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Drastic Changes to WARN Contemplated in "Forewarn Act" Bill
Posted: July 2, 2009
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Both houses of Congress have introduced bills that would amend drastically the Worker Adjustment and Retraining Notification Act, the federal law that requires employers to provide at least 60 calendar days’ advance written notice of “plant closings” and “mass layoffs.” The proposed “Federal Oversight, Reform, and Enforcement of the WARN Act” (“Forewarn Act”) not only would increase the number of employers subject to WARN and increase the number of entities and individuals who must receive WARN notices, but also would require employers to provide 90 days of WARN notices, instead of 60, prohibit waivers of WARN rights unless supervised by the U.S. Department of Labor or the attorney general of a state, and create an administrative enforcement scheme in addition to the existing judicial enforcement scheme, giving the DOL the authority to investigate and prosecute alleged WARN violations. Senator Sherrod Brown (D-Ohio) and Representatives George Miller (D-Calif.) and John McHugh (R-N.Y.) introduced the bi-partisan bills (S. 1374 and H.R. 3042) on June 25, 2009. They said they were responding to the rise in factory closings across the country. They seek “to modernize the WARN act to fit today’s economy,” and to “strengthen enforcement,” “increase penalties” and “close loopholes” in WARN. Under the amendments, employers with at least 75 employees (full-time or part-time) (down from 100) would be covered. A covered “plant closing” would be one affecting at least 25 workers (down from 50). A covered “mass layoff” under the bill is one that affects at least 25 workers (down from 33% of full-time workers amounting to at least 50 workers, or 500 workers). The proposed amendments also appear to eliminate WARN’s current distinction between “part-time” and “full-time” employees. NotificationFollowing the lead provided by the New York state WARN Act, under the proposed amendments, employers would be required to give advance written notification of a covered plant closing or mass layoff at least 90 days prior to the action. Employers must provide to each affected employee written WARN notice, regardless of whether a union represents that employee. In addition, the proposed amendments add new recipients of WARN notices — the Secretary of Labor and the governor of the state where the plant closing or mass layoff will occur. The chief elected official of local government, the state dislocated worker unit, the affected non-union employees and the unions, if any, representing employees, would continue to receive notice, as under current law. (The Forewarn bill excuses WARN notice requirements entirely where “the plant closing or mass layoff is due directly to a terrorist attack on the United States.”) The Forewarn Act makes significant changes in the required contents of the actual WARN notices an employer would provide. The notices would have to include:
The proposed amendments require the Secretary of Labor to maintain a guide on the DOL website of benefits and services which may be available to affected employees. Upon receipt of a WARN notice, the Secretary of Labor would transmit this guide to the employer immediately. Employers must permit, during work hours, reasonable on-site access to any federal, state or local rapid response team responsible for providing reemployment, training services and related services to affected employees. Moreover, within 15 days of receiving WARN notices, the Secretary or Labor would notify the Senators and Representatives who represent the area or areas where the plant closing or mass layoff will occur. Civil Actions in Addition to Administrative Proceedings Against EmployersWARN currently provides for enforcement through federal district court lawsuits commenced by employees, unions or local government officials. In addition to the current enforcement scheme, the proposed amendments would empower the Secretary of Labor to investigate a complaint of violations, issue subpoenas, and bring a civil action in court to recover on behalf of an employee back pay, interest, benefits, and liquidated damages. An employer in violation of the amended WARN Act may be liable to an aggrieved employee for double back pay for each day the employer was required to provide notice before the closing or layoff, but failed to do so, along with interest. Only regular back pay is available now. Moreover, the law would permit the Secretary of Labor to obtain injunctive relief, as well as workers’ back wages and benefits. Other ProvisionsA WARN poster, approved by the Secretary of Labor, would have to be posted at workplaces. A willful violation of the posting requirement could carry a civil penalty for each separate offense. In an apparent response to criticism over the WARN’s lack of a statute of limitations for bringing lawsuits and a U.S. Supreme Court ruling which failed to supply a uniform period (the Court, instead, held that the statute of limitation should be determined by reference to the most analogous limitations period under state law where the closing or layoff took place), the proposed legislation provides a two-year statute of limitations on lawsuits. Finally, the proposal also would prohibit an employee from waiving, deferring or losing any rights under WARN through any agreement or settlement, unless the Secretary of Labor, an attorney general of any state, or a private attorney on behalf of affected employees negotiates the agreement. Implications for EmployersThe Forewarn Act would work radical changes in WARN and impose added burdens and risks on employers facing plant closings or mass layoffs. The proposed amendments cast a wide net, applying to small employers and even smaller employment actions. The Forewarn Act would require employers, already facing adversity and uncertainty, to engage in even more advanced planning. The proposed WARN notices are more detailed than those currently required. Severance agreements, providing departing employees with additional benefits in exchange for a general release and waiver of rights, may be harder to negotiate. The bill requires that waiver to be the product of negotiation on behalf of the employee either by the Secretary of Labor, a state attorney general or a private attorney. This is a general summary of the proposed changes to WARN included in the new bill. Please contact a Jackson Lewis attorney regarding any questions about the Forewarn Act and its impact.
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