How the WARN Act Actually Works: A Human-Readable Guide

May 24, 2023

💡

Disclaimer: We are not attorneys. This article is not legal advice. This article only reflects our findings and understanding after extensive research and work in this space and is intended to be a starting resource for persons who are trying to understand the overall context of federal and state WARN Acts.

What is the WARN Act?

The WARN Act (Worker Adjustment and Retraining Notification Act of 1988) outlines requirements for employers who are performing large layoffs or office closures (referred to as plant closures) to notify employees as well as state government officials of these job losses at least 60 days in advance.

Before we get started, there are a few important points to make:

Not all layoffs or plant closures require WARN notices. The thresholds for triggering WARN depend on the state where the layoff is occurring.

The WARN Act is a federal law, and many states have their own additional “mini-WARN Acts” which generally place stricter requirements on employers, to be applied on top of the federal law.

Which WARN Act applies to you? Generally, employers must follow the federal law, plus any additional state laws in the state where the affected employees are based. A company based in California which is performing layoffs only in their New York office will be held accountable to the federal WARN Act and New York’s WARN Act (but not California’s).

This gets tricky for fully remote employees who are not based in any office. See the note at the end for more insight into how the WARN Act treats remote employees.

History

The WARN Act is a federal law which was passed in 1988 by a bipartisan supermajority. Since its ratification, many states have passed their own “mini-WARN Acts” which impose additional requirements and thresholds on employers.

The purpose of the law is to ensure that workers are provided with sufficient notice before job loss to enable them to pursue new employment, and for states to be able to deploy rapid response personnel to assist affected employees.

The Federal WARN Act

The federal WARN Act requires employers to file notices when performing mass layoffs or plant closings that affect a sufficient number of employees (excluding part-time employees).

Important definitions under the federal WARN Act

Full-time employee: Employees who work 20 or more hours per week AND have been employed for at least 6 of the past 12 months by the company

Eligible employer: The federal WARN Act applies to employers who employ either:

100 or more full-time employees

Or 100 or more employees who, in aggregate, work at least 4,000 hours per week, exclusive of hours of overtime

Note: employees on leave (such as parental and sick leave) do still count towards the above thresholds

Note2: keep in mind this the total employees NOT total employees with employment loss

Plant Closing: An office or plant is being closed down, resulting in employment loss of 50 or more full-time employees at a single site during any 30-day period.

Mass Layoff: The employer is performing a reduction in force which will result in job loss for either:

500 full-time employees within a single job site

OR 33% of the company’s full-time employees AND at least 50 full-time employees within a single job site

For example:

Mega Corp, a large employer with 30,000 employees, lets go of 500 employees at a single office:

✅ Federal WARN triggered - Mass Layoff

XYZ, LLC, an employer with 200 employees, lays off 50 employees across multiple offices

❌ Federal WARN not triggered because the total number of affected employees at a given site is below 500 and this affects 25% (below the 33% threshold) of their employees

XYZ, LLC, an employer with 200 full-time employees, closes an office with 50 employees and eliminates the positions of the employees in that office

✅ Federal WARN triggered - Plant Closing

Acme, Inc, an employer with 100 full-time employees, lays off 40% of its staff across multiple offices

❌ Federal WARN not triggered because the total number of affected employees is below 50

For employers who trigger the federal WARN Act, a notice is required to be filed with the state government at least 60 days prior to the plant closing or mass layoff. These notices are generally made available by most states on their government websites.

WARNTracker collects these records from those state government websites and publishes them on our homepage, as well as our twitter feed.

Some Mini-WARN Acts (State-specific)

Here are some of the highlights of a few state-specific WARN acts. This list is not exhaustive.

California WARN Act

Requires additional information to be included in the WARN notice

Covers employers with 75 or more full-time or part-time employees

Reduces eligibility threshold to 50 or more employees within 30 days, regardless of company size

(source)

Hawaii WARN Act

Covers employers of 50 or more full-time workers

Requires filing for layoffs of any size, even a single employee

(source)

Illinois WARN Act

Covers employers of 75 or more full-time employees

Changes definition of mass layoff to be:

250 or more full-time employees
OR:

25 or more full-time employees at a single site AND 1/3 of employees at that site

(source)

New York WARN Act

Covers employers of 50 or more full-time employees

Changes the definition of mass layoff to be:

Any layoff affecting 250 or more full-time employees
OR:

Affecting at least 25 employees AND at least 33% of all employees at the site

Changes the definition of plant closing to be:

Any office closure affecting 25 or more employees

New York has proposed legislation to clarify the treatment of remote employees: https://dol.ny.gov/system/files/documents/2023/03/2023-warn-regs-3-9-23-2.pdf

(source)

New Jersey WARN Act

Applies to all employers with 100 or more full-time employees nationwide and any full-time employees in New Jersey

Imposes requirements for employers to pay severance

Increased pre-termination notice period to 90 days

Changes definition of mass layoff:

Any reduction in force affecting at least 50 full-time employees, regardless of the percentage of the employer’s total workforce that represents

(source)

Exceptions to WARN

The WARN Act carves out three exceptions in which employers are not beholden to the normal requirements.

