Company Doctor: Heed this WARNing

In recent months, GM, Ford, Harley-Davidson and Starbucks have found it necessary to reduce their workforces significantly. Each of these major companies found themselves subject to the WARN Act.

The Worker Adjustment and Retraining Notification Act (WARN) was enacted on Aug. 4, 1988, and became effective on Feb. 4, 1989. It is possible that your company may be covered under this legislation, so it is important that as an employer you understand the obligations created by the WARN Act.

We found ourselves subject to this legislation when I was employed at JH Collectibles. Once we declared bankruptcy in 1996, we began to significantly reduce our workforce at the distribution center, corporate office, outlet stores and factory. We quickly realized that we would need to notify the governor, the mayor and the county executive of our intentions to reduce our workforce by such a large percentage.

I was designated the contact person and was responsible for coordinating our efforts to place downsized employees in retraining programs that were funded by federal and state governments. Many of the displaced workers from JH Collectibles found employment with Allen Edmonds Shoe Company as sewers. In fact, Allen Edmonds opened a new plant on the south side of Milwaukee so these workers would not have to travel to Belgium, Wis.

The intent of the WARN Act is to offer protection to workers, their families and communities by requiring employers to provide notice 60 days in advance of covered plant closings and covered mass layoffs. This notice must be provided to either affected workers or their representatives (e.g., a labor union); to the state dislocated worker unit; and to the appropriate unit of local government.

Employers are covered by WARN if they have 100 or more employees, not counting employees who have worked less than six months in the last 12 months and not counting employees who work an average of less than 20 hours a week. Private, for-profit employers and private, nonprofit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. Regular federal, state, and local government entities which provide public services are not covered.

Employees entitled to notice under WARN include hourly and salaried workers, as well as managerial and supervisory employees. Business partners are not entitled to notice. The threshold of coverage varies depending on the circumstances with regard to the following categories.

When a plant closes, as in the case of GM’s Janesville plant, the company must provide notice if an employment site (or one or more facilities or operating units within an employment site) will be shut down, and the shutdown will result in an employment loss for 50 or more employees during any 30-day period. This does not count employees who have worked less than six months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. These latter groups, however, are entitled to notice.

When there is a mass layoff as was experienced by Midwest Airlines, notice should be given of the layoff which does not result from a plant closing, but which will result in an employment loss at the employment site during any 30-day period for 500 or more employees, or for 50-499 employees if they make up at least 33 percent of the employer’s active workforce. Again, this does not count employees who have worked less than six months in the last 12 months or employees who work an average of less than 20 hours a week for that employer. These latter groups, however, are entitled to notice.

An employer also must give notice if the number of employment losses which occur during a 30-day period fails to meet the threshold requirements of a plant closing or mass layoff, but the number of employment losses for 2 or more groups of workers, each of which is less than the minimum number needed to trigger notice, reaches the threshold level, during any 90-day period, of either a plant closing or mass layoff. Job losses within any 90-day period will count together toward WARN threshold levels, unless the employer demonstrates that the employment losses during the 90-day period are the result of separate and distinct actions and causes.

There are penalties assessed if an employer violates the WARN provisions by ordering a plant closing or mass layoff without providing appropriate notice. The employer is liable to each aggrieved employee for an amount including back pay and benefits for the period of violation, up to 60 days. The employer’s liability may be reduced by such items as wages paid by the employer to the employee during the period of the violation and voluntary and unconditional payments made by the employer to the employee.

An employer who fails to provide notice as required to a unit of local government is subject to a civil penalty not to exceed $500 for each day of violation. This penalty may be avoided if the employer satisfies the liability to each aggrieved employee within three weeks after the closing or layoff is ordered by the employer.

It is important that if you feel that your reduction in your workforce would subject you to the requirements of the WARN Act, you should contact an attorney who specializes in employment law. They will assist you in navigating the detailed paperwork that is required to comply with the Act. In addition, they will identify which local government agencies to contact that could assist your displaced workers in enrolling in retraining programs that will eventually lead to future employment opportunities

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