The Worker Adjustment and Retraining Notification Act
Revising the Act and Educational Materials Could Clarify Employer Responsibilities and Employee Rights
Gao ID: GAO-03-1003 September 19, 2003
In 2001, 1.75 million workers lost jobs through extended mass layoffs. The Worker Adjustment and Retraining Notification (WARN) Act requires advance notice of plant closures and mass layoffs. The report discusses (1) the extent to which plant closures and mass layoffs were subject to WARN's requirements, (2) the extent to which employers with mass layoffs and plant closures provided notice, and (3) what issues employers and employees face when assessing the applicability of WARN to their circumstances.
About one quarter of the 8,350 plant closures and mass layoffs in 2001 appear subject to WARN's advance notice requirements. Mass layoffs were less likely to be subject to the requirements than plant closures. The difference between mass layoffs and plant closures stems primarily from a rule exempting mass layoffs from WARN's requirements if businesses lay off less than one-third of their workforce (up to 499 workers). Employers provided notice for approximately one-third of layoffs and closures that appear subject to WARN requirements. Specifically, employers provided notices for almost one-half of plant closures, compared with approximately one-quarter of mass layoffs. The remaining mass layoffs and plant closures appear subject to WARN requirements, but notices were not provided. Two-thirds of the notices that employers provided gave the full sixty days' advance notice required by the law. Employers that did not provide notice may be engaging in other practices that limit their liability under the law. In addition, other employers provided notice for mass layoffs and plant closures that were not subject to WARN's requirements as encouraged in the law and the regulations. Employers and employees find WARN's definitions and calculations difficult to apply to their circumstances. Almost all state dislocated worker units reported that employers and/or employees contact them with basic questions on WARN--GAO calculated that states received thousands of communications from employers, employees, and their representatives per year. The courts have interpreted some of the provisions in the law in varying ways, which adds to the confusion and uncertainty when employers and employees apply WARN to their circumstances. Because of this uncertainty, employers, employees, and courts incur costs in time and resources in determining the applicability of WARN to specific circumstances. Finally, the enhanced educational materials being developed by the Department of Labor to address some of these issues have not been made widely available and therefore fail to answer many of the questions asked by employers and employees. This lack of clarity and guidance could ultimately circumvent the purpose of advance notice--namely, to assist dislocated workers in becoming reemployed.
Recommendations
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GAO-03-1003, The Worker Adjustment and Retraining Notification Act: Revising the Act and Educational Materials Could Clarify Employer Responsibilities and Employee Rights
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Revising the Act and Educational Materials Could Clarify Employer
Responsibilities and Employee Rights' which was released on October 20,
2003.
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Report to Congressional Requesters:
United States General Accounting Office:
GAO:
September 2003:
the worker adjustment and retraining notification act:
Revising the Act and Educational Materials Could Clarify Employer
Responsibilities and Employee Rights:
GAO-03-1003:
GAO Highlights:
Highlights of GAO-03-1003, a report to Congressional Requesters
Why GAO Did This Study:
In 2001, 1.75 million workers lost jobs through extended mass layoffs.
The Worker Adjustment and Retraining Notification (WARN) Act requires
advance notice of plant closures and mass layoffs. The report
discusses
(1) the extent to which plant closures and mass layoffs were subject
to WARN‘s requirements,
(2) the extent to which employers with mass layoffs and plant closures
provided notice, and
(3) what issues employers and employees face when assessing the
applicability of WARN to their circumstances.
What GAO Found:
About one quarter of the 8,350 plant closures and mass layoffs in 2001
appear subject to WARN‘s advance notice requirements. Mass layoffs
were less likely to be subject to the requirements than plant
closures. The difference between mass layoffs and plant closures stems
primarily from a rule exempting mass layoffs from WARN‘s requirements
if businesses lay off less than one-third of their workforce (up to
499 workers).
Employers provided notice for approximately one-third of layoffs and
closures that appear subject to WARN requirements. Specifically,
employers provided notices for almost one-half of plant closures,
compared with approximately one-quarter of mass layoffs. The remaining
mass layoffs and plant closures appear subject to WARN requirements,
but notices were not provided. Two-thirds of the notices that
employers provided gave the full sixty days‘ advance notice required
by the law. Employers that did not provide notice may be engaging in
other practices that limit their liability under the law. In addition,
other employers provided notice for mass layoffs and plant closures
that were not subject to WARN‘s requirements as encouraged in the law
and the regulations.
Employers and employees find WARN‘s definitions and calculations
difficult to apply to their circumstances. Almost all state dislocated
worker units reported that employers and/or employees contact them
with basic questions on WARN”GAO calculated that states received
thousands of communications from employers, employees, and their
representatives per year. The courts have interpreted some of the
provisions in the law in varying ways, which adds to the confusion and
uncertainty when employers and employees apply WARN to their
circumstances. Because of this uncertainty, employers, employees, and
courts incur costs in time and resources in determining the
applicability of WARN to specific circumstances. Finally, the enhanced
educational materials being developed by the Department of Labor to
address some of these issues have not been made widely available and
therefore fail to answer many of the questions asked by employers and
employees. This lack of clarity and guidance could ultimately
circumvent the purpose of advance notice”namely, to assist dislocated
workers in becoming reemployed.
What GAO Recommends:
The Secretary of Labor should make enhanced educational materials
widely available to employers and employees for assistance in
understanding the regulations. Further, Congress may wish to consider
amending the WARN act by simplifying the calculation of thresholds,
clarifying the definition of employer and how damages are calculated,
and establishing a uniform statute of limitations. Labor provided
informal comments and technical clarifications on this report, which
we incorporated as appropriate. Labor informed us about efforts that
it has already made to address our recommendation and chose not to
comment formally.
www.gao.gov/cgi-bin/getrpt?GAO-03-1003.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Robert E. Robertson
at (202) 512-9889 or robertsonr@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
An Estimated 24 Percent of All Mass Layoffs and Plant Closures Appear
Subject to WARN's Advance Notice Requirements:
Employers Provided Notice for about One-Third of Layoffs and Closures
Subject to WARN Requirements, Most of Which Were Timely:
Employers and Employees Find WARN's Definitions and Calculations
Difficult to Apply Due to Ambiguities in the Statute and Limited
Guidance:
Conclusions:
Recommendation for Executive Action:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Mass Layoff Statistics Data:
WARN Notices:
Interviews:
Review of Court Cases:
Appendix II: Tests Applied to Find Liability in Parent/Subsidiary,
Sister Corporation, and Lender/Borrower Situations:
Appendix III: Reported Court Cases under WARN Act, 1998-2002:
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Extended Mass Layoffs and WARN Coverage in 2001:
Table 2: Required Elements in the Notices:
Table 3: Different Tests Used by Courts to Determine Employer
Liability:
Table 4: Reported Court Cases under WARN Act, 1998-2002:
Figures:
Figure 1: WARN Decision Matrix:
Figure 2: Events Subject to and Not Subject to WARN Requirements in
2001:
Figure 3: Percentage of Mass Layoffs in 2001 Excluded from WARN
Requirements Due to the One-Third Rule:
Figure 4: Amount of Employer Advance Notice to State Officials before a
Mass Layoff or Plant Closure:
Figure 5: WARN-Related Court Cases by Litigation Subject 1998-2002:
Figure 6: Overlap between WARN Notices and Events That Appear Subject
to WARN:
Abbreviations:
BLS: Bureau of Labor Statistics:
DWU: dislocated worker unit:
ETA: Employment and Training Administration:
MLS: Mass Layoff Statistics:
WARN: Worker Adjustment and Retraining Notification Act:
United States General Accounting Office:
Washington, DC 20548:
September 19, 2003:
The Honorable George Miller
Ranking Minority Member
Committee on Education and the Workforce
House of Representatives:
The Honorable Major R. Owens
Ranking Minority Member
Subcommittee on Workforce Protections
Committee on Education and the Workforce
House of Representatives:
The Honorable Robert E. Andrews
Ranking Minority Member
Subcommittee on Employer-Employee Relations
Committee on Education and the Workforce
House of Representatives:
In 2001, job losses through extended mass layoffs[Footnote 1] reached
1.75 million, the highest level since 1995. To assist workers who have
recently been laid off with job training and to facilitate their
reemployment, Congress enacted the Worker Adjustment and Retraining
Notification (WARN) Act[Footnote 2] in 1988, which requires employers
to provide advance notice to employees and state and local officials in
the event of a mass layoff or plant closure. Advance notice allows
workers and their families some transition time to adjust to the
prospective loss of employment, to seek and obtain alternative jobs,
and if necessary, to enter skill training that will allow these workers
to compete successfully in the job market. According to both business
and labor leaders, advance notice allows time for state officials to
provide information about skill training and retraining services before
the layoff or closure occurs.
WARN generally requires employers with 100 or more workers to provide
60-days advance notice for both mass layoffs and plant closures
involving 50 or more employees. WARN requirements differentiate between
mass layoffs and plant closures by including a provision in the law,
called the "one-third" rule, which only applies to mass layoffs and
requires employers to give advance notice for layoffs of 50-499
employees only if they are reducing their workforce by at least 33
percent. The employer is responsible for determining if the layoff or
closure meets WARN criteria, and providing a notice that contains
certain information about the mass layoff or plant closure as outlined
in the regulations. The Department of Labor is not responsible for
enforcing WARN; enforcement is done entirely through the federal
courts. However, Labor was required to issue implementing regulations,
which it did in 1989. Labor is also responsible for providing
assistance in understanding these regulations and has provided
educational materials to facilitate employers' and employees'
understanding of WARN.
