Overview: A plant closing is a type of downsizing effort employers use to permanently or temporarily shut down a single employment site or even several facilities or operating units in one location, commonly referred to as a "campus." This type of action can occur for myriad reasons including declining economic performance, environmental concerns or natural disasters or the employer's decision to relocate a facility for business efficiency purposes.
Prudent employers often develop a plant closing or downsizing team, which almost universally includes an HR professional, to guide the process of closing a plant from beginning to end. This process includes analyzing the workforce to determine which employees will be terminated using performance-related criteria, reviewing contracts, written policies and procedures to ensure compliance, processing termination benefits like post-employment healthcare and pension plans, and finally, assessing post-plant closing risk to the employer. In that regard, HR professionals often work closely with in-house or external employment counsel to determine if the plant closing will trigger the protections and early notification requirements of either the federal WARN Act or accompanying state legislation. If so, HR professionals may be tasked with preparing notifications and ensuring that outgoing employees receive them within the statutory warning period.
Trends: In addition to the requirements imposed by the federal WARN Act and accompanying state legislation - some of which heightens restrictions for employers, requiring them to notify workers of impending plant closings at lower thresholds - the National Labor Relations Board requires employers with a unionized workforce to negotiate procedures for plant closings in advance. These provisions are typically included in the Collective Bargaining Agreement (CBA), meaning that the employer will have procedures in place for handling a plant closing before the decision to close a plant is contemplated.
Author: Michael Jacobson, JD, Legal Editor
Updated to reflect forthcoming legislation that will protect franchisors from being sued as employers or co-employers when disputes arise with employees of franchisees.
Updated to reflect forthcoming legislation clarifying that franchisors are not employers for purposes of disputes with franchisees or the employees of franchisees.
Enhanced to include regulations protecting franchisors from several types of employment litigation, effective May 10, 2016.
Updated to reflect employee retention and notification requirements under the New York City Grocery Worker Retention Act, effective May 8, 2016.
Updated to reflect forthcoming amendments to severance pay and notification requirements in the event of a mass layoff or plant closing under the Maine Severance Pay Act.
In-depth review of the spectrum of New Jersey employment law requirements HR must follow with respect to Involuntary Terminations
In-depth review of the spectrum of Tennessee employment law requirements HR must follow with respect to involuntary terminations.
In-depth review of the spectrum of Wisconsin employment law requirements HR must follow with respect to involuntary terminations.
This How To details the steps an employer should take to address labor issues arising during and after a merger.
Updated to reflect new legislation that protects grocery workers from termination for a period of time following a change in ownership.
HR guidance on downsizing efforts and plant closings, the typical reasons to close a plant, common HR considerations in the course of a plant closing and planning for post-plant closing risk by complying with federal and state law.