Stay Compliant With WARN Act Requirements at the Federal and State Level

The WARN Act is one of many legal guidelines your business may have to contend with to continue operating in compliance with the law. Take a closer look at the WARN Act requirements, and discover how federal and state versions can differ depending on where your business is based.

What Is the WARN Act?

The WARN Act is the Worker Adjustment and Retraining Notification Act, and it essentially governs how businesses must notify employees about mass layoffs and planned closings. It dates back to 1988 and applies to just about all businesses with more than 100 employees. According to the federal WARN Act, businesses must provide notification 60 calendar days in advance of any planned closings or mass layoffs to their employees. Employees who qualify for warning in advance include hourly wage workers, salaried employees, and managers/supervisors.

Note that many states have passed their own versions of the WARN Act with differences ranging from the minimum number of employees to the percentage of the workforce being laid off. For example, the New York WARN Act applies to companies with 50 or more employees that are planning to lay off 25 or more employees, and they must give 90 days' notice. The following states and localities have their own WARN Act in place:

• California
• Hawaii
• Illinois
• Iowa
• Maine
• Massachusetts
• Michigan
• Minnesota
• New Hampshire
• New Jersey
• New York
• Tennessee
• Wisconsin

WARN Act Exceptions

While the WARN Act stipulations apply to most companies that meet the initial qualifications, there are a few exceptions to keep in mind. For example, the WARN Act is not activated when an employer is preparing to lay off between 50 and 499 workers but that number is less than a third of the employer's total workforce at a single employment site. The act also does not apply if work hours are not reduced by 50% in each month of any six-month period or if the layoff is for six months or less.

The 60-day notice requirement is already superseded by some local requirements, like the 90-day requirement in the New York WARN Act, but other exceptions apply too. A faltering company does not have to meet the 60-day requirement if they are actively seeking capital and advance notice could reasonably prevent the acquisition of capital. Another exception is unforeseeable circumstances like the sudden cancellation of a major contract. The final exception to the 60-day requirement is a mass layoff that occurs due to the effects of a natural disaster.

Penalties for WARN Act Violations

The most prominent penalty for any WARN Act violation is back pay to any employee who did not receive proper notice. That includes back pay up to 60 days from when they were supposed to receive notice of a layoff. Pay in lieu of notice can be used to get around this as long as it is equal to the amount of back pay that would be owed.

If a company is in violation of the WARN Act, they are subject to enforcement by U.S. district courts. Individual and class action suits can also be brought against the company by employees, local government agents, or representatives of employees. Attorney fees are often included too, so it is almost always more affordable for a company to simply avoid these violations. 

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