To identify issues about compliance with and implementation of the WARN
Act, you asked us to provide you with information on (1) the extent to
which mass layoffs and plant closures were subject to WARN's advance
notice requirements, (2) the extent to which employers with mass
layoffs or plant closures that appear subject to WARN's advance notice
requirements provided notice, and (3) what issues employers and
employees face when assessing the applicability of WARN to their
circumstances.
To determine the extent to which mass layoffs and plant closures appear
subject to WARN's advance notice requirements, we used the Bureau of
Labor Statistics[Footnote 3] (BLS) Mass Layoff Statistics (MLS) data
for 2001 to determine which events appear subject to WARN according to
the criteria included in the statute and the regulations. To determine
the extent to which employers with mass layoffs and plant closures
subject to WARN's advance notice requirements provided notice, we
obtained all WARN notices received for mass layoffs and plant closures
in 2001 from all 50 states and the District of Columbia.[Footnote 4]
BLS then matched its MLS data for 2001 with the notices states sent us,
which provided an estimate of the number of events subject to WARN's
advance notice requirements where the employers provided
notice.[Footnote 5] To assess the extent to which notices met the
requirements of the WARN Act, we analyzed a random, nationwide sample
of 600 WARN notices from 2001 to determine the extent to which the
notices contained the required elements outlined in the law.[Footnote
6] To determine what issues employers and employees face when assessing
the applicability of WARN to their circumstances, we interviewed
dislocated worker officials in all 50 states[Footnote 7] and the
District of Columbia, labor experts, employee and employer groups, law
firms, and selected a random sample of 50 employers that provided
states with a WARN notice in 2001.[Footnote 8] Finally, we reviewed the
WARN Act provisions, WARN Act regulations, Department of Labor's
educational materials, and all reported court cases decided between
1998 and 2002 that discuss or apply WARN provisions to describe the key
issues raised through the courts by laid-off workers and employers. We
conducted our work between October 2002 and July 2003 in accordance
with generally accepted government auditing standards. (See app. I for
our scope and methodology.):
Results in Brief:
On the basis of 2001 data from BLS, we found that an estimated 24
percent of all mass layoffs and plant closures appear subject to WARN's
advance notice requirements. However, mass layoffs were less likely to
be subject to WARN's advance notice requirements than plant closures.
Specifically, employers were required to provide advance notice for
approximately 13 percent of the 7,097 mass layoffs, while employers
were required to provide advance notice for approximately 82 percent of
the 1,253 plant closures. This difference between mass layoffs and
plant closures stems primarily from the law's "one-third" rule, which
applies only to mass layoffs. In 2001, while approximately 661,000
workers were involved in a mass layoff or plant closure that met WARN
criteria, over 415,000 workers were involved in mass layoffs that did
not meet the one-third rule; therefore, their employers were not
required to provide advance notification.
On the basis of 2001 data from BLS, we found that employers provided
notice for an estimated 36 percent of mass layoffs or plant closures
that appear subject to WARN's advance notice requirements.
Specifically, employers provided notices for almost one-half (46
percent) of plant closures, compared with approximately one-quarter (26
percent) of mass layoffs. The remaining mass layoffs and plant closures
appear subject to WARN requirements, but notices were not provided.
This discrepancy might be explained partially by the use of other
practices, not precluded by WARN, that employers and employee
representatives reported, such as asking employees to sign waivers of
their rights to advance notice. Of the 36 percent of mass layoffs and
plant closures with a WARN notice, about two-thirds of the notices (an
estimated 68 percent) provided at least the required 60-day advance
notice. Almost all of the notices included all required elements
outlined in the regulations. In addition, other employers provided
notice for mass layoffs and plant closures that were not subject to
WARN's requirements as encouraged in the law and regulations.
On the basis of interviews with interested parties and a legal review
of court cases, we found that certain definitions and requirements of
WARN are difficult to apply when employers and employees assess the
applicability of WARN to their circumstances. In particular, employers,
employee representatives, and others reported it problematic to apply
the statute's provisions when calculating the layoff threshold (i.e.,
whether the requisite number of employees have been laid off within
prescribed time frames) that triggers WARN requirements. In addition,
the courts have applied the statute's provisions in varying ways,
resulting in decisions that do not always clarify employer
responsibilities and employee rights under the law. For example, the
courts have interpreted the damages for violating the statute's advance
notice provision in two ways; in some cases the courts have calculated
damages using calendar days, while in other cases they have used work
days. The use of one calculation versus the other either increases or
decreases the amount of money the employer is required to pay for a
WARN violation by approximately 30 percent and affects the amount of
money workers receive when they do not receive 60-days advance notice
of a layoff or closure. Finally, although the Department of Labor has
taken steps to improve educational materials on WARN originally
developed in 1989, Labor has not made these materials widely available
to employers or employees.
To educate and inform employers and employees about WARN, we recommend
that the Secretary of Labor take immediate action to make revised
educational materials widely available to employers and employees for
assistance in understanding the regulations. In responding to
preliminary findings of this report, Labor officials said that updating
the regulations would not address many of the issues outlined in this
report. Consequently, we include a Matter for Congressional
Consideration to clarify employer responsibilities and employee rights
under WARN, specifically clarifying definitions and layoff thresholds
through amending the statute. Labor provided informal comments and
technical clarifications on this report, which we incorporated as
appropriate. Labor informed us about efforts that it has already made
to address our recommendation and chose not to comment formally.
Background:
WARN generally requires that employers with 100 or more full-time
workers give their affected employees or their representatives, the
state's dislocated worker unit, and local government officials 60 days
advance notice of an impending closure or layoff. Employers with 100 or
more full-time workers generally account for less than 2 percent of all
employers. However, these employers employ 64 percent of the labor
force.
The purpose of advance notice is twofold. First, advance notice
provides workers and their families with an appropriate amount of time
to transition and adjust to the prospective job loss, to seek and
obtain alternative jobs, and if necessary, to participate in skill
training and retraining so that these workers can re-enter the job
market. Second, advance notice promotes the delivery of rapid response
services to the affected workers through the state's dislocated worker
unit (DWU), by allowing the DWU to go to the employment site and
provide information about job services before workers are laid off and
more difficult to locate.
A number of factors determine whether employers are required to provide
notice under WARN. (See fig. 1.) First, employers must decide if the
mass layoff or plant closure at a single site will affect at least 50
employees, excluding part-time workers. For a mass layoff, employers
must also consider if the layoff will affect at least 33 percent of the
workforce (excluding part-time workers) and will be expected to exceed
6 months.[Footnote 9] Alternatively, employers with 100 or more
employees who in the aggregate work at least 4,000 hours per week
(excluding overtime) are covered. Employers must then determine if at
least 50 full-time workers will be laid off during any 30-day period,
or for two or more groups, over a 90-day period.[Footnote 10] If the
mass layoff or plant closure has met all these criteria, it would be
subject to WARN's requirements and notice must be provided at least 60
days before the first layoff. Certain layoffs and closures are exempt
from advance notice, including those that involve the completion of a
particular project, certain transfers or reassignments, and strikes or
lockouts.
Figure 1: WARN Decision Matrix:
[See PDF for image]
[End of figure]
WARN also lists three exceptions that allow employers to give less than
60 days advance notice. These are (1) "faltering company," which is
defined as those employers involved in a closure who are trying to seek
new business or raise capital at the time that 60-day notice would have
been required; (2) "unforeseeable business circumstances," which
applies to closings and mass layoffs caused by business circumstances
that were not reasonably foreseeable at the time that 60-day notice
would have been required; and (3) a natural disaster. Employers that
wish to use these exceptions must still provide notice in as much time
as possible and also give a brief statement of why the exception is
being used in the WARN notice.
Congress did not assign any agency responsibility for enforcing WARN.
The Department of Labor is responsible for issuing regulations,
providing educational information about the act, and for providing any
future revisions to the regulations as may be necessary. Employees
seeking redress under WARN must pursue their cases through the federal
courts.[Footnote 11] The time frames for employees to file under WARN
vary by state because the act does not contain a statute of
limitations. Courts can award damages of up to 60 days back pay and
benefits as remedy to workers for WARN violations.[Footnote 12] The
courts must reduce the damages for each day the employer gave notice,
if less than 60 days, or for any wages paid during the violation
period. The courts may also award the winning party reasonable
attorney's fees.
An Estimated 24 Percent of All Mass Layoffs and Plant Closures Appear
Subject to WARN's Advance Notice Requirements:
Of the 8,350 mass layoffs and plant closures in 2001, 24 percent appear
subject to WARN advance notice requirements and involved approximately
661,000 workers. Fewer mass layoffs appear subject to these
requirements than plant closures (13 percent vs. 82 percent). This is
due primarily to the one-third rule that only applies to mass layoffs,
specifically layoffs affecting at least 33 percent of the workforce.
Figure 2 provides a summary of events subject and not subject to WARN
requirements in 2001.
Figure 2: Events Subject to and Not Subject to WARN Requirements in
2001:
[See PDF for image]
[End of figure]
The 948 mass layoffs that appear subject to WARN involved about 300,000
workers. In comparison, the 6,149 layoffs not subject to WARN's
requirements involved over 1 million workers. Forty-five percent of the
mass layoffs were not subject to WARN because the "single event" did
not affect at least one-third of the employer's workforce. (See fig.
3.) These layoffs affected approximately 415,000 workers whose
employers were not required to provide notice.
Figure 3: Percentage of Mass Layoffs in 2001 Excluded from WARN
Requirements Due to the One-Third Rule:
[See PDF for image]
Note: Exclusions do not total 87 percent due to rounding. Other
exclusions include layoffs that affect less than 100 workers and public
sector layoffs. It also includes those workers who are seasonal,
involved in labor disputes, involved in weather-related layoffs, on
leave, and finished with a contract.
