WARN Act Requirements: A Guide for HR Professionals

If you’re planning a layoff or reduction in force (RIF), you must ensure that you follow all local, state, and federal laws. One of the most important of these is called the WARN Act.

The Worker Adjustment and Retraining Notification Act—commonly called the WARN Act—was passed into law in 1988 to assist families with the hardships that can result from a sudden loss of employment when an organization lays off a group of employees.

In a nutshell, the WARN Act requires employers of specific sizes to provide advanced notice of plant closings, large reductions in force, or mass layoffs, as well as a lot of other smaller elements that also come into play.

In this blog, we’ll cover the following WARN Act basics:

• What the WARN Act is
• Who Needs to Comply With the WARN Act Requirements
• When WARN Act Requirements Don’t Apply
• How and When to Provide a WARN Act Notice
• Common Questions About The WARN Act

Remember, while this guide will help you better understand WARN Act fundamentals, always work closely with your legal team to ensure that you are holding reduction events to the letter of the law.

What Is The Warn Act And Its Purpose?

As we briefly mentioned, the WARN Act is a law that helps protect employees from sudden mass layoff events by dictating how much notice employers need to give their employees before such an event.

According to the US Department of Labor (DOL) Code of Federal WARN Regulations, “The WARN Act requires employers to provide written notice at least 60 calendar days in advance of covered plant closings and mass layoffs.”

“An employer’s notice assures that assistance can be provided to affected workers, their families, and the appropriate communities through the State Rapid Response Dislocated Worker Unit.  The advance notice allows workers and their families transition time to seek alternative jobs or enter skills training programs.”

How the WARN Act Helps Workers

While advanced notice can go a long way, especially in areas of the country where large plants drive the local economy, the WARN Act also strives to help workers find new jobs or upskill themselves for different career paths.

The DOL does this through what they call the State Rapid Response Dislocated Worker Unit, which provides on-site information to impacted workers and ways for them to boost their skills sets, such as:

• Labor market information
• Job search and placement assistance
• On-the-job training
• Classroom training
• Entrepreneurial training
• Basic and remedial education

In other words, the unit provides a form of outplacement service to departing workers, though it doesn’t go as far as private outplacement providers do.

Warn Act Requirements And Who Needs To Follow Them

The WARN Act has several federal requirements that shape who must adhere to it and how. The law states:

• The WARN Act applies to your organization if you have over 100 full-time employees.
• The WARN Act applies to all publicly and privately held companies.
• The WARN Act applies to all organizations that are for-profit or not-for-profit.
• A WARN notice must be given if there is a plant closing or a mass layoff.

If you are an organization that has less than 100 full-time employees, you do not have to comply with the WARN Act. If you have over 100 full-time employees, the WARN Act will apply to you regardless of being public or private, for-profit or not-for-profit.

Those regulations are relatively simple to understand. The last one—“A WARN notice must be given if there is a plant closing or a mass layoff”—is a little bit more complicated because of the ambiguity of a “mass layoff” or “plant closing.”

What Is a Plant Closing Under the WARN Act?

To answer these questions, we suggest always referring to the DOL definitions since they are going to be the most up-to-date information you can find. Here is what they say about the specific WARN requirements surrounding a plant closing:

“A covered employer must give 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 (as defined later) 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.”

What Is a Mass Layoff Under the WARN Act?

The same is needed to accurately explain a mass layoff because, on the surface, a “mass layoff” could mean different things to different organizations. Once again, here are the DOL WARN requirements with mass layoffs:

“A covered employer must give notice if there is to be a mass 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% of the employer’s active workforce.”

“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.”

What Are Examples of the WARN Act?

While the law on federal WARN Act notice requirements is defined clearly, it can always help to have some fictional examples to make these points stick.

Let’s say that Jayhawk Manufacturing has 95 full-time employees. If they were planning on laying off any employees, they wouldn’t have to give a WARN notice. That is unless, according to the above plant closing and/or mass layoff stipulation, Jayhawk Manufacturing was going to close a facility that would affect more than 50 workers and last for more than 30 days, or if they were going to lay off more than 50 workers over a 30 day period (since this is more than 1/3 of their workforce).

