What Is the WARN Act? A Guide for Business Owners

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As an employer, it’s important to understand the Worker Adjustment and Retraining Notification (WARN) Act and your requirements for issuing notice to your employees if you’re facing a layoff of more than 50 employees. Learn what the WARN act means for your business. 

 

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What is the WARN Act?

The WARN Act is a law that protects workers from the impacts of unexpected loss of employment by requiring employers to give notice to employees. The WARN Act defines loss of employment as employment termination, a layoff exceeding six months or the reduction of working hours by 50% in six months. 

 

The WARN Act requires employers to give employees 60-day notice when:

 

  • Closing a facility will lead to loss of employment for at least 50 employees. However, this notice does not cover employees who are employed for 20 hours a week or less, or employees who have worked less than six months for a company.  
  • At least 500 employees who work on an employer’s site for 30 days will be laid off. The employees who will be laid off should comprise at least 33% of actively working employees at the employer’s site. The act does not cover employees who have worked for less than six months or those who work less than 20 hours a week. 

The act also requires that employers notify employees affected by the sale of a business or one of its parts. In this case, the employer must provide at least 60 days’ notice. Other expectations include:

 

  • The seller must provide notice before the sale date and time. The buyer must provide employees with a notice of a plant closure or mass layoff after the sale date and time. 
  • The employees of the seller will immediately become the employees of the buyer after the sale. 
  • The notice should also inform any affected areas of the sale date and time. 
  • If the sale of the business will not result in plant closure or mass layoff, employers are not required to give notice.  

 

The purpose of the WARN Act

The WARN Act gives employees and their families time to prepare for a loss of employment. Employees have time to look for new jobs and are expected to obtain training in a new skill or retrain existing skills to secure replacement work. 

 

How to avoid WARN penalties

Issue a WARN notice if you are required to do so. Employers who violate the WARN Act may be liable for paying employees back pay and benefits for the violation period. 

 

Employers who do not notify local governments are subject to civil penalties of up to $500 for each day of violation. Penalties can be avoided if employers compensate employees within three weeks of closure or layoff. 

 

Employers need to follow state and federal employment laws. Be sure to stay current with the WARN act requirements as well as employment laws in your jurisdiction. Doing so is beneficial for you and your employees.

 

FAQs about the WARN Act

Here are answers to some more questions you may have about the WARN Act:

 

Who does the WARN Act apply to?

The act applies to companies with over 100 active full-time employees, private and public companies and all non-profit and for-profit organizations.

 

Employees covered under the act include both salaried and hourly employees. Employees must be employed for at least six months during the last 12 months. They must also work no fewer than 20 hours a week.

 

Are there any exceptions to giving a WARN  notice?

Employers may not be required to give a 60-day notice in these cases:

 

  • Unforeseeable business circumstances have caused a business closing and layoffs.
  • A company is seeking new capital and issuing a WARN notice would ruin its opportunities.
  • Natural disasters have caused layoffs or a business to close. Acceptable natural disasters include storms, floods, earthquakes and droughts.

What can you do to help employees receiving a WARN notice?

By issuing the required notice, you are at least giving your employees a chance to manage their finances in the face of impending unemployment. It is helpful to connect your employees with local opportunities for retraining. Communicating eligibility of benefits, including severance pay, is also helpful. Finally, if you know whether the layoff is temporary or permanent, giving this information can help employees understand their next steps.

 

The state dislocated worker unit should be notified about your layoffs so they can be proactive and help your employees find employment. This local unit assists with unemployment insurance, job seeking, career training and other resources. 

 

Finally, administering a performance evaluation and exit interview can help you and your employees gain closure. It can also alleviate misunderstandings and give employees and managers a chance to express their final thoughts and feelings about having worked together.

 

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