[End of figure]
In contrast to mass layoffs, 82 percent of plant closures appear
subject to WARN's requirements. (See fig. 2.) These 1,026 plant
closures affected about 360,000 workers. In comparison, the 227 plant
closures were not subject to WARN's requirements and involved
approximately 20,000 workers. Plant closures may be excluded from
WARN's requirements for a variety of reasons; for example, plant
closures that involve seasonal workers or workers who have completed a
contract. (See app. I for further explanation.):
Employers Provided Notice for about One-Third of Layoffs and Closures
Subject to WARN Requirements, Most of Which Were Timely:
While 1,974 mass layoffs and plant closures appear to be subject to
WARN's advance notice requirements in 2001, BLS estimated that
employers provided notice for only 717 of these events. Most of the
notices provided gave at least the required 60-day advance notice. In
addition, almost all notices included the required elements outlined in
the regulations. Other employers provided notice for mass layoffs and
plant closures that were not subject to WARN's requirements as
encouraged in the law and the regulations.
Employers Provided Notice for about One-Third of WARN-Covered Mass
Layoffs or Closures:
Data from BLS indicated that employers provided notices for 717, or 36
percent, of the 1,974 mass layoffs and plant closures that appear
subject to advance notice requirements under WARN in 2001. Employers
provided notices for plant closures at a higher rate than for mass
layoffs. Specifically, they provided notices for almost one-half (46
percent) of plant closures, compared with approximately one-quarter (26
percent) of mass layoffs. The remaining two-thirds (64 percent) of mass
layoffs and plant closures appeared to be subject to WARN requirements,
but employers did not provide notices. (See app. I.):
In those cases where notices were not provided, employers may be
engaging in other practices, not precluded by WARN, that limit their
liability under the law. Representatives for both employers and
employees told us about two practices in particular: pay in lieu of
notice and waivers. For the former, employers offer employees money
instead of their full 60-days notice.[Footnote 13] For the latter,
employers ask employees to sign a contract waiving their rights under
WARN--sometimes in exchange for a severance package.[Footnote 14] In
both cases, employees might receive payment for foregoing the advance
notice, but the lack of an advance notice means that the state is less
likely to be able to deploy services to facilitate workers'
reemployment before the plant closure or mass layoff. An employer
representative told us that some employers use these other practices
because they are confused, in general, about the law, and its
applicability to their circumstances. According to employers and their
representatives, employers have difficulty determining when WARN
requirements apply to mass layoffs, in particular, because of the
layoff threshold requirements. In addition, employer representatives
told us about concerns that employers have about providing advance
notice, which might influence an employer's decision to engage in other
practices.[Footnote 15] Specifically, some employers fear that
providing advance notice will affect their businesses negatively by
causing employees to leave before the scheduled layoff or commit
sabotage. Although 17 of the 23 employers we interviewed that provided
advance notice told us that some employees resigned after they received
advance notice, only 2 employers indicated that this was a hardship.
Two experienced acts of sabotage.
Interestingly, employers provided more notices than there were WARN
events in 2001. Employers provided 5,349 notices, but there were only
1,974 plant closure and mass layoffs that appeared to meet the WARN
criteria for advance notice. The volume of notices provided suggests
that employers appear to be heeding the portion of the law and
regulations that encourages advance notice in ambiguous situations even
if it is not required by WARN. Providing advance notice when not
required may lead to the delivery of rapid response services for
dislocated workers. Some state officials told us that they provide
rapid response services for layoffs and closures that do not meet WARN
requirements if they receive notice.
Of the Notices Provided, Two-Thirds Were Timely:
On the basis of a sample of WARN notices, we found that employers with
mass layoffs or plant closures that were subject to WARN requirements
and sent a notice to their state officials generally provided notice on
time and almost always included all of the required elements as
outlined in the law. We estimated that two-thirds (68 percent) of the
notices that state officials received were dated 60 or more days before
the mass layoff or plant closure; the estimated average advance notice
was 49 days.[Footnote 16] (See fig. 4.) We further estimated that 32
percent of employers gave state officials less than 60 days to prepare
for the event.[Footnote 17] Regardless of when states received notice,
approximately 90 percent of all notices included all of the required
elements as outlined in the regulations.
Figure 4: Amount of Employer Advance Notice to State Officials before a
Mass Layoff or Plant Closure:
[See PDF for image]
[End of figure]
Employers and Employees Find WARN's Definitions and Calculations
Difficult to Apply Due to Ambiguities in the Statute and Limited
Guidance:
On the basis of our interviews with interested parties and a legal
review of court cases, we found that certain definitions and
calculations of WARN are difficult for employers and employees to apply
when assessing the applicability of WARN to their circumstances. The
courts have applied the statute's provisions in varying ways, resulting
in decisions that do not always clarify employer responsibilities and
employee rights under the law. In addition, Labor has made several
efforts to enhance educational materials on the WARN Act, but these
materials are not yet widely available to employers and employees.
Employers and Employees Find WARN's Definitions and Calculations
Difficult to Apply:
A variety of indicators suggest that employers and employees find WARN
definitions and calculations difficult to apply. These include
inquiries made regarding WARN provisions, litigation stemming from the
provisions, and an examination of the steps necessary to decide if and
when WARN is applicable. In our 1993 report,[Footnote 18] we found that
the employers had similar issues with WARN.
The questions employers and employees ask about the application of WARN
provides one indicator of the difficulties they have in applying its
provisions. State DWUs, the Department of Labor, and employer groups
all reported that employers and employees contact them with basic
questions about WARN.[Footnote 19] Of the state DWU's able to provide
an estimate, 36 states reported receiving thousands of inquiries each
year on WARN. This number does not include the additional eight
dislocated worker units in states that reported receiving inquiries but
could not estimate the number. Moreover, the amount of inquiries
surpasses the amount of events that appear to meet WARN criteria and
even surpasses the amount of total events in 2001. According to
dislocated worker officials, employers called to ask whether their
circumstances required compliance with WARN and where to send notices,
while employees called to ask whether their layoff was covered and what
their rights were. An Employment and Training Administration (ETA)
official within the Department of Labor reported receiving 553
inquiries on the WARN Act in 2002. She also reported that employees
were the most frequent callers and most often asked about practices
employers used in lieu of notice or about severance. Additionally,
employer groups reported receiving inquiries about WARN from employers
and their representatives, and one employer representative told us his
organization provides WARN information sessions for employers twice
each year.
In addition to these queries, litigation over certain provisions
provides further evidence of the difficulties experienced by employers
and employees in applying WARN provisions. During our legal review of
court cases from 1998-2002, we found that certain provisions resulted
in more litigation in the courts. (See fig. 5.) In this time frame, we
identified 68 reported decisions addressing WARN. (See app. III.) The
most commonly litigated issues in these cases were related to layoff
thresholds. Lawyers who litigated WARN cases told us that layoff
threshold issues involved multiple definitions that were difficult to
comprehend. Employers, employer and employee representatives, and
lawyers cited the statute's definition of calculating the 50 employees
who have been laid off, the one-third rule, and the aggregation of
multiple layoffs within a 90-day period as difficult to apply to their
specific circumstances. Lawyers we spoke with said that neither the
statute nor Labor's guidance were sufficient for helping them
understand these definitions. In addition, because the WARN Act does
not have a statute of limitations, the court must decide for each case
whether the case was filed within the appropriate time period. To do
this, the courts look to the most analogous state statute of
limitations as opposed to federal law.[Footnote 20] The applicable
state statute of limitations, however, is not always easy to identify
and often varies from state to state.
Figure 5: WARN-Related Court Cases by Litigation Subject 1998-2002:
[See PDF for image]
Note: Only major issues are represented in the graphic; therefore, they
do not add up to the 68 reported decisions addressing WARN.
[A] WARN requires that layoffs or closures occur at a single site of
employment in order to calculate the requisite number of workers
affected by a layoff or closure. These cases discuss a "single site" as
being geographically connected. Even where several distinct operations
are performed at a geographically connected site, that building or
complex will be counted as one site. In some limited cases,
geographically separate sites may still be considered a single site of
employment because of other business-related connections; for example,
sites that share the same staff and management and are used for the
same purpose.
[B] WARN notices are required to be provided to all "affected
employees." These court cases have dealt with this issue and found, for
example, that workers who are temporarily laid off prior to a WARN
event are entitled to notice.
[C] Establishes who the employer is for purposes of WARN notification.
These cases discuss, for example, the relationship between parent and
subsidiary companies when determining the employer responsible for
providing advance notice.
[End of figure]
Some labor law attorneys we spoke with said that applying the layoff
threshold definitions is difficult because doing so involves multiple
steps they characterized as complicated. In determining whether or not
the WARN threshold has been met, employers must first decide if at
least 50 employees or one-third of the workforce have suffered an
employment loss[Footnote 21] at a single site. Employers must exclude
all employees who have worked fewer than the last 6 out of 12 months or
fewer than 20 hours per week. The layoff threshold calculations are
further complicated when a short-term layoff (i.e., a layoff lasting
less than 6 months) that is not covered under WARN is extended beyond 6
months becoming a long-term layoff (i.e., a layoff lasting more than 6
months) and thus triggering the WARN requirements.
In addition, applying the layoff threshold definitions can be further
complicated when multiple layoffs occur across a 90-day period. If
there are waves of layoffs within a 90-day period that result in an
employment loss for at least 50 workers and one-third of the workforce,
then these combined events may be subject to WARN. For example, if a
company employs 150 employees and has three layoff events involving 20
workers during each event over 90 days, then these events in aggregate
would be subject to WARN's requirements. Waves of layoffs are not
always aggregated for purposes of determining whether WARN is
triggered; however, if the issue is challenged, the employer must
demonstrate that the employment losses were the result of separate and
distinct causes and not an attempt to evade WARN's requirements.
