Recent news has shined a spotlight on the legal consequences of mass layoff situations. Employers should take steps now to prepare for possible reductions in their workforce. By being aware of the potential pitfalls and legal ramifications of layoffs, as well as the opportunities to provide meaningful severance benefits to departing employees and retention benefits that have a low cash cost for remaining employees, employers may help lower their legal exposure and can motivate remaining employees to help improve the company’s business prospects.

What Triggers Liability Under the WARN Act?

Failure to comply with the requirements under the Worker Adjustment and Retraining Notification (WARN) Act can be costly and may lead to class-action litigation. The WARN Act requires employers with 100 or more employees to provide written notice 60 days in advance of plant closings and mass layoffs (or pay and benefits in lieu of notice).

• Plant Closing. The WARN Act is triggered if an employment site (or one or more facilities within an employment site) is shut down, and the shutdown will result in employment loss for 50 or more employees during any 30-day period.
• Mass Layoff. The WARN Act is triggered in a mass layoff (that does not result in a site closing) when an employer does either of the following:
  • Lays off 500 or more employees at a single site of employment in a 30-day period.
  • Lays off at least 50 employees in a 30-day period, and the layoffs constitute 33% or more of the...

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