I’ve had to counsel many employers on layoffs and furloughs and such during this COVID-19 pandemic. Based on the number of impacted employees, that conversation can involve the federal Worker Adjustment and Retraining Notification (WARN) Act.
What is WARN?
In a nutshell, WARN requires larger employers to provide advance notice in cases of plant closings and mass layoffs. Specifically, the DOL warns that WARN is triggered when a covered employer:
- Closes a facility or discontinues an operating unit (see glossary) permanently or temporarily, affecting at least 50 employees, not counting part-time workers, at a single site of employment. A plant closing also occurs when an employer closes an operating unit that has fewer than 50 workers but that closing also involves the layoff of enough other workers to make the total number of layoffs 50 or more;
- Lays off 500 or more workers (not counting part-time workers) at a single site of employment during a 30-day period; or lays off 50-499 workers (not counting part-time workers), and these layoffs constitute 33% of the employer’s total active workforce (not counting part-time workers) at the single site of employment;
- Announces a temporary layoff of less than 6 months that meets either of the two criteria above and then decides to extend the layoff for more than 6 months. If the extension occurs for reasons that were not reasonably foreseeable at the time the layoff was originally announced, notice need only be given when the need for the extension becomes known. Any other case is treated as if notice was required for the original layoff; or
- Reduces the hours of work for 50 or more workers by 50% or more for each month in any 6-month period. Thus, a plant closing or mass layoff need not be permanent to trigger WARN.
In any one of these situations, an employer must provide written notice at least 60 calendar days in advance to the impacted employees. Messing that up can carry some serious consequences. An employer that violates the WARN Act notice requirement is liable to each affected employee for an amount equal to back pay and benefits for the period of violation up to 60 days. (Plus, an employer that fails to provide notice as required to a unit of local government is subject to a civil penalty not to exceed $500 for each day of violation.)
But, there are some exceptions to the 60-day notice rule, one of which involves unforeseeable business circumstances (i.e., a business circumstance that is caused by some sudden, dramatic, and unexpected action or conditions outside the employer’s control).
In addition to the federal WARN law, many states, like the State of New Jersey, have mini-WARN laws. Indeed, back in January, Jersey’s mini-WARN law, also known as the Millville Dallas Airmotive Plant Job Loss Notification Act, got a facelift. Here’s what changed:
- If you employ 100 or more workers, you must provide WARN Notices 90 days in advance; rather than the federally-mandated 60 days.
- If you fire or layoff 50 or more people at once, you’ll probably need to provide severance pay equal to one week of pay for each full year of employment to each employee whose employment ends.
- One hundred or more workers includes anyone, full or part-time. Part-timers also get counted in the 50 getting laid off.
- If you’re late on the WARN Notice, you owe each impacted employee an additional four weeks of severance.
The amended mini-WARN law was to have gone into effect on July 19, 2020.
But, even under the existing mini-WARN law, there was some question about whether the current coronavirus pandemic would excuse employers from providing the 60-day notice requirement.
After all, it is New Jersey.
NJ gets all employer-friendly on us.
Well, wonder no more.
On Tuesday, Governor Murphy signed into law this amendment to the mini-WARN law. As revised, NJ’s mini-WARN law clarifies that a mass layoff does not include a mass layoff made necessary by a “national emergency.” While the words “COVID-19” or “coronavirus” or “pandemic” aren’t in the revised language, I think it’s safe to say that NJ will not come after you for failing to provide 60 days notice of a mass layoff.
Additionally, the change takes effect immediately, retroactive to March 9, 2020. So, NJ has blessed any significant layoffs in the last month or so.
However, this change will expire on the 90th day after Executive Order 103 terminates, which is when Governor Murphy declared a state of emergency.
Whether in NJ or otherwise, if you do find yourself having to layoff several employees, there’s more than just WARN or a mini-WARN to consider. For example, if you terminate older employees and want a proper release in return, that severance document needs to be drafted carefully to comply with the Age Discrimination in Employment Act. There could also be notice requirements for unemployment compensation. Or maybe you need to ensure that certain restrictive covenants remain effective.
What I’m saying is, you may be in cost-cutting mode, but you should have an employment lawyer — not just HR, sorry — helping you.