Moreover, if there are multiple layoffs within a 90-day period and one
of them alone triggers WARN, the rest are not subject to WARN's
requirements unless they otherwise meet WARN's requirements. For
example, if a company employs 150 employees and has three layoffs
within a 90-day period involving 20 workers for the first and second
events but 60 employees in the third, then this last event alone would
be subject to WARN's requirements, while the other two would not be
subject to WARN's requirements even though they all took place within a
90-day period.
Lawyers also told us that the difficulties in applying the layoff
thresholds allow some employers to manipulate numbers to qualify under
the one-third rule or lay off workers in waves over a period of time so
that WARN thresholds do not apply during a 90-day period. According to
lawyers representing employers and employees, some employers have a
difficult time applying these standards while other employers are so
savvy at manipulating the numbers that it is difficult for employees to
know if and when their rights have been violated.
Court Decisions Interpret Certain WARN Provisions Inconsistently:
Areas of inconsistency among the courts' interpretations of certain
WARN Act provisions have caused difficulties for employers, employees,
and their lawyers when assessing the applicability of WARN to their
circumstances. Depending upon the circuit,[Footnote 22] the courts
interpret two WARN provisions differently: (1) the calculation of
damages and (2) the definition of "employer" when two companies are
closely related--an issue that is associated with determining the
employer responsible for giving notice.
When calculating damages, the law states that employees are entitled to
up to 60 days back pay for a violation of WARN. However, the law does
not state if the 60 days should be interpreted as calendar days or as
workdays. The difference between the calendar day versus workday
approach would be the difference between 60 and 42 days pay, which
decreases or increases the amount an employer must pay for a WARN
violation by approximately 30 percent. The courts have different
interpretations of the law, and the regulations do not address the
calculation of damages.
Because of this uncertainty, much litigation surrounds the calculation
of back pay and whether the law intended workers to receive 60 or 42
days of pay for a WARN violation. The third circuit alone has found
that back wages should be calculated as calendar days--1 day of wages
multiplied by 60. The other circuit courts that have addressed the
calculation of WARN damages have all upheld the workday interpretation
and use the rationale that the back pay was meant to describe the wages
that would have been earned on average during a 60-day time period.
Lawyers representing both employers and employees would like the law to
be clarified, regardless of whom the outcome favors. For example, if
the calendar day approach were decided as the mandatory way to
calculate damages, then employers would be paying more money in
damages, but employers wishing to settle a WARN violation could better
estimate pay because they would know exactly how much they were liable
for if the case went to court.
The courts also have taken various approaches in determining who the
"employer" is for purposes of complying with WARN. Different courts
have chosen to use varying tests as outlined in several laws to
determine the employer responsible for providing WARN notice.
Specifically, there is no uniformity among the courts around the issue
of identifying the responsible employer when there are two closely
related companies (e.g., the parent of a subsidiary), and it is unclear
as to who is responsible for sending the notice prior to a layoff. The
WARN statute defines an employer as a business enterprise but does not
further define the term to address parent and subsidiary companies.
To give employers, employees, and the courts guidance on determining
who the employer is, WARN's regulations outline a five-factor employer
test. However, this test differs from other federal and state employer
tests, which results in the application of various tests when making
determinations regarding the employer and inconsistent outcomes for
employers and employees in court. As a result, the tests the courts
have applied have varied from case to case. (See app. II.) Each test
examines a number of factors meant to determine which of the two
closely related companies can be identified as the employer. For some
cases, the courts have used the five-factor test established in the
WARN regulations. In others, they have used a slightly different four-
factor test called "federal common law" in combination with the five-
factor test. And in still other cases, courts have looked to state law
in addition to the other laws. In most cases, the courts have used some
combination of these three. According to ETA officials, in promulgating
regulations and the five-factor test they contain, Labor did not intend
to create a new employer test that could be used instead of existing
federal common law.
The Department of Labor's Enhanced Educational Materials Are Not Widely
Available:
Organizations representing both employers and employees indicated that
confusion over WARN definitions and calculations may stem, in part,
from a lack of guidance. The implementing regulations that the
Department of Labor published in 1989 tasked Labor with providing
assistance in understanding the regulations. In the same year, Labor
produced an eight-page informational brochure on the WARN Act for
employers and later made the regulations available over the Internet.
However, the inquiries about WARN discussed earlier indicate that
employers and employees still have basic questions about WARN and find
its definitions and calculations difficult to apply to their
circumstances. Further, the brochure published in 1989 does not address
case law established since the act passed in 1988.
The Department of Labor has made several efforts to enhance educational
materials on the WARN Act, but these materials are not yet widely
available to employers and employees. These efforts have taken place
over the past 3 years and include taking steps to revise the brochure
for employers and developing an additional brochure for employees. In
addition, ETA officials told us that they have made some efforts to put
explanatory information about WARN regulations on the Internet. Labor
has also taken the initial steps to develop an interactive flow chart
that employers could use to determine if WARN is applicable. Labor's
enhanced educational materials can be made widely available independent
of any changes to the law and will begin to address the need for
additional educational materials on WARN.
Conclusions:
The assessment of the applicability of WARN is important, because for
every potential mass layoff or plant closure employers are responsible
for determining if their circumstances require compliance with WARN,
and employees are responsible for determining if their rights have been
violated. Although the Department of Labor has issued implementing
regulations and educational materials on WARN, these efforts have not
been sufficient to clarify employer responsibilities and employee
rights under the WARN Act. The lack of clarity stems, in part, from the
statute that contains provisions the courts, employers, and employees
find difficult to apply to specific situations. Because of this
uncertainty, employers, employees, and courts incur costs in time and
resources in determining the applicability of WARN to individual
circumstances. This lack of clarity could ultimately circumvent the
purpose of advance notice--namely, allowing states to prepare for
workforce reductions and quickly return dislocated workers to the
workforce.
Recommendation for Executive Action:
To educate and inform employers and employees about WARN, we recommend
that the Secretary of Labor take immediate action to make revised
educational materials widely available to employers and employees for
assistance in understanding the regulations.
Matter for Congressional Consideration:
To clarify employer responsibilities and employee rights under WARN and
to address varying court decisions, the Congress may wish to consider
amending WARN by simplifying the calculation of layoff thresholds,
clarifying how damages are calculated, defining the term "employer" to
address closely related corporations, and establishing a uniform
statute of limitations.
Agency Comments and Our Evaluation:
We provided the U.S. Department of Labor with a draft of this report
for review and comment. Labor generally concurred with our conclusions
about the difficulties in WARN implementation and provided informal
comments and technical clarifications, which we incorporated as
appropriate. Labor informed us that it has already made efforts to
address our recommendation and thus chose not to comment formally.
Furthermore, officials have indicated that they will continue to work
towards making enhanced educational materials widely available. In July
2003, the department published new WARN educational brochures for
employers and employees. However, distribution of the brochures is
currently limited to individuals inquiring about WARN through the
department, and the brochures have not yet been posted on ETA's Web
site. Additionally, Labor is developing a WARN e-law advisor program to
help employers and employees understand their rights and
responsibilities under federal employment laws. However, department
officials were unable to provide an estimate on when the e-law advisor
program would be finished.
As agreed with your offices, unless you publicly announce the contents
of the report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to the Secretary of Labor, appropriate congressional committees, and
other interested parties. In addition, the report will be made
available at no charge on GAO's Web site at http://www.gao.gov.
If you or your staf have any questions about this report, please
contact me at (202) 512-9889. Other contacts and staff acknowledgments
are listed in appendix IV.
Robert E. Robertson
Director,
Education, Workforce, and Income Security Issues:
Signed by Robert E. Robertson:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
We were asked to provide information on (1) the extent to which mass
layoffs and plant closures appear subject to the Worker Adjustment and
Retraining Notification (WARN) Act's advance notice requirements, (2)
the extent to which employers with mass layoffs or plant closures that
appear to meet WARN criteria provided notice, and (3) what issues
employers and employees face when assessing the applicability of WARN
to their circumstances.[Footnote 23] To attain the objectives for this
engagement, we began by reviewing the WARN Act provisions, the U.S.
Department of Labor's regulations, and the preamble to the regulations.
We also reviewed Labor's explanatory brochure on WARN for employers, as
well as the draft brochures for employers and employees.
To determine the extent to which mass layoffs and plant closures appear
subject to WARN's advance notice requirements, we asked the Bureau of
Labor Statistics (BLS)[Footnote 24] to determine which events in its
Mass Layoff Statistics (MLS) data for 2001 appear subject to WARN
according to the criteria included in the statute and the regulations.
To determine the extent to which employers with mass layoffs and plant
closures that appear subject to WARN's advance notice requirements
provided notice, we asked all 50 states and the District of Columbia to
provide us with all WARN notices received for mass layoffs and plant
closures in 2001.[Footnote 25] BLS then matched its MLS data for 2001
with the WARN notices states sent us, which provided an estimate of the
number of events subject to WARN's advance notice requirements where
the employers provided notice.[Footnote 26] To assess the extent to
which notices met the requirements of the WARN Act, we conducted
analysis on the content of a random, nationwide sample of 600 WARN
notices to determine the extent to which the notices contained all of
the required elements outlined in the law.[Footnote 27] To determine
what issues employers and employees face when assessing the
applicability of WARN to their circumstances, we talked to dislocated
worker officials in all 50 states and the District of Columbia, labor
experts, employee and employer groups, law firms, and 23 employers from
a random sample of 50 employers that provided WARN notices to states in
2001. Finally, we reviewed all reported court cases decided between
1998-2002 that discuss or apply WARN provisions to describe the key
issues raised through the courts by laid-off workers and employers.
