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 legal developments regarding the Seattle Hotel Employees Health and Safety Initiative.
Updated to include state WARN act, effective January 7, 2019.
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Updated to reflect amendment to the Oakland Hospitality Worker Retention ordinance.
Updated to include a provision regarding disqualification from unemployment benefits for misconduct, effective August 24, 2018.
Updated to reflect amendments to Missouri Human Rights Act, effective August 28, 2017.
In-depth review of the spectrum of New Hampshire employment law requirements HR must follow in respect to involuntary terminations.
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.