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Act to Assist Workers Facing Mass Layoffs

Lately, severe job cuts have revealed weaknesses in the Worker Adjustment and Retraining Notification (WARN) Act, a federal law meant to cushion the blow of mass layoffs. In response to the weaknesses in the WARN Act, dozens of employee groups have recently challenged abrupt terminations in federal courts.

In an effort to strengthen the WARN Act, Ohio Senator Sherrod Brown along with representatives of both parties introduced a new bill at the end of June. The Federal Oversight, Reform, and Enforcement of the WARN (FOREWARN) Act, is meant to increase the enforcement of and close the loopholes in the WARN Act.

The WARN ACT was passed by Congress in 1988 to give workers and communities 60 days advanced notice to adjust to an impending plant closing or mass layoff. However, critics claim that the WARN Act’s effectiveness has been undermined by existing loopholes and weak enforcement. According to the Government Accountability Office (GAO), the WARN Act only covers 24 percent of all layoffs. The GAO reports that of those layoffs, employers only provided notice approximately one-third of the time.

Additionally, the WARN Act has several exceptions that employers can invoke. Companies deemed to be faltering do not have to give notice if they think an announcement would hurt their efforts to raise new capital. Employers can also avoid providing warning if layoffs were due to natural disaster or changes in business circumstances that were not reasonably foreseeable. The WARN Act covers workers who are laid off from one workplace, but not the smaller groups of employees who also lose their jobs in satellite offices or stores.

The WARN Act requires that a company file notice if it lays off one-third of staff over three months. Companies that stretch a big layoff over a longer period of time don’t trigger the WARN Act.

Further, critics cite weak penalties and enforcement measures as the reasons for preventing employers from providing notice. The GAO found that employers failed to provide notice to employees in two-thirds of layoffs and closures where the WARN Act applied.

For violating the WARN Act, employers are required to pay an employee’s pay for every day of notice not provided. However, it does not provide for punitive damages. The most employees can recover is two months of pay and benefits.

The FOREWARN Act, if enacted, will correct some of the problems with the WARN Act. For example, it will empower the Labor Department to enforce WARN, double the maximum penalties, apply the law to smaller worker groups and raise the notice period to 90 days; all of which are meant to aid the worker in today’s weakened economy.

WARN Act

· Requires employers to provide notice 60 days in advance of plant closings and mass layoffs.

· Applies to employers that have 100 or more employees, excluding employees who have worked less than 6 months out of the last 12 months and employees who work an average of less than 20 hours a week.

Notice must be in writing but no other particular form is required.

FOREWARN Act

· Lengthens the notification period to 90 days.

· Reduces the employer size to 75 employees.

Requires employers to provide written notification that includes the reason for the plant closing or mass layoff, whether the employer has jobs elsewhere, and a statement of each employee’s right to wages and benefits to the Department of Labor.

© 2008 Ott & Associates Co., LPA

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