Mass Layoff Statistics Data:
In order to determine the extent to which mass layoffs and plant
closures appear subject to WARN's advance notice requirements, we asked
BLS to perform some work utilizing its MLS data. There are no data
collected on the WARN Act, and although the type of information
obtained by MLS and the information required by the WARN provisions
differ slightly (see next paragraph),[Footnote 28] the MLS data are the
best available for measuring WARN layoffs and closures. Due to the
differing criteria, BLS could only assess whether mass layoffs and
plant closures in the analysis "appear" to meet WARN requirements.
Because MLS does not generate sufficiently detailed information about
all the circumstances involved in each event and BLS's confidentiality
pledge to employers prevented us from contacting the employers
directly, we could not conclusively determine whether every closure
that appeared to meet the WARN criteria actually met each provision of
the law. With these caveats in mind, we asked BLS to provide us with
information on the total number of extended mass layoffs in 2001 and to
subtract from that total the mass layoffs and plant closures that did
not appear to meet the WARN criteria due to exclusions[Footnote 29] and
exemptions[Footnote 30] that are provided in the law. BLS provided us
with a list of 1,974 extended mass layoffs[Footnote 31] from its MLS
data that appear to meet WARN criteria. Table 1 shows the process by
which BLS arrived at its list of events that appeared to meet WARN
criteria.
Table 1: Extended Mass Layoffs and WARN Coverage in 2001:
Extended mass layoff events, 2001: Events; Layoffs: 7,097; Closures:
1,253; Total: 8,350.
Extended mass layoff events, 2001: Less exclusions:; Layoffs: 4,611;
Closures: 210; Total: 4,821.
Extended mass layoff events, 2001: Employment level not provided[A];
Layoffs: 1,070; Closures: 50; Total: 1,120.
Extended mass layoff events, 2001: Employment level less than 100;
Layoffs: 206; Closures: 159; Total: 365.
Extended mass layoff events, 2001: Ownership not private; Layoffs: 125;
Closures: 1; Total: 126.
Extended mass layoff events, 2001: Events with 50-499 separations not
meeting the one-third criteria; Layoffs: 3,210; Closures: [B]; Total:
3,210.
Subtotal, less exclusions; Layoffs: 2,486; Closures: 1,043; Total:
3,529.
Extended mass layoff events, 2001: Less exemptions:; Layoffs: 1,538;
Closures: 17; Total: 1,555.
Extended mass layoff events, 2001: Seasonal work; Layoffs: 1,254;
Closures: 10; Total: 1,264.
Extended mass layoff events, 2001: Labor disputes; Layoffs: 17;
Closures: 1; Total: 18.
Extended mass layoff events, 2001: Employees on leave; Layoffs: 75;
Closures: 0; Total: 75.
Extended mass layoff events, 2001: Weather-related; Layoffs: 25;
Closures: 0; Total: 25.
Extended mass layoff events, 2001: Natural disaster; Layoffs: 2;
Closures: 0; Total: 2.
Extended mass layoff events, 2001: Contract completed; Layoffs: 165;
Closures: 6; Total: 171.
Extended mass layoff events, 2001: Appear to meet WARN criteria;
Layoffs: 948; Closures: 1,026; Total: 1,974.
[SOURCE: BLS.]
[A] For closures, includes those events for which no employment was
provided and between 50-99 workers were separated.
[B] Not applicable.
[End of table]
WARN provisions do not match exactly with the data collected in MLS.
WARN requires that notice be provided for plant closures and mass
layoffs affecting at least 50 workers during a 30-or 90-day period,
with some exclusions and exemptions. MLS uses reports of layoffs
involving at least 50 workers and lasting more than 30 days.
Information on extended mass layoffs is developed initially from each
state's Unemployment Insurance database using a standardized automated
approach for identifying establishments that have at least 50 initial
claims filed against them during a consecutive 5-week period (the
"extended mass layoff"). The state agency then contacts these
establishments by telephone to determine if a "permanent" layoff or
plant closing has occurred. A permanent layoff is one that lasts more
than 30 days. An establishment is considered closed if, at the time of
contact, the employer plans to close, is closing, or has already closed
the work site. The telephone survey obtains specific information on the
nature of the extended mass layoff, including the number of
separations, the reason for and the duration of the extended mass
layoff, and whether the establishment is remaining open.
To determine the extent to which employers with mass layoffs and plant
closures that appear to meet WARN criteria provided notice to their
state DWU, we asked BLS to link its MLS data with WARN notices we
collected from states. First, we asked the DWUs from all 50 states and
the District of Columbia to provide us with a list of all WARN notices
that they received for mass layoffs and plant closures in 2001 (n =
5,349).[Footnote 32] Then BLS matched the mass layoffs and plant
closures that appear subject to WARN's advance notice requirements with
the list of WARN notices. This match was conducted using employer name
and state to determine if there was a match; it also provided us with
an estimate of the number of events that appear to be covered by WARN
where the employers also provided notice to the state dislocated worker
unit. The number of notices, mass layoffs and plant closures, and the
overlap are in figure 6.
Figure 6: Overlap between WARN Notices and Events That Appear Subject
to WARN:
[See PDF for image]
[End of figure]
WARN Notices:
To determine the extent to which WARN notices were timely and complete,
we performed a content analysis on a random, national sample of notices
we collected. From the list provided by the dislocated worker units, we
selected a random sample of 600 notices and asked states to provide us
with copies of those notices. We performed a content analysis to
determine the extent to which notices provided the amount of advance
notice required in the law and contained required elements (see table
2.) Specifically, we evaluated the extent to which employers included
the name and address of the employment site, the date of first
separation, a contact person for the company, the number of affected
workers, and, if applicable, exemptions and a brief statement of the
exemption.[Footnote 33] After reviewing copies of the notices provided
by the state DWUs, we eliminated five WARN notices from the sample
because they occurred in 2000 or 2002. We also eliminated 40 notices
because states told us they were not able to provide those missing
notices because either the employer did not provide a notice (the DWU
learned of the event through other means, such as a newspaper article),
the DWU lost the notice after it was received or the DWU destroyed the
notice after it was archived. The final sample of 555 WARN notices
represents about 10 percent of the adjusted universe of WARN notices
for layoffs and closures in 2001.
Table 2: Required Elements in the Notices:
[See PDF for image]
[SOURCE: DEPARTMENT OF LABOR'S REGULATIONS.]
[A] The following information is not required to be included in the
notices to dislocated worker units and local officials, but must be
made available upon request by the dislocated worker unit or elected
officials: (1) job titles of positions to be affected, (2) statement of
type of layoff, (3) existences of bumping rights, (4) name of union
representative, and (5) name and address of chief elected officer of
each union.
[B] If no representative.
[C] Must also include schedule of separations.
[D] "Bumping rights" include displacing the least senior person in the
affected employee's job classification. For example, a carpenter with
seniority could bump the least senior carpenter in order to remain
employed.
[End of table]
Interviews:
To determine what issues employers and employees face when potentially
affected by WARN, we conducted semistructured interviews with (1) state
DWUs or rapid response officials from all 50 states and the District of
Columbia;[Footnote 34] (2) academic and professional experts on the
WARN Act, including officials from the Guild Law Center; (3) employer
groups, such as Labor Policy Association and Small Business
Administration; (4) employee groups, such as the AFL-CIO and United
Auto Workers; and (5) lawyers with experience litigating WARN cases,
from both the employer and employee sides. These groups provided us
with a multifaceted look from the employer and employee perspective at
the issues faced when potentially affected by WARN. In our interviews
with the state dislocated worker units in all 50 states and the
District of Columbia, we asked the officials to estimate the number of
inquiries they receive per year. Thirty-six states were able to provide
estimates.
To collect information on employer perspectives and experiences
regarding the clarity of provisions and the consequences associated
with filing a WARN notice, we conducted structured interviews[Footnote
35] with a small, randomly selected set of employers who provided a
WARN notice to their state dislocated worker unit for a mass layoff or
plant closure in 2001. We attempted to contact 50 employers. Of those,
18 had closed entirely and/or we were unable to locate any current
contact information for them. From the remaining 32 employers, 9
declined to participate in the interview for a variety of reasons. We
interviewed 23 employers. With these data, among other sources, we were
able to assess which WARN provisions were unclear to the employers,
other practices used to limit potential WARN liability, and costs
associated with providing notice.
Review of Court Cases:
To determine what issues employers and employees face when potentially
affected by WARN, we reviewed court cases from 1998-2002 that were
substantively about the WARN Act. In order to find all of the relevant
court cases that dealt with the WARN Act, we used Lexis, Westlaw, and
the Guild Law Center's Plant Closing (WARN Act) Project.[Footnote 36]
The Department of Labor's ETA also provided us with a list of cases
that we checked against our own research and the Guild Law Center's
Plant Closing Project to establish a list of cases addressing WARN
during the past 5 years.
From our list of all reported court cases that discuss or apply WARN
provisions, we summarized the outcomes of each case and then coded each
case according to the issues addressed. (See app. III and fig. 5.) We
reviewed the cases to identify patterns between the interviews and
court cases where employers and employees seem to be confused with the
law and its regulations. In addition, we reviewed law review articles
discussing the inconsistencies in the application of various WARN
provisions by the courts. We also reviewed articles discussing the
evolution of WARN and general information regarding the law and its
regulations.
[End of section]
Appendix II: Tests Applied to Find Liability in Parent/Subsidiary,
Sister Corporation, and Lender/Borrower Situations:
State law tests: Generally focus on the extent of actual control the
company has over its own business decisions.
Federal common law test: Also referred to as single employer,
integrated enterprise or single business enterprise test: (1) common
ownership; (2) common management; (3) centralized control of labor
relations; (4) functional integration of operations; focus on whether
two nominally independent enterprises really constitute one integrated
enterprise (absence of arms length dealing).
