WARN Act Implications of Transactions Affecting Multiple Facilities or Mobile Workers

Corporate transactions involving multiple locations and/or employees who regularly travel or regularly work outside of a fixed office can present complicated issues under the Worker Adjustment and Retraining Notification Act (WARN Act). A recent decision by the Court of Appeals for the Fourth Circuit, Meson v. GATX Technology Services Corp., No. 06-1942 (November 16, 2007), highlights this problem.

Under the WARN Act, if a transaction or other corporate restructuring causes at least 50 full-time employees to suffer employment losses at a "single site of employment," a 60-day WARN notice may be required. Thus, identifying who works at a given "site of employment" can be critical to determining whether a WARN notice is required.  

In Meson, an employee terminated in connection with an asset sale claimed that she should have received a WARN notice. The employee had worked as a sales representative and managed a three-person office in Falls Church, Virginia; however, the employee asserted that the company’s Tampa, Florida, headquarters was her site of employment for purposes of the WARN Act because her duties involved significant travel and because she reported to the Tampa office. The employee relied on 29 CFR §639.3(i)(6), which provides that:

For workers whose primary duties require travel from point to point, who are outstationed, or whose primary duties involve work outside any of the employer’s regular employment sites (e.g., railroad workers, bus drivers, salespersons) the single site of employment to which they are assigned as their home base, from which their work is assigned, or to which they report will be the single site in which they are covered for WARN purposes.

The Fourth Circuit rejected the employee's claim, finding that her Falls Church office was her site of employment. The court reasoned that the foregoing regulation applies only to truly mobile workers who have no regular, fixed place of work. Therefore, according to the court, because the employee had a fixed place of work, the fact that she traveled substantially and reported to another office did not bring her within the scope of the regulation. Significantly, however, the Fourth Circuit observed that other courts have applied the regulation more loosely.

The Meson case highlights the fact that in today's evolving workplace, with telecommuting and other developments, determining the site of employment for each employee is not always a simple task. For example, if a company is closing a main office with 45 employees and a branch office with 15 employees, it may appear that no WARN notice is required because 50 employees will not be terminated at any "single site of employment." However, if six of the employees associated with the branch office actually work from home, or regularly travel and are simply assigned to the branch office on paper, and if those same six employees actually receive assignments from the main office, then the main office may be their site of employment, meaning that a WARN notice would be required. Accordingly, the Meson decision demonstrates the need to carefully review the employment effects of corporate transactions under the WARN Act, especially in the case of a company with multiple locations.