The WARN Act

What Is the WARN Act?

The WARN Act generally requires covered employers to provide at least 60 calendar days of written notice before certain plant closings and mass layoffs.

Advance notice can give workers time to prepare for losing their jobs, apply for unemployment benefits, look for other work, arrange health-insurance coverage, and use available workforce services.

However, WARN is not a general severance law. It does not guarantee every laid-off worker 60 days of notice or 60 days of pay.

Why Was the WARN Act Created?

Congress enacted WARN to give workers, families, and communities more time to prepare for the disruption caused by large-scale job losses.

Advance notice also allows state and local workforce agencies to begin offering employment, training, and other transition services before or shortly after workers lose their jobs.

When Did It Become Law?

President Ronald Reagan allowed the WARN Act to become law without his signature on August 4, 1988. It was enacted as Public Law 100-379 and took effect on February 4, 1989.

The law is now found at 29 U.S.C. §§ 2101–2109. Federal WARN regulations are found in 20 C.F.R. Part 639.

Which Employers Are Covered?

Federal WARN generally applies to a business enterprise that employs either:

• 100 or more employees, not counting employees classified as part-time under WARN; or
• 100 or more employees, including part-time employees, who collectively work at least 4,000 hours per week, not counting overtime.

For WARN purposes, an employee is considered part-time if the employee:

• averages fewer than 20 hours of work per week; or
• has worked for the employer for fewer than six of the 12 months before notice would be required.

This definition can classify a recently hired full-time worker as “part-time” for WARN counting purposes. It does not necessarily describe the worker’s normal schedule or the employer’s internal classification.

Covered employers may include private for-profit businesses, nonprofit organizations, and certain public or quasi-public entities that operate commercially and function separately from the government.

Regular federal, state, and local government agencies that provide public services are generally not covered as employers under federal WARN.

Which Closings and Layoffs Are Covered?

Meeting the employer-size requirement is only the first step. The closing or layoff must also meet one of WARN’s event thresholds.

Plant closing

A plant closing generally occurs when an employer permanently or temporarily shuts down a single site of employment, or a facility or operating unit within that site, and the shutdown causes an employment loss for at least 50 employees during a 30-day period.

Employees classified as part-time under WARN are not counted toward the 50-worker trigger.

A “plant closing” does not necessarily mean an entire factory or company must close. The shutdown of a distinct facility, department, product line, or operating unit at one employment site may qualify.

Mass layoff

A mass layoff generally occurs when a workforce reduction is not caused by a plant closing and results in an employment loss at a single site during a 30-day period involving:

• at least 50 employees, when those employees make up at least 33% of the active workforce at that site; or
• at least 500 employees, regardless of what percentage of the site’s workforce they represent.

Employees classified as part-time under WARN are not counted when determining whether these thresholds have been reached.

What counts as an employment loss?

Under federal WARN, an employment loss generally includes:

• termination of employment for a reason other than discharge for cause, voluntary departure, or retirement;
• a layoff expected to last longer than six months; or
• a reduction in work hours of more than 50% during each month of a six-month period.

Certain transfers, relocations, strikes, lockouts, temporary projects, and other situations are treated differently under the law.

What Is a “Single Site of Employment”?

Many WARN calculations are based on job losses at a single site of employment, not across the entire company.

A single site may be one location or a group of nearby locations that share staff, equipment, or an operating purpose. Separate facilities owned by the same company are not automatically treated as one site.

This rule can leave workers at geographically scattered locations outside WARN even when a company eliminates a large number of jobs nationwide.

Remote workers

The regulations were written long before large-scale remote work became common.

For employees whose duties involve travel or work outside the employer’s regular sites, the regulations generally look to the location:

• assigned as the employee’s home base;
• from which the employee’s work is assigned; or
• to which the employee reports.

How that rule applies to a particular remote worker can depend heavily on the worker’s actual reporting structure and job arrangements. A home address is not automatically the worker’s WARN employment site.

Can Layoffs in Different Rounds Be Combined?

Sometimes.

Separate employment losses within a 90-day period may be combined if, together, they meet the WARN thresholds. An employer may avoid combining them if it can show that the separate reductions resulted from separate and distinct actions and causes and were not an attempt to evade WARN.

This is one reason workers should document multiple layoff rounds, even when each round appears too small to trigger WARN on its own.

The law’s aggregation rule does not mean that every layoff anywhere in the company over 90 days is automatically combined. The single-site rules and other WARN definitions still matter.

Who Must Receive Notice?

When WARN applies, the employer generally must send written notice to:

• affected employees who are not represented by a union;
• the representative of affected unionized employees;
• the state dislocated worker unit; and
• the chief elected official of the appropriate local government.

Part-time employees and recently hired employees may still be entitled to receive notice when they are affected by a covered event, even though they may not be counted when determining whether some WARN thresholds have been met.

Employees on leave may also be entitled to notice if they have a reasonable expectation of returning to work.

What Should the Notice Tell Workers?

A WARN notice sent directly to an affected employee generally should explain:

• whether the closing or layoff is expected to be permanent or temporary;
• whether the entire facility will close;
• the expected date the closing or layoff will begin;
• the employee’s expected separation date;
• whether bumping rights exist; and
• the name and telephone number of a company representative who can provide more information.

