Employees in the United States are generally considered employed at-will in most jurisdictions, meaning that either the employee or the employer can terminate the relationship at any time, for any reason or no reason at all, without providing notice. The general rule gives way, however, in limited circumstances which trigger certain federal (and potentially state-specific) statutory notice requirements. The Worker Adjustment and Retraining Notification (WARN) Act and the Older Worker Benefit Protection Act (OWBPA) are two such statutes. Although the notice provisions under these laws apply in relatively narrow circumstances, failure to comply when they are triggered can result in considerable damages and penalties for companies. Accordingly, U.S. employers should be mindful of the notice provisions under these laws.
Under the WARN Act an employer with more than 100 full-time employees “shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order.” The employer must give the notice to “each representative of the affected employees as of the time of the notice or, if there is no such representative at that time, to each affected employee.” Any employer “who orders a plant closing or mass layoff” and who fails to give adequate notice to each “affected employee” or their representative is liable for back pay and benefits for the number of days’ notice was not given.
Covered Employees Under WARN Act
Employers are subject to the WARN Act when they are business enterprises employing either:
- 100 or more employees, excluding part-time employees.
- 100 or more employees, including part-time employees, who in the aggregate work at least 4,000 hours each week, excluding overtime.
The number of employees for WARN Act coverage is determined by the total number of employees employed at all sites of employment under common ownership or control.
A plant closing is a permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, resulting in an employment loss for at least 50 employees during any 30-day period.
A mass layoff is a reduction in force that:
- Is not the result of a plant closing; and
- Results in an employment loss at a single site of employment during any 30-day period for:
- 50 employees who comprise at least 33% of active employees; or
- at least 500 employees.
Exemptions From WARN Act Notice Requirements
Employers are not required to provide advance notice of termination under the WARN Act if:
- A plant closing affects only a temporary facility.
- A plant closing or mass layoff occurs because a particular facility, project or undertaking is completed and affected employees were hired understanding that their employment was limited to that facility, project or undertaking.
- A plant closing or mass layoff constitutes a strike or lockout not meant to evade the WARN Act.
Reduction of Notification Period
The length of the 60-day notice period can be reduced in certain circumstances, including (a) a failure to obtain capital or business that would have averted or postposed the shutdown, (b) a change in business circumstances that was not reasonably foreseeable, or (c) a natural disaster. In such circumstances, the employer must give as much notice as is practicable and must provide a statement regarding the basis for reducing the notification period.
Under the OWBPA, which amended the Age Discrimination in Employment Act (ADEA) and prohibits employment discrimination and retaliation against employees and applicants age 40 or older), employers must comply with statutory requirements in order to secure an effective waiver of rights and release of claims. The law provides that an employee separation agreement that includes the release of an age claim will not be considered knowing and voluntary unless, at a minimum, it:
- Is part of an agreement between the individual and the employer that is written in a manner calculated to be understood by the employee releasing it or the average individual eligible to participate.
- Specifically refers to rights or claims under the ADEA.
- Does not waive the individual’s rights or claims arising after the date the waiver is signed.
- Waives the individual’s rights or claims only in exchange for consideration not already owed to the individual.
- Advises the individual in writing to consult with an attorney before signing the agreement.
- Provides the employee at least 21 days to consider the agreement before signing and an additional 7 days to revoke the agreement if the termination is not part of an exit incentive or other employment termination program (including group layoffs).
If the termination is part of an exit incentive or other employment termination program (two or more employees), the employee has at least 45 days to consider the agreement before signing and an additional 7 days to revoke the agreement. In either case, the agreement is not effective or enforceable until after the expiration of the revocation period.
For an exit incentive or other employment termination program, include information about:
- any class, unit or group of individuals included in the program;
- any eligibility factors for the program;
- any time limits applicable to that program;
- job titles of all individuals eligible or selected for the program;
- ages of all individuals eligible or selected for the program; and
- ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program (no employee names should be included).