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 reflect forthcoming amendments to the mass layoff requirements.
Updated to reflect amendments to New York City Human Rights Law, effective May 20, 2019.
Updated to reflect termination provisions in forthcoming amendments to law regarding restrictive covenants.
Updated to reflect layoff provisions in forthcoming law regarding noncompete requirements.
Updated to include information on Cochise Consultancy, Inc. v. ex rel. Hunt, a Supreme Court case that addresses whistleblower protections.
Updated to include information on a state Supreme Judicial Court case regarding awards under the state WARN Act.
Updated to include state WARN act, effective January 7, 2019.
General Motors recently announced that it will be closing five North American plants and Amtrak announced that it would shut down its Riverside, California call center, triggering requirements under the federal WARN Act.
Updated to reflect amendment to the Oakland Hospitality Worker Retention ordinance.
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.