WARN: Department of Labor's regulations (20 C.F.R. 639.3(a)(2)): (1)
common ownership; (2) common directors and/or officers; (3) de facto
exercise of control; (4) unity of personnel policies emanating from a
common source; (5) dependency of operations.
Table 3: Different Tests Used by Courts to Determine Employer
Liability:
[See PDF for image]
Source: GAO analysis, Westlaw, and Lexis.
[End of table]
[End of section]
Appendix III Reported Court Cases under WARN Act, 1998-2002:
Table 4: Reported Court Cases under WARN Act, 1998-2002:
Case: Air Trans. Local 504, Transp. Workers Union of Am. v. Ogden
Aviation Servs., No. 96 CV 4506 SJ, 1998 WL 191297 (E.D.N.Y. Apr. 20,
1998).; State filed: New York; Year: 1998; Outcome: Court found that
Ogden, seller company, was not responsible for providing WARN notices
to workers subsequently laid off by buyer company; case proceeded
toward trial.
Case: Amalgamated Serv. & Allied Indus. Joint Bd. v. Supreme Hand
Laundry, Inc., 182 F.R.D. 65 (S.D.N.Y. 1998).; State filed: New York;
Year: 1998; Outcome: Corporation failed to file notice of appearance of
counsel, and court entered default judgment for plaintiff. Corporation
was not permitted to subsequently raise a defense of good faith.
Case: Amatuzio v. Gandalf Sys. Corp., 994 F. Supp. 253 (D.N.J. 1998).;
State filed: New Jersey; Year: 1998; Outcome: Court held that WARN's
definition of "affected employees" is not limited to those laid off
after plant shutdown, but includes those expected to experience an
employment loss. With respect to one group, more facts were needed to
determine whether layoffs of two groups should be aggregated for
purposes of determining WARN's applicability.
Case: Breedlove v. Earthgrains Baking Cos., Inc., 140 F.3d 797 (8th
Cir. 1998).; State filed: Arkansas; Year: 1998; Outcome: Court held
that back pay liability under WARN is calculated based on working
days.
Case: Burns v. Stone Forest Indus., Inc., 147 F.3d 1182 (9th Cir. Or.
1998).; State filed: Oregon; Year: 1998; Outcome: Back pay under WARN
is limited to the days that would have been worked during the period
(up to 60 days) for which no notice was given.
Case: Cain v. Inacom Corp., No. ADV. 00-1724, 2001 WL 1819997 (Bankr.
D. Del. Sept. 26, 2001).; State filed: Delaware; Year: 2001; Outcome:
Corporation's motion to dismiss was denied because there was a question
of whether at the time of the layoffs it was a liquidating fiduciary or
"engaged in business"--if the latter, it would be considered an
employer under WARN.
Case: Calvert v. Ladish Co. Inc., LR-C-97-577 (E.D. Ark. 1999).[A];
State filed: Arkansas; Year: 1999; Outcome: Employers' motion to
dismiss was denied because seller was not relieved of obligation to
provide notice where the seller merely transferred assets to a buyer
and not its employees.
Case: Calvert v. Ladish Co. Inc., LR-C-97-577 (E.D. Ark. Mar. 23,
1998).[A]; State filed: Arkansas; Year: 1998; Outcome: Employees who
were laid off as a result of a plant closing and not rehired after sale
of company suffered an employment loss; those rehired after sale did
not.
Case: Castro v. Chicago Housing Auth., No. 99 C 6910, 2001 WL 709445
(N.D. Ill. June 25, 2001).; State filed: Illinois; Year: 2001; Outcome:
Factual questions to be resolved at trial were whether a single site
existed for WARN purposes and whether employer, a quasipublic entity,
is a commercial enterprise and thus subject to WARN requirements.
Case: Castro v. Chicago Housing Auth., No. 99 C 6910, 2002 WL 31324053
(N.D. Ill. Oct. 17, 2002).; State filed: Illinois; Year: 2002; Outcome:
Court found that a group of layoffs occurred at a single site.
Case: Childress v. Darby Lumber, Inc., 126 F. Supp. 2d. 1310 (D. Mont.
2001).; State filed: Montana; Year: 2001; Outcome: WARN obligations
applied because parent and wholly owned subsidiary were a single
business enterprise that employed over 100 employees. Employer did not
qualify for good faith, unforeseen business circumstance exception, or
faltering company exception. Employer's notice was inadequate because
it did not state why the notice was for a shortened time period.
Case: Ciarlante v. Brown & Williamson Tobacco Corp., 143 F.3d 139 (3rd
Cir. 1998).; State filed: Pennsylvania; Year: 1998; Outcome: Court
reversed ruling for plaintiffs because it was not clear whether
plaintiffs, traveling salesmen, were at a "single site of employment."
The case was remanded to district court.
Case: Corbo v. Tompkins Rubber Co., 146 Lab. Cas. (CCH) P 10071, 2002
WL 1969653 (E.D. Pa. 2002).; State filed: Pennsylvania; Year: 2002;
Outcome: District court dismissed plaintiff's case because employer did
not have more than 100 employees, which is the threshold for WARN
coverage.
Case: DePalma v. Realty IQ Corp., No. 01 CIV 446 RMB, 2002 WL 461647
(S.D.N.Y. Mar. 25, 2002).; State filed: New York; Year: 2002; Outcome:
Defendant's motion to dismiss on the grounds that employees had waived
their WARN claims was denied; questions remained about the whether
signed releases were voluntary, and case will proceed toward trial.
Case: Dingle v. Union City Chair Co., 134 F. Supp. 2d 441 (W.D. Pa.
2000).; State filed: Pennsylvania; Year: 2000; Outcome: Court found
that fewer than 50 employees suffered an employment loss; thus WARN
notice requirement was not triggered.
Case: Gomez v. Am. Garment Finishers Corp., No. EP-99-CA-260-DB, 2000
WL 33348730 (W.D. Tex. Oct. 12, 2000).; State filed: Texas; Year: 2000;
Outcome: Employees previously laid off could be affected employees
entitled to notice subsequently if they had a reasonable expectation of
recall.
Case: Graphic Communs. Int'l Union, Local 31-N v. Quebecor Printing
Providence Inc., F. Supp. 2d, (D. Md. Apr. 25, 2002).; State filed:
Maryland; Year: 2002; Outcome: Employer was entitled to use "good
faith" defense even though it did not initially raise this defense.
Case: Graphic Communs. Int'l Union, Local 31-N v. Quebecor Printing
(USA) Corp., 252 F.3d 296 (4th Cir. 2001).; State filed: Maryland;
Year: 2001; Outcome: Notice was required when the plant was shut down
even though workers were previously laid off and had received notice of
temporary layoff. When shutdown occurred, employees suffered an
"employment loss," triggering new notice.
Case: Halkias v. General Dynamics Corp., 137 F.3d 333 (5th Cir. 1998).;
State filed: Texas; Year: 1998; Outcome: Court found that an unforeseen
business circumstance relieved the employer from providing notice where
there was not a foreseeable probability that a significant government
contract would be cancelled.
Case: Hollowell v. Orleans Regional Hosp. LLC, 217 F.3d 379 (5th Cir.
2000).; State filed: Louisiana; Year: 2000; Outcome: Court affirmed
district court's decision in favor of plaintiffs, finding that two
groups of workers laid-off over a 90 day period were appropriately
combined for purposes of establishing that at least 50 workers suffered
an employment loss, thus triggering the WARN notice requirements.
Case: Hotel Emples. and Rest. Emples. Int'l Union Local 54 v. Elsinore
Shore Associates, 173 F.3d 175 (3rd Cir. 1999).; State filed: New
Jersey; Year: 1999; Outcome: Court affirmed district court's decision
in favor of employer--failure to provide notice was excused by
unforeseeable business circumstance exception where government ordered
the shutdown of a casino.
Case: Hotel Emples. & Rest. Emples. Int'l Union v. Paroc, Inc., No. 99
Civ. 3078 MBM, 2000 WL 204537 (S.D.N.Y. Feb. 2, 2000).; State filed:
New York; Year: 2000; Outcome: Unforeseeable business exception did not
apply because employer could not show that successful completion of
negotiations was not reasonably foreseeable as of the date that closure
notices would have been required.
Case: In re Arrow Transp. Co. of Delaware, 224 B.R. 457 (Bankr. D.
Or.1998).; State filed: Oregon; Year: 1998; Outcome: Bankruptcy court
found that the debtor/employer was a "prevailing party" under the WARN
Act and that it is entitled to an award of attorneys' fees incurred in
objecting to that claim.
Case: In re Beverage Enters., Inc., 225 B.R. 111 (Bankr. E.D. Pa.
1998).; State filed: Pennsylvania; Year: 1998; Outcome: WARN Act claims
arising or earned as a result of events, which take place post-petition
are entitled to administrative claim status under the Bankruptcy Code.
Case: In re Fidelity Bond & Mortgage Co., No. 99-18427 DAS, 2000 WL
1218358 (Bankr. E.D. Pa. (Aug. 22, 2000)).; State filed: Pennsylvania;
Year: 2000; Outcome: Layoffs at different sites in Philadelphia did not
occur at a "single site," and insufficient evidence was presented that
50 employees were laid off at any one site.
Case: In re Jamesway Corp., 235 B.R. 329 (Bankr. S.D.N.Y. 1999).; State
filed: New York; Year: 1999; Outcome: Court found a violation of the
WARN Act, and the reliance on unforeseeable business circumstance,
faltering company, and good faith exceptions were not applicable; WARN
claims for back pay do not receive priority in bankruptcy.
