Overview: When employers have no choice but to layoff significant portions of their workforce, they must be careful to comply with federal and state law. Specifically, the federal Worker Adjustment and Retraining Notification (WARN) Act covers certain employers depending on their size and obligates certain employers (depending on the scope or circumstances of their planned action) to notify employees identified for termination in advance. Some states impose more severe restrictions on employers engaging in layoffs or reduction in forces and employers in those states are bound to comply with both their state's version of the WARN Act and the WARN Act itself.
HR plays an important role in the process of determining whether to proceed with a layoff or reduction in force. Specifically, it must help cultivate performance-related metrics to identify employees for termination, assess any post-termination risks for the employer, manage organizational exit and maintain communication with remaining and outgoing employees, notify the employees to be terminated and finally, work with the remaining workforce to maintain productivity and morale.
Trends: WARN Act terminations which require notification are somewhat cyclical in that they mirror the strength of the economy and may be more frequent during political election and changeover cycles. A periodic review of layoff or reduction in force policies by HR - taking recent developments and changes in the law into consideration - can be extremely helpful in limiting post-event risk to the employer.
It is also important for HR professionals to familiarize themselves with WARN Act legislation to ascertain what types of claims against employers are typically successful. This way, HR can identify problematic areas of its WARN Act protocol before they become costly for the employer.
Author: Michael Jacobson, JD, Legal Editor
Updated to include information on a 3rd Circuit case discussing exceptions to the WARN Act notice requirement.
Updated to reflect amendments to Missouri Human Rights Act, effective August 28, 2017.
Updated to include amendments clarifying employment relationships in franchise business models, effective July 31, 2017.
Updated to include termination provisions in the West Virginia Safer Workplace Act, effective July 7, 2017.
Updated to include provisions regarding franchisor liability, effective July 1, 2017.
Updated to include provisions regarding franchisor liability, effective June 29, 2017.
Updated to include provisions regarding franchisor liability, effective May 4, 2017.
Updated to include information on a state supreme court decision discussing constructive discharge based on a violation of public policy.
Updated to include forthcoming amendments clarifying employment relationships in franchise business models.
Updated to reflect a law restricting forum selection clauses relevant to employee terminations, effective January 1, 2017.
HR guidance on layoffs, reductions in force, compliance with the federal Worker Adjustment and Retraining Notification (WARN) Act, and the importance of understanding corresponding or heightened WARN Act requirements based on state law.