New York WARN Act: Additional Notice Required for Mass-Layoffs, Plant Closings and Relocations
Due to current economic conditions, many employers are considering workforce reductions and changes that may require them to provide at least 60 days' advance notice to comply with the Federal Worker Adjustment Retraining and Notification Act (WARN) and/or mini-WARN acts applicable in 16 states, including California, Connecticut, New Jersey and Illinois.
On February 1, 2009, New York will become the seventeenth state with an effective mini-WARN act. Unlike many other mini-WARN acts, the New York State Worker Adjustment and Retraining Notification Act (NY WARN) will be more onerous than its federal counterpart. Here are some of the key differences.
Coverage: NY WARN applies to any business enterprise with at least 50 or more full-time employees or 50 or more employees who work an aggregate of 2,000 hours, including overtime. In contrast, WARN applies to any business enterprise with at least 100 full-time employees or 100 full-time and part-time employees who work an aggregate of at least 4,000 hours per week, excluding overtime.
Triggering Events: Both WARN and NY WARN apply to planned plant closings and mass layoffs resulting in employment losses; however, the number of affected employees needed to trigger the NY WARN is only half of that needed to trigger WARN.
Plant Closings: Both acts refer to a plant closing as a shut-down of a single site of employment or one or more of its facilities or operating units, which, during any 30 day period, results in employment losses at the site of a certain number of full-time employees; however, under WARN at least 50 full-time employees must suffer an "employment loss," whereas only 25 must suffer an "employment loss" under NY WARN.
Mass Lay-offs: Under WARN, a mass-layoff is a reduction in force at a single site of employment, which, during any 30 day period, results in employment losses for either 500 or more full-time employees, or at least 50 full-time employees comprising at least one-third, or 33 percent, of the site's full-time workforce. Under NY WARN, these thresholds are halved to 250 or more full-time employees, or at least 25 full-time employees comprising at least one-third, or 33 percent, of the site's full-time workforce.
Relocations: Unlike WARN, NY WARN requires employers to provide notice of a planned relocation, which is defined as the removal of all or substantially all of the industrial or commercial operations of an employer to a different location 50 miles or more away.
Notice Requirements: NY WARN requires employers to provide at least 90 days' notice to affected employees and their representatives, the state department of labor, and local workforce investment boards prior to a "mass layoff, relocation or employment loss."1 In contrast, WARN requires employers to give at least 60 days' notice to affected employees or their union representatives, the state dislocated worker unit and the chief elected official of the appropriate unit of local government.
Exceptions: Under WARN, employers may provide less than 60 days' notice if they fall within one of several exceptions for faltering businesses, unforeseeable business circumstances, natural disasters, temporary projects, strikes or lock-outs, or business sales. While the faltering business exception is available only in the context of a plant closing, the other exceptions apply to plant closings and mass-layoffs. NY WARN provides similar exceptions, but it groups most of them under a provision applicable only to plant closings. Therefore, it is uncertain whether the exceptions for unforeseeable business circumstances, natural disasters, temporary projects and strikes or lock-outs will apply to mass-layoffs or relocations. In the event the unforeseeable business circumstances exception is held not to apply to mass-layoffs, an employer may still be excused for providing less than 90 days' notice if a previously announced short-term lay-off develops into an employment loss due to business circumstances that were not foreseeable when the lay-off was initially announced.
Damages and Enforcement: Under both acts, violators are liable for up to 60 days worth of benefits and backpay to aggrieved employees, as well as attorneys' fees and civil fines up to $500 per day. Both acts allow employers to avoid the civil penalty by paying each aggrieved employee the amount for which the employer is liable within three weeks of ordering the relevant triggering event. Both acts also allow an employer's liability to be reduced if the employer can show that its act or omission was in good faith and it had reasonable grounds for believing that the act or omission was not a violation. However, unlike WARN, which must be enforced by employees in court, NY WARN may be enforced by employees in court or by the New York Commissioner of Labor in an administrative proceeding.
As the number of states with mini-WARN acts continues to grow, employers must carefully analyze their obligations under both WARN and any applicable state laws before instituting a workforce reduction or restructuring.
1 Section 860-b of NY WARN does not list plant closings among the events for which employers must provide advanced notice. This omission was likely a drafting error and advanced notice will probably be required for plant closings as well.