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Employers Contemplating Layoffs Have No Good Choices Except Perhaps WARN To Follow

March 17, 2020

Over the weekend, some 8,000 unemployment claims were filed just in Connecticut (the average is 1,000).  With the Governor ordering the closures of restaurants and bars (except for takeout and delivery), gyms, movie theaters, and more effective at 8 p.m. on March 16, 2020, many employers have already begun instituting mass layoffs.

As a result, employers should be mindful of the requirements of the federal Worker Adjustment and Retraining Notification (“WARN”) Act that may apply in some circumstances.

Who’s Covered?

Employers who have 100 or more full-time employees are covered by WARN. Employers who have 100 or more full-time and part-time employees who, in total, work for more than 4,000 hours per week are also covered. 

What Does WARN require?

There are two types of events that are covered by WARN -- Plant Closings and Mass Layoffs.  For each of these, a notice to employees and local officials is required as outlined below.

A Plant Closing is the permanent or temporary shutdown of a “single site of employment” (though it can also be one or more facilities or operating units within a single site of employment), so long as the shutdown results in an employment loss at that time for 50 or more full-time employees during any 30-day period.

A Mass Layoff is a reduction in force (that is also not the result of a Plant Closing) that results in an “employment loss” for at least 50 employees at a single site of employment during any 30-day period. These 50 or more employees must also make up at least 33 percent of the total employees (excluding any part-time employees).  This standard will be satisfied if there are at least 500 employees (excluding any part-time employees) affected by the mass layoff as well.

What is an “Employment Loss”?

It means either:

1) A termination of employment for reasons other than a discharge for cause, voluntary departure, or retirement;

2) A layoff longer than six months (which indicates that the employee may return after the layoff)

3) A reduction in hours of more than 50 percent during each month of any six-month period.

Thus, if an employer is planning on the layoff only being two months, it may be that WARN may not apply. 

What Type of Notice is Required?

A WARN notice must be given to each employee at least 60 days before a plant closing or mass layoff. However, if there is a union, the notice must be given to the union representative of the affected employees.

In Connecticut, notice must also be provided to the Connecticut Dislocated Worker Unit and the chief elected official of the local government where the closing or layoff is occurring.

Are There Exceptions?

WARN has three sets of exceptions: Faltering Business, Unforeseen Business Circumstances, and Natural Disasters. Each has some caveats to each of them so be sure to contact an attorney should this situation apply to you.

We have not seen new guidance from the USDOL as to whether the coronavirus pandemic may make employers qualify for these exceptions, but there’s no doubt that the Governor’s Executive Orders will likely give employers good reason to argue that the order to close falls within one of the exceptions. 

These are very difficult times for employers and employees. As you navigate these decisions, be sure you understand that little-used laws may still apply in this unusual situation. 

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