Case: In re Jamesway Corp., 242 B.R. 130 (Bankr. S.D.N.Y. 1999).; State
filed: New York; Year: 1999; Outcome: Claim for attorneys' fees awarded
to a group of workers who brought successful WARN case were given
priority in bankruptcy.
Case: In re Kitty Hawk, Inc., 255 B.R. 428 (Bankr. N.D. Tex. 2000).;
State filed: Texas; Year: 2000; Outcome: WARN claims are not
administrative claims receiving high priority against a bankrupt
debtor; WARN claims are treated as wages or salaries--a "third
priority" claim.
Case: In re United Healthcare Sys., Inc., 200 F.3d 170 (3rd Cir.
1999).; State filed: New Jersey; Year: 1999; Outcome: Court of appeals
reversed lower court ruling for plaintiffs; Court held that a bankrupt
company winding up its affairs was not an "employer" required to give
WARN notice.
Case: International Assoc. of Machinists and Aerospace Workers v.
Compania Mexicana de Aviacion, S.A. de C.V., 199 F.3d 796 (5th Cir.
2000).; State filed: Texas; Year: 2000; Outcome: Appeals court affirmed
lower court's decision that employees' release of rights constituted a
waiver, and the court held that the release does not have to
specifically mention WARN.
Case: International Oil, Chem. & Atomic Workers, Local 7-517 v. The
Uno-Ven Co., 170 F.3d 779 (7th Cir. 1999).; State filed: Illinois;
Year: 1999; Outcome: The appeals court affirmed a lower court decision
that the laid-off workers who were rehired after the sale of a company
did not suffer an employment loss and thus not entitled to notice.
Case: International Union, Oil, Chem. & Atomic Workers, Local 7-517 v.
Uno-Ven Co., No. 97 C 2663, 1998 WL 341617 (N.D. Ill. June 23, 1998).;
State filed: Illinois; Year: 1998; Outcome: The laid-off workers who
were rehired after sale of company did not suffer an employment loss.
Case: Joe v. First Bank Sys., Inc., 202 F.3d 1067 (8th Cir. 2000).;
State filed: Nebraska; Year: 2000; Outcome: The appeals court affirmed
a lower court decision finding that one employee waived his WARN Act
notice, and another, who did not sign the waiver, received a defective
notice (no likely date of when the layoff will occur or the date of
separation).
Case: Johnson v. Telespectrum Worldwide, Inc., 29 Fed. Appx. 76, 2002
WL 54693 (3rd Cir. 2002) 145 Lab. Cas. (CCH) P 11228 (NO. 01-1985).;
State filed: Delaware; Year: 2002; Outcome: The court found that the
plaintiffs failed to establish that at least 50 employees suffered an
employment loss, noting that employees who quit voluntarily are not
considered to have suffered an employment loss for meeting the
threshold.
Case: Johnson v. Telespectrum Worldwide, Inc., 61 F. Supp. 2d 116 (D.
Del. 1999).; State filed: Delaware; Year: 1999; Outcome: Court declined
to decide the case without a trial, finding that issues of fact
remained concerning whether the requisite number of layoffs occurred to
trigger WARN notice requirements and whether an offer to transfer
workers relieved the employer of the obligation to provide workers
notice; case proceeded toward trial.
Case: Kelly v. Sabretech Inc., 106 F. Supp. 2d 1283 (S.D. Fla. 1999).;
State filed: Florida; Year: 1999; Outcome: Court held that back pay
damages are to be based on work days, not calendar days.
Case: Kildea v. Electro-Wire Prods., Inc., 144 F.3d 400 (6th Cir.
1998).; State filed: Michigan; Year: 1998; Outcome: Laid-off employees
who had a reasonable expectation of recall were "affected employees"
entitled to notice when the plant announces a permanent shutdown.
Employer was entitled to good faith defense where it interpreted the
statute reasonably and otherwise complied with requirements.
Case: Kildea v. Electro-Wire Prods., Inc., 60 F. Supp. 2d 710 (E.D.
Mich. 1999).; State filed: Michigan; Year: 1999; Outcome: Despite a
finding of a violation of WARN by the circuit court, on remand, the
district court reduced the amount of damages to zero based on a finding
of good faith and did not award attorney's fees.
Case: Kirby v. Cyprus AmaxMinerals Co., 203 F. 3d 835 (10[TH] Cir.
2000); State filed: New Mexico; Year: 2000; Outcome: Plaintiffs sought
relief for WARN violation from the successor company and not the
companies that had terminated the employees without notice. Since the
defendant was not the employer at the time, court found that the
employer was not liable.
Case: Local 1239, Int'l Bhd. of Boilermakers, Iron Shipbuilders,
Blacksmiths, Forgers and Helpers v. Allsteel, Inc., 9 F. Supp. 2d 901
(N.D. Ill. 1998).; State filed: Illinois; Year: 1998; Outcome:
Following a finding of WARN Act violation, court concluded that
employer was liable for back pay only for days worked during violation
period. Alleged knowledge by employees that plant would close did not
excuse employer from complying with WARN.
Case: Local 1239, Int'l Bhd. of Boilermakers, Iron Shipbuilders,
Blacksmiths, Forgers and Helpers v. Allsteel, Inc., No. 94 C 3552, 1998
WL 808981 (N.D. Ill. 1998).; State filed: Illinois; Year: 1998;
Outcome: Court found that where a layoff for which a WARN notice was
provided was postponed, employees were entitled to additional notice
referring back to the earlier notice.
Case: Local 819, Int'l Bhd. of Teamsters v. Textile Deliveries, Inc.,
No. 99CIV. 1726 (JGK), 2000 WL 1357494 (S.D.N.Y. Sept. 20, 2000).;
State filed: New York; Year: 2000; Outcome: Court found that there was
a genuine issue for trial as to whether employees, who were terminated
and offered new employment, suffered a break in employment constituting
an employment loss.
Case: Local Joint Exec. Bd. of Culinary Bartender Trust Fund v. Las
Vegas Sands, Inc., 7 Fed. Appx. 753, 2001 WL 366784 (9th Cir. 2001)
(NO. 98-17065, 98-17322).; State filed: Nevada; Year: 2001; Outcome:
Back pay under WARN includes tips and holiday pay; this court reversed
the lower court's denial of class certification as a "damages" class.
Case: Local Union No. 1992, Int'l Bhd. of Elec. Workers v. Okonite Co.,
189 F.3d 339 (3rd. Cir. 1999).; State filed: New Jersey; Year: 1999;
Outcome: Reversing the district court's decision, Appeals court held
that plaintiffs' waiver of WARN notice may have been valid because of
ambiguous provisions of a collective bargaining agreement. The district
court had found that the plaintiffs' waivers in exchange for severance
benefits were invalid for lack of consideration because they were
entitled to those benefits under the agreement without signing the
waiver. Case was remanded to district court for further proceedings.
Case: Local Union No. 1992, Int'l Bhd. of Elec. Workers v. Okonite Co.,
34 F. Supp. 2d 230 (D.N.J. 1998).; State filed: New Jersey; Year: 1998;
Outcome: The district court reduced the attorneys' fees awarded to a
Union, which had brought a successful WARN action.
Case: Michigan Regional Council of Carpenters v. Holcroft L.L.C., 195
F. Supp. 2d 908 (E.D. Mich. 2002).; State filed: Michigan; Year: 2002;
Outcome: On motion for reconsideration, the court reversed an earlier
decision that fewer than 50 employees suffered an employment loss,
finding several questions of fact, such as whether certain laid off
employees had a reasonable expectation of recall.
Case: New England Health Care Emples. Union, District 1199 S.E.I.U. v.
Fall River Nursing Home Inc., 14 I.E.R. Cas. (BNA) 400, 1998 WL 518188
(D. Mass 1998).; State filed: Massachusetts; Year: 1998; Outcome: Court
found that issues of fact were present concerning the applicability of
the WARN Act's strike exemption; shutdown of a health care facility
resulting from a strike notice would constitute a strike under WARN
unless the notice were rescinded in a timely way. Case proceeded toward
trial.
Case: North Star Steel Co. v. Thomas, 515 U.S. 29 (1995).; State filed:
Pennsylvania; Year: 1995; Outcome: Supreme Court resolved a split in
the circuits and held that in the absence of a statute of limitations
in the WARN Act, federal courts should look to analogous state law, not
federal law, to determine the time period for filing an action under
WARN.
Case: Oil, Chem. and Atomic Workers v. RMI Titanium, 199 F.3d 881 (6th
Cir. 2000).; State filed: Ohio; Year: 2000; Outcome: Three employees
who were working on a special project and terminated could not be
aggregated for purposes of meeting threshold number of layoffs in 90-
day period, since they were laid off for separate and distinct reasons.
No reduction in force occurred when temporarily laid-off employees were
again laid off, but replaced by employees returning from voluntary
layoff status, and thus not counted toward the threshold criteria.
Case: Paper, Allied-Indus., Chem. & Energy Workers, Int'l Union et al.
v. Sherman Lumber Co., 2000 U.S. Dist. LEXIS 10450 (D. Me. July 11,
2000).; State filed: Maine; Year: 2000; Outcome: Magistrate
recommendation that WARN claim be denied because employer had fewer
than 100 employees during the 12-month period preceding the snapshot
date (the date that notice was to be given).
Case: Pearson v. Component Tech. Corp., 247 F.3d 471 (3d. Cir. 2001).;
State filed: Pennsylvania; Year: 2001; Outcome: Court affirmed lower
court finding that that employer's creditor was not liable for
employer's failure to provide notice using the test contained in
regulations for determining the employer.
Case: Pearson v. Component Tech. Corp., 80 F. Supp. 2d 510 (W.D. Pa.
