Layoffs and Furloughs – Be Careful of the WARN Act

March 19, 2020

By William Pederson, Andrew Still and Allen Wilen

The impact of the novel coronavirus (COVID-19) has already seen sweeping changes in our business communities, and will inevitably continue to impact businesses. As an employer you may already be aware that the federal government has regulations that govern situations involving mass layoffs and plant shutdowns. These federal guidelines often differ from state guidelines, and differentiating between the two could have implications to your business operations. Knowing the differences will help you adjust and be prepared during these economic uncertainties.

What is the WARN act?

The Worker Adjustment and Retraining Notification Act (“WARN”) (29 U.S.C. § 2101 et seq.) is a federal statute that requires employers with more than 100 employees[1] to give a 60-day notice of any plant closing or mass layoff. A mass layoff is defined as one involving more than 50 employees at a location. Failure to give the 60-day notice entitles the employees to damages for wages and benefits they would have earned during the notice period.[2]

In addition, many states have adopted their own WARN Act regulations and, as an employer, it is your duty to abide by both federal and state guidelines. Generally speaking, individual states have adopted mini WARN-Act regulations that are more favorable to the affected employees than federal regulations. For example, there is a provision in the case of a “disaster” to not abide by the rule under federal law; however, in many states there is no similar provision. It is important to understand the subtleties of the WARN Act regulations in the state in which your business operates. See below for a comparison of regulations across states:

Category/State

Federal [2]

New York[3]

New Jersey [4]

Pennsylvania [5]

Employer Qualification

Any business enterprise with 100 or more employees, excluding part time; or 100 or more employees, including part time, who work a combined total of at least 4,000 regular hours per week

Private sector employers that employ more than 50 employees. Or if the lay-off that affects either: 33 percent of the workforce (at least 25 workers), or 250 workers from a single employment site

Any business that has been open for three years and employs 100 or more full-time employees

Any business with 100 or more employees. Does not include employees who have worked less than 6 months in the last 12 months and not counting employees who work an average of less than 20 hours a week. Regular federal, state, and local government entities which provide public services are not covered

Covered Actions [4]

  • Plant closings
  • Mass layoffs
  • Plant closings
  • Mass layoffs
  • Relocation
  • Plant closings
  • Transfer of operations
  • Mass layoffs
  • Relocation
  • Plant Closings
  • Mass Layoffs
  • Sale of Businesses[6]

Exemptions

  • Closing of temporary facility
  • Closing/mass layoff is at completion of a project[7] 
  • Labor negotiations[8]

Same as federal

Same as federal

Same as federal

Notice Requirement

60 Days

90 Days

60 Days

60 Days

New York:

Private sector employers in New York State that employ more than 50 employees must issue a WARN Notice 90 days before closing a plant. They must also issue notice when there is a layoff that affects either:

  • 33% of the workforce (at least 25 workers), or
  • 250 workers from a single employment site.

New Jersey:

An individual or private business entity is covered by the WARN Act if it has been operated by an employer for a period longer than three years and employs 100 or more full-time employees

*Effective July 19, 2020, New Jersey will require severance pay in mass layoff situations.

Pennsylvania:

In general, employers are covered by WARN if they have 100 or more employees, not counting employees who have worked less than 6 months in the last 12 months and not counting employees who work an average of less than 20 hours a week.

  • Private, for-profit employers and private, non-profit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government.
  • Regular federal, state, and local government entities which provide public services are not covered.

In conclusion, as an employer, it is imperative that you understand these implications. Should you have any questions, reach out to your professional advisor and counsel in navigating these regulations, especially during these turbulent times.


[1] This definition has additional qualifiers, (a) 100 or more full-time employees or (b) 100 or more employees, including part-time employees who, in the aggregate, work at least 4,000 hours per week (fewer total employees, such as only 50 employees in New York, may cause the application of certain mini-WARN statutes). Under the federal WARN Act, a full-time employee is an employee who works more than 20 hours per week and has been employed for at least 6 out of the last 12 months (some states have different definitions; for example, California doesn’t have the 20 hours-per-week requirement).

[2] https://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter23&edition=prelim

[3] https://labor.ny.gov/workforcenypartners/warn/warnportal.shtm

[4] https://www.nj.gov/labor/lwdhome/warn/njwarn.html

[5] https://www.dli.pa.gov/Individuals/Workforce-Development/warn/Pages/default.aspx

[6] See individual state guidelines for full details.

[7] This exemption applies only if the workers were hired with the understanding that their employment was limited to the duration of the facility, project or undertaking. An employer cannot label an ongoing project "temporary" in order to evade its obligations under WARN.

[8] Notice need not be provided to strikers or to workers who are part of the bargaining unit(s) which are involved in the labor negotiations that led to a lockout when the strike or lockout is equivalent to a plant closing or mass layoff. Non-striking employees who experience an employment loss as a direct or indirect result of a strike and workers who are not part of the bargaining unit(s) which are involved in the labor negotiations that led to a lockout are still entitled to notice. An employer does not need to give notice when permanently replacing a person who is an "economic striker" as defined under the National Labor Relations Act.

About Andrew J. Still

Andrew Still is a Manager in the Financial Advisory Services Group where he specializes in complex litigation services, forensic accounting investigations, operational analysis and data analytics for cases involving bankruptcy.

About William Pederson

William Pederson is a Director in EisnerAmper's Financial Advisory Services Group with over 30 years in the areas of bankruptcy, commercial litigation, business valuation, accounting and auditing, and forensic accounting services.

About Allen Wilen

Allen Wilen is a Partner and serves as the National Director of the Financial Advisory Services Group assisting the firm’s clients through the litigation and restructuring process.

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