The Worker Adjustment and Retraining Notification Act: A Closer Look

Article excerpt

This year, 2004, marks the 15th year of the enactment of the Worker Adjustment and Retraining Notification (WARN) Act. This federal law (100-379, S 2527) was passed by the U.S. Congress on August 4, 1988, and took effect on February 4, 1989. Its purpose is to ensure employees, their families, and communities receive adequate advance notification in the case of a corporate downsizing. In addition, the Act attempts to provide sufficient employee benefits to assist employees on a short-term basis until they secure future employment, or to enable employees to enter skill training or retraining to compete successfully in the job market. The Act also provides state Dislocated Worker Units adequate notice to provide assistance as needed. Other lesser-known federal legislation such as the Trade Adjustment Assistance Program (TAA) and Economic Dislocation and Worker Adjustment Assistance Act (EDWAA) has been enacted likewise to assist affected employees.

The pervasiveness of downsizing activity during the past two decades has caused the federal WARN Act to become well-known among managers and HR professionals. Most organizational leaders are quite familiar with the 60-day advance notification requirement. Many HR professionals and corporate managers may, however, be unaware that a number of individual states have passed similar versions of the WARN Act prior to, or since, its original passage in 1988 (see Shulman, 2002). Our purpose here is to highlight these additional, and frequently unknown, legal requirements on the state level.

For the purpose of the WARN Act, the term "state" includes the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, and the U.S. Virgin Islands. In order to identify states that enacted their own regulations, the individual state Dislocated Worker Unit Coordinators were contacted. We obtained their names, telephone numbers, and email addresses from the Department of Labor Employment and Training Administration ("State Dislocated Worker Unit Coordinators," 2003). All coordinators were contacted initially by telephone, and then were sent an electronic survey requesting that they provide us with any state legislation pertaining to the WARN Act. All coordinators responded.

The pervasiveness of downsizing activity during the past two decades has caused the federal WARN Act to become well-known among managers" and HR professionals.... [A] number of individual states have passed similar versions of the WARN Act.

Exhibit 1 presents our findings. Overall, states have supplemented the federal law in four different ways:

1. Some states require the notification period to be more than 60 days (e.g., Maryland);

2. Some states have lowered the 100-employee threshold mandated by WARN (e.g., California);

3. Several states have enacted other provisions in their labor legislature, such as health care coverage and retraining allowances (e.g., Maryland); and

4. Some states have required downsizing organizations to notify additional governmental agencies (e.g., Minnesota).

In total, nine states have passed their own versions of the WARN Act (see the shaded entries in Exhibit l). These state laws often are referred to as "mini-WARN statutes" (Maatman, 2001). Eight states have other relevant provisions that pertain to implementing mass layoffs and plant closings. Clearly, organizations that are downsizing in these states need to be familiar with the respective state statutes (statutes pertinent to the state where the downsizing plant is located, not the state where the corporate headquarters is located).

The federal and state-level WARN legislation both have the same objective: to provide affected employees an opportunity to prepare to obtain a new job as quickly as possible after termination and continue to address their health care needs and other benefits until new employment is secured. It is hoped that by the advance notification of a pending downsizing the appropriate governmental and community agencies can assist affected employees as needed. …