Additional information is required in notices sent to unions, state agencies, and local government officials.

Exceptions That May Allow Less Than 60 Days’ Notice

Federal WARN recognizes three situations in which an employer may be permitted to give fewer than 60 days of notice.

These exceptions do not automatically erase the notice requirement. The employer must generally provide as much notice as practical and explain why the full notice period was shortened.

Faltering company

This exception applies only to a plant closing, not a mass layoff.

At the time notice would have been required, the employer must have been actively seeking capital or new business that could have prevented or postponed the shutdown. The employer must also have reasonably and in good faith believed that giving notice would have prevented it from obtaining that capital or business.

Unforeseeable business circumstances

This exception may apply when the closing or layoff was caused by business circumstances that were not reasonably foreseeable when the 60-day notice would have been due.

The test is not simply whether the company describes an event as unexpected. The circumstances generally must involve a sudden, dramatic, and unexpected condition outside the employer’s control, such as an abrupt cancellation of a major contract or an unexpected government-ordered closing.

Natural disaster

This exception may apply when a plant closing or mass layoff directly results from a natural disaster, such as a flood, earthquake, drought, storm, or similar event.

When a natural disaster contributes to a closing or layoff but is not its direct cause, a different WARN exception may need to apply.

Other Situations in Which WARN May Not Apply

WARN generally does not apply when:

• a temporary facility closes and the workers were hired with the understanding that the work would be temporary;
• a specific project ends and the workers were hired knowing their employment was limited to that project;
• a plant closing or mass layoff results from a strike or lockout that is not intended to evade WARN; or
• a temporary layoff is expected to last six months or less and does not otherwise meet the definition of an employment loss.

A temporary layoff can become an employment loss if it is later extended beyond six months. The timing, reason for the extension, and notice provided at that point can affect whether WARN has been violated.

Is Pay in Lieu of Notice Allowed?

WARN does not formally replace its written-notice requirement with a “pay instead” option.

An employer that dismisses workers without notice and then provides 60 days of pay and benefits may still have technically violated the notice requirement. However, voluntary payments may offset the damages the workers could otherwise recover under WARN.

Payments already required by another law, employment contract, company policy, or established practice may not qualify for the same offset.

In plain English: an employer may be able to satisfy most or all of its financial liability by paying workers after failing to provide notice, but that is not the same as properly complying with the law.

What Happens When an Employer Violates WARN?

A covered employer that fails to provide required notice may be liable to affected workers for:

• back pay for the period of the violation, up to 60 days; and
• the cost of certain benefits the worker would have received during that period, including some medical expenses caused by the loss of an employee benefit plan.

Courts have not all calculated WARN back pay in exactly the same way.

An employer that fails to notify the proper local government may also face a civil penalty of up to $500 for each day of the violation. That penalty may be avoided if the employer pays its liability to affected workers within three weeks after the closing or layoff.

A court may award reasonable attorney’s fees to the prevailing party.

The U.S. Department of Labor provides WARN guidance, but it does not investigate individual WARN complaints, issue violation findings, or file lawsuits for affected workers. WARN is generally enforced through private lawsuits in federal court brought by workers, their representatives, or units of local government.

Why Are So Many Layoffs Not Covered?

Federal WARN was designed to cover specific large-scale employment losses. Its definitions leave many workers outside the law.

Common reasons include:

• the employer is too small to be covered;
• fewer than 50 countable employees lose their jobs at a single site;
• a layoff of 50 to 499 workers does not affect at least 33% of the active workforce at that site;
• job losses are spread among separate employment sites;
• employees are excluded from the trigger calculations because of their hours or length of employment;
• a temporary layoff or reduction in hours does not meet WARN’s definition of an employment loss;
• separate layoff rounds do not qualify for aggregation under the 90-day rule;
• the workers were hired for a temporary facility or limited-duration project; or
• the employer qualifies for an exception allowing reduced notice.

The WARN Act does contain a rule intended to prevent employers from dividing one larger layoff into smaller rounds simply to avoid the law. Whether separate rounds must be combined depends on the timing, locations, causes, and facts surrounding the reductions.

How State WARN Laws May Provide Additional Protection

Some states have their own layoff-notice laws, often called mini-WARN laws.

Depending on the state, these laws may:

• cover smaller employers;
• apply to layoffs affecting fewer workers;
• use different rules for counting employees or locations;
• require more than 60 days of notice;
• impose additional penalties; or
• require severance under certain circumstances.

State requirements vary considerably and can change. Workers should check the law in the state where they worked rather than assuming the federal rules are the only rules that matter.

Official Sources and Further Reading

• U.S. Department of Labor: WARN Act Compliance Assistance
• U.S. Department of Labor: WARN Employment Law Guide
• U.S. Department of Labor: WARN Advisor Frequently Asked Questions
• Federal WARN Regulations, 20 C.F.R. Part 639
• Federal WARN Statute, 29 U.S.C. §§ 2101–2109
• Public Law 100-379, enacted August 4, 1988