Faltering Company

This exception applies only to plant closings. It is very specific in its application: it is meant for employers who were seeking new capital, and for whom giving notice of a plant closing would have ruined the chances of them securing the additional capital necessary to continue operations.

Unforeseeable Business Circumstances

This exception applies to plant closings and mass layoffs which are the result of business circumstances which could not have been reasonably foreseen or predicted in advance.

Natural Disaster

Plant closings or mass layoffs that are the result of floods, fires, earthquakes, etc are exempted.

Enforcement and Penalties

Employers who are found to be in violation of the WARN Act can be held liable for civil penalties. The maximum penalty is 60 days’ back pay and benefits for any affected employees.

However, some employers prefer to essentially pay this penalty preemptively by providing employees with 60 or more days’ severance pay. Doing so effectively seems to make compliance with the WARN Act voluntary, since there is no additional penalty which can be applied.

According to the Department of Labor’s website:

WARN requires 60 calendar days' written notice. The law makes no provision for any alternative such as pay in place of a notice. While an employer who pays workers for 60 calendar days instead of giving them proper notice technically has violated WARN, the provision of pay and benefits in place of a notice is a possible option. Because WARN provides for back pay and benefits for the period of the violation, up to 60 days, generally this approach by an employer <to> “pay in place of notice” means that the employer has already met the penalty specified in the Act, if the payment is not required to be made. WARN allows voluntary payments of wages and benefits to be offset against any damages that might be awarded.(emphasis added) If, however, a payment is required by another law, contract or company policy or practice, it may not be offset against WARN damages.

(source)

WARN In Practice: Meta’s Layoff Timeline

Many times, WARN notices will be the first public announcement of a layoff. However, many large companies with enough cash will choose instead to preemptively pay the maximum WARN penalty to their employees as severance so that they can more closely control the public narrative around their layoffs. One of many examples of this is Meta’s round of layoffs performed in April 2023. Here’s what that timeline looked like in practice:

March 14, 2023 (Day 0): Meta announces layoffs publicly (source)

Apr 19, 2023 (Day 36): Meta begins the previously-announced round of layoffs (source)

April 24, 2023 (Day 41): Meta files WARN notices with the state of California (source)

May 9, 2023 (Day 56): State of California releases WARN notices (source)

June 22, 2023 (Day 100): Employees go off of payroll (AKA “Effective Date” of the layoff) (source)

In this case, we can see that Meta announced the upcoming layoffs in their “Year of Efficiency” press release 100 days before the WARN notice was published on California’s EDD website.

(Note: you can check out WARNTracker’s breakdown of Meta layoffs here)

COVID-19 Carve-outs

The COVID-19 pandemic made WARN Act compliance particularly complicated. Many employers were forced to shut down for an unknowable length of time, and had to perform emergency reductions in force which were unforeseeable. WARN Acts were not drafted with this type of circumstance in mind. Thus, two notable things happened.

First, the courts were asked to ascertain whether the COVID-19 pandemic qualified as a natural disaster. After several rounds of appeals, the 5th Circuit Court of Appeals ruled that the pandemic does not qualify as a natural disaster, and thus does not exempt employers from the WARN Act.

However, some states altered or lifted their own WARN Acts’ requirements. For example, Gavin Newsom suspended the notice requirements of California’s WARN Act (source).

Remote Employees

The WARN Act was written before the proliferation of work-from-home, so its application to remote employees is unsurprisingly vague. However, the following clause is most often used to decipher these cases:

For workers whose primary duties require travel from point-to-point, who are outstationed, or whose primary duties involve work outside any of the employer's regular work sites (including railroad workers, bus drivers and salespersons and teleworkers), the single site of employment for WARN purposes is whichever of the following is applicable to the worker's situation: 1. The location to which workers are assigned as their home base; 2. The location from which workers are assigned duties; or 3. The location to which they report.

(source)

We have anecdotally heard that employers determine jurisdiction by looking up through the affected employee’s reporting chain until they find someone who is based in an office. So a fully remote employee who lives in Utah and reports to a manager in California might be treated like a California employee. However, the law was drafted well before the proliferation of remote work, so the proper handling in these cases seem to be somewhat ambiguous.

Conclusion

WARN Acts are complicated to begin with, and the interplay between state and federal WARN acts makes this an even more complex space. If you are an employee who believes your employer may have violated the WARN Act, we would recommend that you get in contact with an attorney who has expertise in this area. If you would be interested in getting in contact with an attorney, feel free to reach out to the WARNTracker team and we would be happy to put you in contact with exceptional attorneys we’ve interacted with.

Disclaimer

💡

This article was written by the WARNTracker team and published on May 24, 2023. We are not attorneys, and this article is not legal advice. It may not be perfectly up-to-date or exhaustive, so you should contact an attorney if you have any questions about your own situation. Additionally, we are not attorneys. This article was written to provide a helpful resource for workers and employers who have been affected by layoffs, but we strongly encourage you to seek out legal guidance for your own situation if you are affected by a layoff, or are seeking guidance on how to perform a layoff in compliance with your local and federal laws.

Some logos provided by Clearbit.

Get the Data