Employers Face Additional Employee Notice of Layoffs Requirements

Given the bleak economic forecast, it is inevitable that layoffs will continue to occur as the next Administration takes office. As a result, expect the reintroduction of the Federal Oversight, Reform, and Enforcement of the WARN Act (FOREWARN Act), first introduced in both the House and Senate (and co-sponsored by President-elect Obama) in 2007 (S. 1792 and H.R. 3662). Given the almost daily announcements of major companies laying off significant numbers of employees, this bill could get immediate attention. If enacted, this law will:

  • Revise the definitions of “employer,” “plant closing,” and “mass layoff” found in the Worker Adjustment and Retraining Notification (“WARN”) Act to cover more and smaller employers.
  • Require an employer to provide a 90-day written notice (up from the 60-day requirement) to employees and appropriate state and local governments before ordering a plant closing or mass layoff, thus forcing employers to predict their economic futures.
  • Require the employer to notify the U.S. Secretary of Labor within 60 days of a closing or layoff.
  • Make employers liable for double back pay in the event of a notice violation.
  • Empower the Secretary of Labor to bring civil action on behalf of employees.

In essence, more and smaller employers would be required to foresee economic downturns and notify workers of mass layoffs or plant closings, and would be required to give more notice and face stiffer penalties in the event of a violation. Because President-elect Obama emphasized his support for the unemployed and middle class, and because many in Congress might find it hard to explain a vote against giving laid off employees more notice in the current economic environment, employers can expect serious consideration of the FOREWARN Act or similar legislation.

This trend toward increased employee protection in the event of a layoff is already evident at the state level. A growing number of states have passed their own notice laws. New York’s new WARN Act, for example, requires employers to provide 90 days’ notice prior to a plant closing, mass layoff or relocation occurring on or after February 1, 2009. Contrary to previous written statements it has issued, New York’s Department of Labor is now stating that an employer planning a layoff shortly after February 1, would have to provide notice prior to the law’s effective date to meet the 90-day requirement. The New York law applies to private employers with 50 or more employees who lay off at least 25 employees. Thus, this act not only provides for broader coverage and notice requirements than those articulated in the federal WARN Act, but offers a lower threshold for triggering those requirements. Some other state laws do the same.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.