant closing or mass layoff is to occur.
Adapted from Corporate Practice Portfolio Series 42-2nd, Reductions in Force by Kathy Davidson Ireland
• Employer is defined as a business enterprise that employs: (1) 100 or more employees, excluding part-time workers; or (2) 100 or more employees, including part-time workers, whose total weekly work hours (exclusive of overtime) exceed 4,000 hours. Two or more affiliated companies may be considered a single business enterprise for WARN Act purposes.
Comment: Treatment as part of the same employer or as separate employers depends on the degree of independence of the subsidiary. Factors to be considered include: (1) common ownership, (2) common directors and/or officers, (3) de facto exercise of control, (4) unity of personnel policies emanating from a common source, and (5) the dependency of operations.
• The WARN regulations provide that, although “employer” may include nonprofit business enterprises, the definition of “employer” does not extend to federal, state or local governments or to federally recognized Indian tribal governments. If a public or quasi-public entity, however, engages in business, is organized separately from the government, has its own governing body, and has independent authority to manage its personnel and assets, that entity may be a covered “employer.”
• Affected Employee is defined as an employee suffering an employment loss or who may reasonably be expected to experience an employment loss as a consequence of the proposed plant closing or mass layoff. This includes employees who are likely to lose their jobs because of other employees' exercising bumping rights or other factors and who can be identified at the time notice is given.
• Plant Closing is defined as the shutdown, even if temporary, of a “single site of employment,” or one or more operating units within that site, if, during any 30-day period, 50 or more workers (excluding part-time employees) experience an employment loss at that site.
Comment: A particular department can constitute an operating unit within the meaning of WARN if it has its own managers, separate budget, and separate workforce. See Pavao v. Brown & Sharpe Mfg. Co., 844 F.Supp. 890, 893–95 (D.R.I. 1994).
• Mass Layoff is defined as a reduction in force that is not the result of a plant closing and that results in an employment loss at a “single site of employment” during any 30-day period for (1) at least 33% of the employees (excluding part-time employees), and (2) 50 or more workers (excluding part-time employees). If 500 or more employees (excluding part-time employees) are affected, the 33% requirement does not apply.
Comment: Employment losses for two or more groups at a single site of employment during a 90-day period may be aggregated under certain circumstances.
• Temporary Employment - WARN specifically provides that it does not apply to a shutdown or layoff resulting from completion of a particular project, if the employees affected by such events were hired with the understanding that their employment was so limited. The WARN Regulations discussing the “temporary employment” exemption provide that, for the exemption to be applicable, employees “must clearly understand at the time of hire that their employment is temporary.” The WARN Regulations place the burden of proof for this exemption on the employer.
Comment: WARN Regulations suggest that evidence of employees' understandings at the time of hire may be found in employment contracts, collective bargaining agreements or industry practice.
• Employment Loss is defined as an employment termination (other than a discharge for cause, a voluntary departure or a retirement) or a layoff longer than six months, or a greater than 50% reduction in work hours during each of six consecutive months.
Comment: An employee departing a business because that business is closing has not “voluntarily departed” within the meaning of the Act.
However, an employee does not suffer an “employment loss” if two conditions are met. First, the shutdown or layoff must be caused by a relocation or consolidation, in whole or in part, of the employer's business. Second, before the shutdown or layoff, the employer must offer to transfer the employee either to a new employment site within a reasonable commuting distance or to any new employment site, regardless of location, and the employee must accept the offer within 30 days of the offer or of the closing or layoff, whichever is later. The employer's offer to transfer must involve no more than a six-month break in employment.
• Single Site of Employment is defined in the WARN regulations as “either a single location or a group of contiguous locations” or separate buildings or areas “in reasonable geographic proximity, used for the same purpose, and shar[ing] the same staff and equipment.”
Comment: The preamble to the final WARN Regulations provides that the term “single site of employment” should be construed narrowly and that only rarely would geographically separate facilities constitute a “single site of employment.”
• 60-Day Period refers to calendar days, not work days. This period may be shortened in two primary circumstances: the “faltering business” exception,
Comment: An employer may give less than 60 days' notice of a shutdown if, when notice would have been required, the employer was actively seeking business or capital through any commercially reasonable method that would allow the employer to avoid, at least for the time being, a shutdown, and the employer had a reasonable, good faith belief that giving the required notice would preclude it from successfully obtaining the sought-after business or capital.
Comment: An employer may give less than 60 days' notice of a shutdown or mass layoff if such shutdown or layoff was caused by business circumstances that were not reasonably foreseeable to the employer when notice would otherwise have been required. The WARN Regulations provide that a business circumstance is not reasonably foreseeable if it was caused by a sudden or unexpected action that was outside the employer's control.
• Notice pursuant to WARN must be in writing, and it must be specific, based on the best information available to the employer at the time the notice is served. Three separate types of notice, as discussed here, may be required.