Mass Layoffs and the WARN Act
The Federal WARN (Worker Adjustment and Retraining Notification) Act requires businesses who employ over 100 workers to provide their employees 60 days notice in writing of a mass layoff AND to pay the employees 60 days of pay. The WARN Act requires advance notice of loss of employment so workers have time to look for another job or receive training in another occupation.
Size of Layoff: A mass layoff occurs under the WARN Act when:
- at least 50 employees are laid off during a 30-day period, if the laid-off employees made up at least one third of the workforce; or
- an entire work site is closed down and at least 50 employees are laid off during a 30-day period.
Employers Covered by the WARN Act: A business is covered if it employs at least 100 full-time employees or a combination of at least 100 part-time and full-time employees who work a total of 4000 hours per week.
Benefits: A covered employee is normally entitled to 60 days notice and 60 days of pay. If employed fewer than 120 days the employee gets the lesser of 60 days notice or half the number of days employed.
An employer may have to compensate for tips or overtime pay made on a regular basis. Holiday pay is also covered. Employers are also required to pay for retirement benefits during the covered period, and for any medical expenses that would have been covered under the medical insurance plan.
Payment is calculated at either the average wage received over the last three years of employment, or the last rate received, whichever is greater.
Limitations: If the layoff is due to the business relocating, the workers are not covered if the new worksite is within reasonable commuting distance, and the employer offers the employees the chance to transfer to the new site. If the site is not within reasonable commuting distance and the employee decides to transfer there anyway, the employee also is not entitled to notice or payment.
Under certain conditions, the notification period can be reduced:
- the layoff is due to a natural disaster
- the business closes due to circumstances that the employer could not reasonably have foreseen 60 days ahead of time
- the employer was trying to avoid or postpone the layoff by obtaining capital, and believed that giving notice would have jeopardized the funding
However, the employer is still required to give as much notice as possible under all of the above circumstances.
California has its own Mass Layoff protection law (the California WARN law). California’s statute affects employers with 75 employees or more, when 50 or more employees are laid off.
Filing a claim for lack of notice: These laws are enforced by lawsuits to collect back pay and penalties when an employer does not give 60 days of notice. Kletter Law can assist with potential or actual WARN Act claims.
Contact us today by calling (415) 434-3400 to schedule an in person consultation.