Docket Entries Since Last Update
NOTE: This court's RSS feed does not list MOTION entries, so Bloomberg Law cannot detect them and thus they will not be listed here. However, motions will be included if you update the docket.
Republished from Bloomberg BNA, Reductions in Force in Employment Law, 2nd Edition, 10.X. Recommended Analytic Approach.
Complying with the WARN Act and similar laws can be very difficult. Here is a recommended analytic approach:
Step One. Determine who the “employer” is.
Step Two. Determine if the employer is a WARN Act–exempt “small employer” or is otherwise exempt from the WARN Act.
Step Three. Determine the relevant employment “site,” “operating unit,” or “facility.”
Step Four. Determine whether a plant closing will occur (i.e., will 50 or more full-time or temporary employees suffer employment losses during the relevant period by reason of the closure of a site or an operating unit or facility at the site).
Step Five. Determine whether there will be a “mass layoff” at the site (i.e., will at least 50 or 33 percent (or 500) of the temporary, nontemporary, and non–part-time employees at the site suffer employment losses during the relevant period, other than as a result of a plant closing).
Step Six. Determine whether any of the following exceptions or defenses will be available.
• Layoffs occur too slowly to cause a plant closing or mass layoff
• Temporary project exception
• Strike/lockout exception
• Faltering company exception
• Unforeseeable business circumstances exception
• Natural disaster exception
• Sale-of-business exception
• Exclusion of nontraditional employees (e.g., consultants) precludes a plant closing or mass layoff
• Treating recently hired employees as part-time employees precludes a plant closing or mass layoff
• Bumping, job transfers, retraining, or search activities preclude a plant closing or mass layoff
• Recalls within six months preclude a plant closing or mass layoff
• Sovereign immunity exception
• Foreign site of employment exception
• No “functional job loss” exception
• Creative definitions of “site,” “facility,” and “operating unit” preclude a plant closing or mass layoff
• Pay-in-lieu-of-notice will be provided or a paid terminal leave of absence will be given
Step Seven. Determine whether collective bargaining agreements or state laws impose additional obligations.
If this analytic approach is too daunting, an employer can try to avoid or minimize WARN Act liability by using exit incentives, as discussed in Comment 10.15, below, or can avoid WARN Act liability altogether by limiting to 49 the number of non–part-time employees terminated other than for cause on any day at any site of employment, minus the number of non–part-time employees who were terminated at that site other than for cause in the preceding 89 days.
Comment 10.15 - Encouraging Voluntary Resignations to Minimize WARN Act Exposure
An employer confronted by a potentially troublesome WARN Act problem may be able to materially ameliorate its situation by encouraging employees scheduled for layoff to resign voluntarily instead, but its encouragement should not be coercive lest it convert voluntary resignations into constructive discharges. As the following example illustrates, encouraging voluntary resignations can reduce WARN Act notice–related costs dramatically.
An employer precipitously decides to implement a WARN Act–triggering layoff of 60 employees, which it would like to do without any notice. Unfortunately for the employer, no WARN Act notice exception applies. Therefore, the employer has only two basic alternatives. The first is to lay off employees without notice and either give them pay and benefits in lieu of WARN Act notice or face the prospect of being ordered by a court to do so. The second is to give the employees 60 days' notice of layoff, until which they will continue to perform their current jobs, be assigned other duties, or be placed on paid leaves of absence. All these alternatives have the same pay-and-benefits price tag, which the employer considers excessive because it really does not have anything further for the 60 employees to do. The employer therefore elects to offer exit incentives and other voluntary resignation inducements to these employees. It does so by including the following statements in its perfectly compliant WARN Act notice:
Your layoff is currently scheduled to occur 60 days after the date of this notice, but we reserve the right to accelerate or delay your layoff without advance notice. Until your layoff, you must continue to report to work on time on each of your regularly scheduled workdays, in accordance with and subject to our normal attendance, holiday, vacation, and leave of absence policies. If you fail to do so, you will be subject to discipline, including termination, in accordance with those policies.
We may not need you to work your regular hours from now through your layoff. Each workday, your supervisor will notify you whether you may leave work early that day. If you need to take time off from work to look for another job, notify your supervisor as much in advance as possible, and to the fullest extent practicable, he or she will permit you to take time off, with pay, to look for a new job.
We recognize that many of you may have good job opportunities and may be eager to move on. To thank you for your loyal services in the past and to help you to transition to new employment, we will pay you two weeks of pay in a lump sum if you resign within one week from the date of this notice and sign the general release agreement attached to this notice.
Whether or not you accept this buyout offer, we will do our best to help you find new jobs. Starting tomorrow, outplacement assistance will be available, and the day after tomorrow, we will be hosting a job fair. Your supervisor will give you more details about these two programs, which you definitely should utilize.
Before you begin another job at which you would be working during your regularly scheduled work hours for us (as in effect prior to this notice), you must first notify us and resign from our employment.
Thirty-nine employees accepted the lump sum exit incentive offer after five workdays. If these employees averaged $100 a day in pay and there were 42 workdays in the 60-day WARN Act notice period, the salary-only cost of giving WARN Act notice for these employees would have been $163,800 (39 × 42 × $100 = $163,800). In contrast, the salary-only cost of paying them exit incentives was only $58,500, which was the sum of 5 days of pay, for their employment between their notice of layoff and their exit incentive-plan-induced resignations, and 10 days of exit incentive-plan pay (39 × 15 × $100 = $58,500). Besides saving the employer about two-thirds of the salary cost of conventional WARN Act notice for employees who resigned under the program, this exit incentive approach also reduced their period of post-WARN Act notice benefit coverage from 60 days to 5 days.
Moreover, a number of the employees who did not resign under the exit incentive program commenced other employment before their layoff dates, which similarly reduced WARN Act notice–related costs. The employer had helped to enhance this (and to encourage exit-incentive-offer acceptance) by requiring employees to report to work throughout the notice period even if there would be nothing for them to do, by providing outplacement, by holding a job fair, by liberally offering employees time off to seek other employment, by reserving the right to accelerate or postpone layoffs, and by requiring employees to resign before accepting new non-moonlighting employment.
The WARN Act implications of the strategies described in this example have not yet been explicitly addressed by the courts, and the WARN Act Regulations provide little or no material guidance. There is a risk that prelayoff resignations to accept exit incentives or new employment might be considered constructive discharges, in which case constructively discharged employees might have been given inadequate WARN Act notice, for which a court might order damages.
Yet it seems unlikely that a court would consider the mere offer of exit incentives and job search assistance as effecting constructive discharges in that such offers advantage, rather than disadvantage, the recipients. In the WARN Act context, it seems counterintuitive to conclude that an employer that merely notifies its employees of their scheduled layoff is not constructively discharging them before their scheduled termination dates, but that the employer would be constructively discharging them by giving them such notice plus job search assistance or an exit incentive alternative. Moreover, treating voluntary resignations as constructive discharges could be a two-edged sword that, depending on the circumstances, might cause some or all of the WARN Act notice–related terminations to cease even to be subject to the WARN Act notice requirement. Further, even if voluntary resignations were constructive discharges for which insufficient WARN Act notice had been given, a court might well exercise its discretion to reduce WARN Act damages to zero for the post-voluntary resignation period. Finally, employees who accept exit incentives could—and should—be barred from seeking WARN Act damages by releases they are required to execute as a precondition to exit incentive entitlement.