Worker Adjustment and Retraining Notification Act - Exceptions To The WARN Act

Exceptions To The WARN Act

The WARN Act is not activated when a covered employer:

• Closes a temporary facility or completes a temporary project, and the employees working in the facility or temporary project were hired with the clear understanding that their employment would end with the closing of the work facility or the completion of the project; or
• Closes a facility or operating unit because of a strike or a worker lock-out, and the closing is not intended to evade the purposes of the WARN Act.

The WARN Act also is not activated when the following coverage thresholds are unmet:

• If a plant closing or a mass layoff results in fewer than 50 workers losing their jobs at a single employment site;
• If 50 to 499 workers lose their jobs and that number is less than 33 percent of the employer’s total, active workforce at a single employment site;
• If a layoff is for 6 months or less; or
• If work hours are not reduced 50 percent in each month of any 6-month period.

There are three (3) exceptions to the full 60-day notice requirement; however, the notice must be provided as soon as practicable, even when these exceptions apply, and the employer must provide a statement of the reason for shortening the notice requirement in addition to fulfilling other notice information requirements. These three exceptions are:

• Faltering company: When, before a plant closing, a company is actively seeking capital or business and reasonably, in good faith, believes that advance notice would preclude its ability to obtain such capital or business, and this new capital or business would allow the employer to avoid or postpone the shutdown for a reasonable period;

• Unforeseeable business circumstances: When the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable at the time that the 60-day notice would have been required (i.e. a business circumstance caused by some sudden, dramatic, and unexpected action(s) or condition(s) beyond the employer's control, such as a major order's unexpected cancellation); or

• Natural disaster: When a plant closing or mass layoff is the direct result of a natural disaster such as a flood, an earthquake, a drought, a storm, a tidal wave, or the similar effects of nature. In such cases, notice may be given after the event.

Exceptions are often claimed by employers in bankruptcy cases, and bankruptcy courts must often determine how the WARN Act applies. Generally, the WARN Act's requirements and penalties apply when an employer continues to run the business in bankruptcy, rather than close the business, and also when an employer plans a closing or mass layoff before filing bankruptcy. The WARN Act does not apply to a trustee in bankruptcy whose sole function is to close the business.