Mass layoffs mean that a large number of people have lost their jobs. The devastating effects of a mass layoff extend out into the community. When a group of community members has lost their livelihoods, they cannot contribute to the local economy as they could before. They lack the financial resources to purchase goods and services. Thus, other community members become adversely affected by mass layoffs.
The economic domino effect that begins with a mass layoff in a community means that the community will feel the negative impacts of a mass layoff far beyond the initial layoffs. Because of the magnitude of the impact on workers who are included in a mass layoff as well as the toll it takes on the community at large, U.S. lawmakers established the Worker Adjustment and Retraining Notification Act.
What is the Worker Adjustment and Retraining Notification Act?
The Worker Adjustment and Retraining Notification Act (WARN) requires employers that have 100 or more employees to provide a minimum of 60 calendar days advanced, written notice of a plant closing and mass layoffs that would affect 50 or more employees at one employment site.
To calculate whether an employer has 100 or more employees, workers who work, on average, less than 20 hours a week and workers who have been employed less than 6 months in the last 12 months are generally not included. This requirement may be waived if the mass layoffs occurred due to unforeseeable circumstances, including natural disasters. Companies that are faltering may also be deemed an exception to the WARN requirements.
Under WARN, employers are required to give notice to managers and supervisors as well as hourly and salaried workers. Additionally, because these kinds of situations do have a significant impact on a larger community, WARN requires the employer to not only provide notice to employees, but also to provide notice to the representatives of the employee, the chief elected official, and the state dislocated worker unit.
The advanced notice of a plant closing and mass layoffs provides employees and their families with some much-needed transition time. The prospect of an indefinite period of unemployment is something that takes time to adjust to. During this transition period, affected employees and their families have the opportunity to do things like job hunt or prepare for a new line of work by entering into a training program to be competitive in the job market.
If an employer fails to comply with WARN requirements, the employer is liable to each employee who did not provide proper notice for back pay and benefits for up to 60 days when the employer violated WARN requirements. If the employer paid any wages or unconditional payments to an affected employee during the violation period, this might reduce the employer’s liability.
Additionally, an employer who fails to comply with the requirement of providing notice to the affected local government may be charged an additional civil penalty of up to $500 per day of the violation occurring. This penalty may be avoided if the employer pays every affected employee within three weeks after the plant closing or layoffs occurring.