As the coronavirus pandemic continues to evolve, employers needing to close facilities or lay off employees permanently or temporarily until the outbreak subsides will need to be aware of the various federal and state laws impacting their decisions.
What is the WARN Act?
The Worker Adjustment and Retraining Notification (WARN) Act is a federal law requiring “covered employers” to provide notice to employees, unions and certain government entities when they need to lay off larger numbers of employees. The purpose of the WARN Act is to give employees time to prepare for the prospective loss of employment and to seek a new job. Certain exceptions are permitted for unforeseeable circumstances and natural disasters (see below).
Who is a “covered employer” under the federal WARN Act?
Employers with 100 or more employees are covered under the federal WARN Act. Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities that operate in a commercial context and are separately organized from the regular government. Federal, state, and local government entities that provide public services are not covered.
How do employers count the number of employees?
The federal WARN Act provisions do not count “part-time workers,” defined as employees who have worked less than 6 months in the last 12 months or employees who only work an average of fewer than 20 hours a week.
What type of notice does the federal WARN Act require?
Covered employers must provide advance written notice of at least 60 calendar days of their intention to implement a plant closing or a mass layoff, defined as follows:
- Plant closing means a permanent or temporary shutdown of a single site, or one or more facilities or operating units within a single site, resulting in job loss for 50 or more employees (not counting part-time workers) during any 30-day period.
- Mass layoff means a reduction in force not resulting from a plant closing, but resulting in job loss at a single site during any 30-day period for 500 or more employees (not counting part-time workers), or 50 to 499 employees (not counting part-time workers) if the laid-off employees make up at least one-third of the employer's active workforce.
If a covered employer, who is entitled to the notice?
Employees entitled to notice include hourly and salaried employees, as well as managers and supervisors. Notice must also be given to employees' representatives, the local chief elected official, and the state dislocated worker unit.
What if the reason for the closing or layoff is an emergency or unforeseeable circumstance in less than 60 days?
The federal WARN Act allows for exceptions due to “unforeseeable business circumstances” or a “natural disaster.” Unforeseeable circumstances include when the closing or mass layoff is caused by “sudden, dramatic, and unexpected action or conditions outside the employer's control.” Natural disasters expressly include “flood, earthquake, drought, storm, tidal wave, or similar effects of nature.” If these exceptions apply, notice must be provided as soon as is practicable and the employer must provide a statement of the reason for the less than 60-day notice in addition to meeting the other notice requirements.
Does a pandemic such as COVID-19 qualify as an “unforeseeable business circumstance” or “natural disaster?”
Although pandemics are not specifically addressed in the WARN Act, we are dealing with a globally-recognized pandemic and public health crisis. Because federal WARN compliance will be reviewed by the courts on a case-by-case basis, employers may need to prove a lack of foreseeability. The Department of Labor recommends that employers claiming such exceptions review the regulations and document their reasons. Even with an exception, however, covered employers must still give the required notice as soon as is practicable.
For additional information, please review the WARN Employers Guide to Advance Notice of Closings and Layoffs
What applicable states have ‘mini-WARN’ laws?
Minnesota does not have a ‘mini-WARN’ law covering plant closings and mass layoffs, but offers a Dislocated Worker Program for assisting employers with federal WARN Act compliance.
Wisconsin, Illinois and Iowa have their own laws requiring notice under those circumstances and employers in those states must comply with both federal and state laws if they both apply. Exceptions for certain types of unforeseeable circumstances and disasters are available in all three states.
Wisconsin law applies to employers (not including charitable or tax-exempt organizations) employing 50 or more persons in Wisconsin. Covered employers must give a 60-day notice when they:
- Permanently or temporarily shut down an employment site, facility, or operating unit within a single municipality affecting 25 or more full-time employees (excluding part-time workers with the same definition under the federal law), or
- Make a reduction in the workforce affecting at least 25 percent of the workforce or 25 full-time employees, whichever is greater, or at least 500 full-time employees (excluding part-time workers with the same definition under the federal law).
- A workforce reduction includes a layoff exceeding 6 months or a reduction in work hours of more than 50 percent during each month in any 6-month period.
Illinois law applies to employers (not including charitable or tax-exempt organizations) with 75 or more full-time employees (excluding part-time workers with the same definition under the federal law) or 75 or more employees who in the aggregate work at least 4,000 hours per week (not including overtime). Covered employers must give a 60-day notice (counting concurrently with any collective bargaining agreement requirement) when they:
- Layoff 25 or more full-time employees at a single site during any 30-day period if they constitute 33 percent or more of the full-time employees at the site, or
- Layoff 250 or more full-time employees at a single site during any 30-day period, or
- Permanently or temporarily shut down a single site of employment, facility or operating unit if the shutdown results in an employment loss during any 30-day period for 50 or more full-time employees.
- “Employment loss” includes a layoff exceeding 6 months or a reduction in work hours of more than 50 percent during each month of any 6-month period.
Iowa law applies to employers with 25 or more full-time employees (excluding part-time workers with the same definition under federal law, unless an applicable collective bargaining agreement defines part-time differently, which then supersedes the federal definition). Iowa employers must give a 30-day notice (superseded by any collective bargaining agreement) when they:
- Permanently or temporarily shut down a single site of employment, facility or operating unit resulting in an employment loss for 25 or more full-time employees, or
- Make a reduction in the workforce resulting in an employment loss at a single site during any 30-day period of 25 or more full-time employees.
- “Employment loss” includes a layoff of more than 6 months or a reduction in work hours of more than 50 percent during each month of any 6-month period.
As stated above, it remains to be seen if states will be focusing on enforcing notice requirements for closings or layoffs resulting from the pandemic, but employers are advised to seek legal counsel to ensure compliance with federal and state notice requirements.
