A WARNing about Layoffs

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07.01.1997

Steven A. Rowe

As companies explore ways to cut production costs and overhead, consolidation or closure of business operations is often an attractive option. Federal law, however, requires that some employers give workers advance notice of impending terminations, layoffs or plant closings. The Worker Adjustment and Retraining Notification, or WARN, Act generally provides that larger employers may not lay off or terminate 50 or more workers or close a business operations site without first giving the affected employees 60-days' advance notice of the layoff or closure. The employer must also give similar notices to state and local authorities and to any representative labor organization. The purpose of this notice is to give employees an opportunity to locate alternative employment prior to losing their jobs and to allow state and local government time to marshal its resources to assist the affected employees. Failure to comply with the WARN Act can result in liability for back pay, lost benefits, civil penalties, and attorneys' fees.

The WARN Act does not apply to all employers and is limited to particular instances of layoffs and closings affecting at least 50 employees. Additionally, there are exceptions for faltering companies, reasonably unforeseeable circumstances and natural disasters, although these exceptions are limited in practice. Also, many states have their own versions of the WARN Act which may apply in circumstances excepted from the federal WARN Act.

If your company is considering consolidation or closure of its business operations, it is imperative that federal and state WARN Act notice requirements be reviewed to determine their applicability. In the event notices are required, your company must be sure to provide affected workers with all of the information required by the WARN Act or such notice may be ineffective. Poyner Spruill LLP has attorneys with experience in determining WARN Act applicability and preparing conforming notices.

Physical Address: 301 Fayetteville Street, Suite 1900, Raleigh, NC 27601

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07.01.1997