For another example, Pittsburgh Hockey Co. has over 600 employees and, while they aren’t closing down their facilities, they plan to lay off 100 workers. If they do this within 30 days time, they will have to provide a WARN notice to these employees. If they do this over a longer period of time, they will not have to give a notice since a mass layoff only qualifies if all employees are let go within the 30-day time period.

When Warn Notice Requirements Do Not Apply

There are other things to consider about the WARN Act besides the regulations above. First, the WARN Act only applies to organizations where employees will be impacted by a “loss of employment.” Thus, employees who are let go for performance issues or are retiring will not apply to the WARN Act requirements.

The DOL defines an “employment loss” under the WARN Act as:

• An employment termination, other than a discharge for cause, voluntary departure, or retirement;
• a layoff exceeding 6 months; or
• a reduction in hours of work of more than 50 percent during each month of any 6-month period.

However, there are some exceptions to this. For example, an “employment loss” does not occur “if a plant closing is the closing of a temporary facility, or if the closing or mass layoff is the result of the completion of a particular project or undertaking.” It is also not deemed an “employment loss” if an employee refuses an offer to transfer to a different work site within a reasonable commuting distance, or if an employee receives and accepts a transfer to a different work site outside of this distance within 30 days after it is offered or after the plant closing or mass layoff.

Based on this explanation, the WARN Act only applies to employment loss that is not caused by performance issues, the employee voluntarily leaving for a position at another organization, or retirement. It also means that if your organization provides a job to an employee let go at one location for a position at another location that is a reasonable commuting distance, you do not need to provide the WARN notice.

According to the DOL, a reasonable commuting distance is “a flexible term that will vary with local conditions. The factors to be considered in determining what is a reasonable commuting distance include: the accessibility of the place of employment, the quality of the roads, customarily available transportation and usual or customary travel times. The commuting distance is measured from the worker’s home.”

This means that, to use our previous examples for reference, a reasonable commuting distance might be different for an employee working at Jayhawk Manufacturing in Lawrence, Kansas, as opposed to an employee working at Pittsburgh Hockey Co. in Pittsburgh, Pennsylvania.

Complying With The Warn Act

If you do meet any of the requirements listed above, you will need to comply with the WARN Act. Now, what does this mean for your organization?

To be in full compliance with the WARN Act, you must notify your affected employees at least 60 days before their last day with the organization. This can be done through several different delivery methods as long as it is given in writing. The DOL states that any reasonable method of delivery is applicable. However, they do have certain stipulations that you need to follow:

“Use of preprinted notices that are regularly included in employees’ paychecks or pay envelopes are not acceptable and do not meet the WARN Act requirements.”

This means that if your organization regularly gives out notices about the workplace with your paychecks, providing a WARN notice this way won’t be sufficient. There’s a chance your employees might not see the notice, since they are regularly given other forms and paperwork through this delivery method. So make sure you choose a delivery method that ensures employee receipt of the WARN notice.

When creating your WARN notice for employees, make sure to include the following items:

• Notification to all receivers of the upcoming reduction in force.
• An explanation of whether this layoff will be permanent or if the workers can expect to be called into work again.
• A time frame for when layoffs will occur and when their position will be affected.
• Your organization’s policy on bumping rights.
• Any severance benefits that your organization will provide.
• Who the employees should contact for further information at your organization (usually an HR representative).

To comply with the WARN Act, your organization must also provide a notice to the government about your reduction event. Similar to the notice given to employees, this notice must also be given 60 days in advance.

As the DOL states: “The employer must also provide notice to the State dislocated worker unit and to the chief elected official of the unit of local government in which the employment site is located.”

Which States Have Warn Act Requirements?

Many individual states have specific laws that pertain to the WARN Act. Your corporate counsel should evaluate all of the states where your employees will be affected to make sure that your organization is abiding by the applicable regulations in every location.

According to the Employment Law Handbook, the following states have WARN Act regulations specific to their locations:

• California
• Illinois
• Maryland
• New Jersey
• New York
• Tennessee
• Wisconsin

If you will have a plant closing or mass layoff in any of these states, read the descriptions below of each state’s WARN Act requirements, as quoted directly from the Employment Law Handbook.

WARN Act Requirements for California

“Applies to employers with 75 or more full or part-time employees where 50 or more employees are to be laid off due to a plant closing, mass layoff, or relocation of the employer’s business.”

