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Wednesday, September 26, 2012

Worker Adjustment and Retraining Notification (WARN) Act: A Primer

Benjamin Collins
Analyst in Labor Policy

Enacted by the 100th Congress, the Worker Adjustment and Retraining Notification (WARN) Act requires qualified employers that intend to carry out plant closings or mass layoffs to provide 60 days’ notice to affected employees, states, and localities. The purpose of the notice to workers is to allow them to seek alternative employment, arrange for retraining, and otherwise adjust to employment loss. The purpose of notifying states and localities is to allow them to promptly provide services to the dislocated workers and otherwise prepare for changes in the local labor market.

The WARN Act applies to employers with at least 100 or more full-time employees or equivalents. Federal, state, and local government employers are not subject to the act.

Broadly speaking, there are three types of events that require notification under the WARN Act. Each of these events is limited to a single site of employment; employment losses by a single employer across multiple sites are not aggregated. Events that trigger the requirements of the WARN Act are

  • a plant closing resulting in employment losses of at least 50 employees;
  • a mass layoff of at least 50 employees where the employment loss consists of at least 33% of employment at the site; or
  • a mass layoff with an employment loss of 500 or more at a single site of employment, regardless of its proportion of total employment at the site or if the employment loss is part of a plant closing. 

For the purposes of the WARN Act, an employment loss is defined as an involuntary termination, layoff exceeding six months, or a reduction in hours worked exceeding 50% for each of six consecutive months. In addition to the three events described above, an employer may also be subject to the WARN Act if it engages in several layoffs during a 90-day period that, in aggregate, meet the criteria of an applicable event. Short-term layoffs that are later extended to six months or more may also trigger WARN Act requirements.

The act and accompanying regulations also specify situations in which an otherwise covered employer may be exempt from WARN Act requirements. Generally, these exceptions relate to unanticipated situations such as unforeseeable business circumstances or natural disasters.

The WARN Act is enforced through the federal court system. While the Department of Labor is permitted to establish regulations related to the act and offer non-binding guidance to employers and workers, all penalties and settlements are administered through the courts.

This report does not provide information on how the WARN Act may apply to government contractors affected by the Budget Control Act of 2011 (P.L. 112-25). CRS issued a Congressional Distribution memorandum that discusses this issue on July 18, 2012. The memorandum was written by Benjamin Collins and Jon O. Shimabukuro and is available from either author.

Date of Report: September 10, 2012
Number of Pages: 11
Order Number: R42693
Price: $29.95

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