WARN: Hazardous to HR Health?
The Worker Adjustment and Retraining Act (WARN), which went into effect in February 1989 (see "In Focus," Personnel, October 1988) requires employers to give their employees 60 days' advance notice of major company layoffs and/or plant closings. But despite the obvious benefits of this "plant-closing" law for workers and their families, WARN has many serious operational and fiscal implications for HR managers as well as the potential for creating certain healthcare and labor-relations problems. This article will provide HR professionals with a general analysis of WARN, examine ways in which it might conflict with other laws already in effect, and offer HR managers suggestions on how they can help their organizations deal with the Act's provisions.
An Analysis of WARN
Although it is known as the "plant-closing" law, WARN actually applies to any type of business, from healthcare to financial services. According to subsection 2(a)(1) of the Act, a business enterprise is a covered "employer" if it employs 100 or more employees (excluding part-timers) or employs 100 or more employees who in the aggregate work more than 4,000 hours per week (exclusive of overtime).
According to WARN, an employer must give the 60-day notification under two conditions: . Facility closings (subsection 2(a)(2)). This situation occurs when there is (1) a permanent or temporary shutdown of a single facility or other employment site, or of one or more of the facilities or operating units (for example, hospital consolidation) within a single plant, facility, or employment site; and (2) a reduction-in-force (RIF) or termination of 50 or more full-time employees over a 30-day period. . Reduction-in-force (subsection 2(a)(3)). A reduction-in-force is a mass layoff, although it results not in a plant or operating-unit shutdown but in (1) at least 50 employees (constituting at least 33% of the total workforce) being terminated or laid off for more than six months; or (2) at least 500 full-time employees being terminated or laid off for more than six months.
According to subsection 3, this notification must be given in writing to the affected employees and the local government agencies. The employer must provide written notice to each employee whom it expects to terminate or to lay off for six months or more, or who would face a reduction in hours worked of more than 50% per month.
If there is a union representing the employer's employees, then the employer must send notice to the union, not to the individual employees. Further, the company must give advance written notice to the appropriate state unemployment office and to the chief elected official of the local government unit in which the facility shutdown or mass layoff will occur.
The point at which the number of employees should be measured for the purposes of determining coverage and finding out whether the 33% threshold for a mass layoff has been reached could be termed a "snapshot," or an average figure that has been calculated over time. The inclusion of a "snapshot" of the employment level at the time when the employer must give notice will apparently be the basic rule in most cases, but in some circumstances an average employment figure would be appropriate. In such cases, any intent of the employer to evade the Act by reducing employment levels over time would probably be the first consideration for subsequent civil action.
In addition, a major problem arises in this area when employees are terminated at different time intervals. The best approach seems to be to use the date of the first individual termination within the statutory 30-day period as the trigger for the 60-day notice. The Act provides that each subsequent group of terminees is entitled to a full 60-day notice.
Employers may wish to look ahead and behind 30 days to determine whether planned employment actions in the aggregate trigger the coverage of the Act. …