“Unlike the federal law, there is no requirement that the number of employees to be laid off constitute a certain percentage of the employer’s workforce. Relocation is defined as a move to a different location more than 100 miles from the prior location.”

WARN Act Requirements for Illinois

“Applies to employers with 75 or more full-time employees when:

• 25 or more full-time employees are laid off if they constitute one-third or more of the full-time employees at the site, or
• 250 or more full-time employees are laid off.”

WARN Act Requirements for Maryland

“Maryland’s version of WARN, the Maryland Economic Stabilization Act, is voluntary and applies to employers in the industrial, commercial, and business industries with 50 or more employees. Otherwise, an employer must comply with the federal requirements.”

WARN Act Requirements for New Jersey

“Applies to employers who have been in business at least three years and have at least 100 employees. It applies in situations where a covered employer:

• Transfers or terminates its operations during any continuous period of 30 days which results in the termination of employment of 50 or more full-time employees, or
• Conducts a mass layoff that results in an employment loss during any 30 day period of:
  • 500 or more full-time employees, or
  • 50 or more full-time employees representing one-third or more of the full-time employees at the establishment.”

WARN Act Requirements for New York

“Applies to private employers with 50 or more workers who lay off at least 25 employees.”

WARN Act Requirements for Tennessee

“Applies to employers with 50 or more employees, instead of the 100 required by the federal law. All other federal requirements apply.”

WARN Act Requirements for Wisconsin

“Applies to employers with 50 or more employees.”

For more information about WARN requirements and laws specific to your state location, make sure to speak with your corporate counsel or a law firm knowledgeable about employment law.

Warn Act Enforcement

The WARN Act often has a reputation for lacking much actual punishment for organizations that violate its laws. This is because employers who fail to give proper notice under the WARN Act to their impacted employees are still protected from any liability as long as they pay all compensation due to those employees through their last day of work.

The WARN Act only allows employees to file suit for damages if they are not paid their last 60 days of wages. So, while an organization may be in violation of the law by not providing notice, they are not at risk of being sued as long as they have paid their employees in full up until their last day of employment. Many organizations choose to do this to avoid mass employee resignations and huge losses in productivity, which can result from giving WARN Act notices.

That said, even though you might not be at financial risk from failing to give a WARN notice, it could still put your brand at serious risk. If your organization plans to keep running after the reduction event, the damage done to your company brand by not providing proper WARN Act notice could be detrimental to your talent retention and recruitment efforts.

As always, be sure to consult with your corporate counsel or outside law firm when preparing for any such reduction events to ensure compliance with all legal regulations.

Common Questions About The Warn Act

If you still have questions about the WARN Act and its requirements, below are some more of the most commonly asked questions:

Does the WARN Act Apply to Territories Outside of the United States?

Yes. Territories like Puerto Rico and Guam are subject to United States law and thus are also subject to the WARN Act. If you are having an event in one of these territories, please consult with corporate counsel or a law firm to ensure that you are abiding by the WARN Act, as well as any local laws and regulations specific to that territory.

Are Hospitals Covered by the WARN Act?

This depends. If your hospital is owned by a local government, then no. If not, then your hospital will have to be compliant with the WARN Act.

Are Universities Covered by the WARN Act?

More than likely, yes. Private colleges will definitely have to comply with the WARN Act, as well as most public colleges. Please review your specific public institution with legal counsel and determine if your school board functions as a governmental institution, which could complicate WARN notice compliance.

Do I Have to Provide a Notice to Workers on Leave?

Yes. Any workers that expect to come back to work at your organization after their leave has finished will need to be given a WARN notice. This could include situations such as maternity or paternity leave, a sabbatical, etc.

Warn Act Requirements: Key Takeaways

It’s vital that HR professionals fully understand the WARN Act and all of its federal and state requirements, especially when working at larger firms with over 100 full-time employees.

In essence, the WARN Act was created to ensure that employees are made aware of significant layoff events and have a proper amount of time to find a new role or upskill themselves.

While the WARN Act does help assist departing employees, the support doesn’t replace the need for an outplacement provider. Outplacement services are a great tool to provide during a reduction or layoff as it helps workers find new roles quicker and develop the skills they need to succeed in the future.