5.5 Worker Adjustment and Retraining Notification Act (warn)

• Library: Virginia Employment Practices and Forms (Virginia CLE) (2015 Ed.)

5.5 WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT (WARN)

5.501 Introduction. An attorney whose client is preparing to initiate a substantial reduction-in-force should be prepared to offer advice on applicable federal and state plant closing laws. The federal Worker Adjustment and Retraining Notification Act (WARN) ¹⁴⁹ generally requires that employers give written notice 60 calendar days before implementing a "plant closing" or "mass layoff" at any "single site of employment." Employers must provide advance written notice of mass layoffs and plant closings to: (i) each employee who will suffer an "employment loss"; (ii) the employee's union, if one exists; and (iii) state and local governmental agencies. Failure to provide a WARN notice exposes the employer to liability for up to 60 days' pay and benefits to terminated employees, civil penalties to the local government, and attorney fees to successful plaintiffs.

5.502 Coverage of the WARN Act.

A. In General. Employers may be covered by WARN under either of two jurisdictional tests. Under the first test, WARN applies to employers with 100 or more full-time employees. This test ignores "part-time" employees—those averaging fewer than 20 hours per week during the last 90 days or working on a full-time basis for fewer than 6 of the preceding 12 months. ¹⁵⁰

Under WARN's alternative jurisdictional test, the Act applies when an employer's workforce includes 100 or more full-time and/or part-time workers, provided that the workforce works more than 4,000 straight-time hours per week. ¹⁵¹

The tests for WARN coverage are generally applied as of the time that a WARN notice first should have been given and not after the employer has implemented the reduction-in-force. ¹⁵²

B. Employees at All Sites. In computing the number of employees for purposes of the 100 employee coverage threshold, WARN requires that employees at all work sites, including United States workers at foreign sites, be counted. However, even though an employer may fall within WARN's jurisdiction as a result of aggregating employees at all sites, the obligation to give

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notice under WARN only arises when terminations at a single United States site exceed specified numerical thresholds. Moreover, the WARN notice obligation does not apply to terminations that occur at foreign sites. ¹⁵³

C. Teleworking or Outstationed Employees. As technology has permitted more employees to telework from home or work from other remote locations, a section of the WARN regulations addressing what should be counted as the work site for "outstationed" employees has become more commonly applicable. That regulation states:

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 employment sites (e.g., railroad workers, bus drivers, salespersons), the single site of employment to which they are assigned as their home base, from which their work is assigned, or to which they report will be the single site in which they are covered for WARN purposes. ¹⁵⁴

The Fourth Circuit Court of Appeals applied this section of the regulations to determine that a salesperson was an employee of the Virginia office to which she was assigned and not the Tampa headquarters of her former employer, despite the fact that she traveled almost continuously and reported primarily to officials in the Tampa headquarters. ¹⁵⁵

D. Laid-Off and On-Leave Employees. The regulations issued under WARN by the Department of Labor (DOL) state that employees on layoff or leave of absence with a "reasonable expectation" of returning to the same or a similar job should be counted in determining whether the 100-employee jurisdictional threshold has been met. ¹⁵⁶

5.503 Triggering Events Under WARN.

A. In General. The WARN notice obligation can be triggered by either of two different types of events that involve substantial "employment losses" at a "single site of employment." Specifically, WARN is triggered either by a "plant closing" or a "mass layoff."

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B. Plant Closings. A plant closing occurs when an employer closes (i) an entire single site of employment and this shutdown directly results in an "employment loss" for fifty or more full-time employees at that site within any 30-day period, or (ii) a building or an operationally distinct product, operation, or specific work function within a single site of employment and the closure directly results in an employment loss for fifty or more full-time employees at the site within any 30-day period. ¹⁵⁷

When the closing of a facility or operating unit within a larger single site directly results in an employment loss for fifty or more employees in the aggregate within a 90-day period, a plant closing may occur even if the terminations relating to the closure did not all occur within the same department. For example, if the closure of a single department with forty employees causes those employees and an additional ten employees in other units at the same site to lose their jobs, a "plant closing" has occurred. ¹⁵⁸

C. Mass Layoffs. A "mass layoff" occurs when at least fifty of the "active" full-time employees at a single site of employment suffer an "employment loss" within any 30-day period and the laid-off employees make up at least 33 percent of the employees at that single site of employment. The reduction in force must not be the result of a plant closing. A mass layoff also occurs whenever 500 or more full-time employees at a single site suffer an "employment loss" within a 30-day period, even if those 500 employees constitute less than 33 percent of those employed at the site. ¹⁵⁹ In determining whether a plant closing or mass layoff has...