1999).; State filed: Pennsylvania; Year: 1999; Outcome: The creditor
was not liable for employer's failure to provide notice.
Case: Pena v. Crowley Am. Transp., Inc., 172 F. Supp. 2d 321 (D. P.R.
2001).; State filed: Puerto Rico; Year: 2001; Outcome: Plaintiff raised
multiple claims, including one WARN allegation. Court found that only
14 employees were laid off; therefore, the notice requirement was not
triggered.
Case: Ramos Pena v. New P.R. Marine Mgmt., Inc., 84 F. Supp. 2d 239 (D.
P.R. 1999).; State filed: Puerto Rico; Year: 1999; Outcome: Multiple
count case, including WARN allegation; court found that layoffs did not
occur at a single site (Ponce and San Juan); therefore, the threshold
requirement was not met.
Case: Reyes v. Greater Texas Finishing Corp., 19 F. Supp. 2d 709 (W.D.
Tex. 1998).; State filed: Texas; Year: 1998; Outcome: Court found that
a factual issue remained about whether 50 employees suffered an
employment loss. Thus, case could proceed toward trial.
Case: Roquet v. Arthur Anderson, LLP, No. 02 C 2689, 2002 WL 1900768
(N.D. Ill. Aug. 16, 2002).; State filed: Illinois; Year: 2002; Outcome:
Court held that part-time employees can experience an employment loss
and may bring suit against employer for failing to provide 60 day's
notice of mass layoff.
Case: Snider v. Commer. Fin. Servs., Inc., 288 B.R. 890 (N.D. Okla.
2002).; State filed: Oklahoma; Year: 2002; Outcome: Court held that
employer did not establish unforeseen business circumstance defense for
failing to provide timely notice, but that the notice given for the
shortened time period contained the required information.
Case: Teamsters Local 838 v. Laidlaw Transit, Inc., 156 F.3d 854 (8th
Cir. 1998).; State filed: Montana; Year: 1998; Outcome: Court held that
seasonal employees did not suffer an employment loss because they were
laid off every year at the time of plant closing and had sufficient
notice that they would not be recalled.
Case: Teamsters Nat'l Auto. Transporters Indus. Negotiating Comm. v.
Hook Up, Inc., No. Civ. A. 7:02CV00035, 2002 WL 1066954 (W.D. Va. May
23, 2002).; State filed: Virginia; Year: 2002; Outcome: Court dismissed
plaintiff's claim for civil penalties ($500 per day, available only to
local government).
Case: United Auto., Aerospace & Agric. Implement Workers of Am. Local
157 v. OEM/Erie Westland, LLC, 203 F. Supp. 2d 825 (E.D. Mich. 2002).;
State filed: Michigan; Year: 2002; Outcome: Employer's motion for
summary judgment was denied because court found issue of fact--whether
company exercised the requisite degree of control over the plant's
operations to qualify as a "single employer.".
Case: United Food and Commer. Workers Union Local 751 v. Brown Group,
Inc., 517 U.S. 544 (1996).; State filed: Montana; Year: 1996; Outcome:
Unions have standing (legal authority) to sue on behalf of its members
under WARN.
Case: United Mine Workers of Am. Int'l Union v. Martinka Coal Co.,
C.A., #1:96-CV-156 (Filed Jan. 5, 1998) (N.D. W.Va.).[A]; State filed:
West Virginia; Year: 1998; Outcome: Court found that workers laid off
in advance of plant closing were entitled to WARN notice.
Case: United Mine Workers of Am. Int'l Union v. Martinka Coal Co., 45
F. Supp. 2d 521 (D. W.Va. 1999).; State filed: West Virginia; Year:
1999; Outcome: The court found that the coal company had violated WARN
with respect to 89 employees; the court addressed the issue of damages-
-overtime, benefits, and inactive employees.
Case: United Mine Workers of Am. v. Martinka Coal Co., 202 F.3d 717
(4th Cir. 2000).; State filed: West Virginia; Year: 2000; Outcome: The
appeals court affirmed a lower court decision in favor of the
plaintiffs: When an affected employee's layoff date is earlier than the
date of the plant shutdown, the affected employee is entitled to notice
of the closing 60 days before the date of that employee's layoff.
Case: Watson et al. v. Michigan Indus. Holdings, et al., Civil No. 97-
76034-DT (E.D. Mich. October 13, 2000).[A]; State filed: Michigan;
Year: 2000; Outcome: Court found that the unforeseeable business
circumstances exception applied where the employer discontinued its
operations due to unexpected failure of a customer to pay a bill.
Case: Watson v. Michigan Indus. Holdings, Inc., 311 F.3d 760 (6th Cir.
2002).; State filed: Michigan; Year: 2002; Outcome: Appeals court
affirmed district court's decision in favor of defendant based on
unforeseeable business circumstances exception.
Case: Watts v. Marco Holdings, L.P., 13 I.E.R. Cas. (BNA) 1552, 1998 WL
211770 (N.D. Miss. 1998).; State filed: Mississippi; Year: 1998;
Outcome: Court found that the employer violated the WARN act, noting
that unforeseen business circumstance exception could have reduced
notice, but employer failed to give any notice and a brief statement of
the basis for the reduction of the period. Court reduced liability by
50 percent based on good faith exception.
Case: Wilson et al. v. Airtherm Prods., Inc., U.S. District Court
#2:01-CV-00055-WRW, (unpublished opinion, September 10, 2001) (E.D.
Ark. 2001).[A]; State filed: Arkansas; Year: 2001; Outcome: Court found
WARN Act violation where workers were not transferred after sale of
company but had to submit application for new employment.
[SOURCE: GUILD LAW CENTER, LEXIS, WESTLAW.]
Notes:
This table includes only WARN cases containing a detailed discussion of
the WARN act provisions and does not include cases focused solely on
procedural issues.
This table also includes the two cases decided by the U.S. Supreme
Court which address the WARN Act, even though they were decided prior
to 1998: North Star Steel Co. v. Thomas, 515 U.S. 29 (1995); United
Food and Commercial Workers Union Local 751 v. Brown Group, Inc., 517
U.S. 544 (1996).
[A] Most of the cases in this table are reported decisions or available
through the Westlaw or Lexis legal databases; however, we have included
some decisions that we became aware of through the Sugar Law Center
Practitioner's Guide to Litigating the WARN Act.
[End of table]
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Joan Mahagan (617) 788-0521 Kara Kramer (202) 512-5434:
Staff Acknowledgments:
Katharine Leavitt made significant contributions to this report, in all
aspects of the work throughout the assignment. In addition, H. Brandon
Haller, Christopher Moriarity, and Jerry Sandau assisted with the
methodology, Richard Burkard provided legal support, and Patrick
Dibattista assisted in the message and report development.
[End of section]
Related GAO Products:
Workforce Investment Act: Issues Related to Allocation Formulas for
Youth, Adults, and Dislocated Workers. GAO-03-636. Washington, D.C.:
April 25, 2003.
Workforce Investment Act: Better Guidance and Revised Funding Formula
Would Enhance Dislocated Worker Program. GAO-02-274. Washington, D.C.:
February 11, 2002.
Trade Adjustment Assistance: Trends, Outcomes, and Management Issues in
Dislocated Worker Programs. GAO-01-59. Washington, D.C.: October 13,
2000.
Dislocated Workers: Worker Adjustment and Retraining Notification Act
Not Meeting Its Goals. GAO/HRD-93-18. Washington, D.C.: February 23,
1993.
Advance Notice: Public and Private Sector Policy and Practice. GAO/T-
HRD-91-19. Washington, D.C.: April 18, 1991.
Dislocated Workers: Labor-Management Committees Enhance Reemployment
Assistance. GAO/HRD-90-3. Washington, D.C.: November 21, 1989.
Plant Closings: Evaluation of Cost Estimate of Proposed Advance Notice
Requirement. GAO/HRD-88-71. Washington, D.C.: March 3, 1988.
Plant Closings: Limited Advance Notice and Assistance Provided
Dislocated Workers. GAO/HRD-87-105. Washington, D.C.: July 17, 1987.
Plant Closings: Information on Advance Notice and Assistance to
Dislocated Workers. GAO/HRD-87-86BR. Washington, D.C.: April 17, 1987.
Dislocated Workers: Exemplary Local Projects Under the Job Training
Partnership Act. GAO/HRD-87-70BR. Washington, D.C.: April 8, 1987.
Dislocated Workers: Local Programs and Outcomes Under the Job Training
Partnership Act. GAO/HRD-87-41. Washington, D.C.: March 5, 1987.
Dislocated Workers: Extent of Business Closures, Layoffs, and the
Public and Private Response. GAO/HRD-86-11BR. Washington, D.C.: July 1,
1986.
FOOTNOTES
[1] The Bureau of Labor Statistics defines an extended mass layoff as
an employment loss, at a job site, that affects at least 50 people who
file a claim with Unemployment Insurance over a 5-week period and are
involved in a layoff that lasts at least 31 days. The data collected by
the Bureau do not directly measure WARN criteria. (See app. I.)
[2] Pub. L. No. 100-379 (1988); 29 U.S.C. 2101-2109.
[3] BLS is an agency within the Department of Labor. The MLS program,
run by BLS, collects data on mass layoff actions that result in workers
being separated from their jobs.
[4] We asked the state dislocated worker units to provide us with
notices because they are the only recipient of all WARN notices for the
entire state and because no data are collected on WARN compliance. We
use these notices as a proxy measure for employers notifying all
relevant parties.
[5] These numbers are an estimate from the available data. Like any
data set, these estimates include limitations. See app. I for further
explanation.
[6] Notices sent to the state officials should include the expected
date of first separation, address of employment site, name and contact
information, number of affected workers, and if the notice is sent less
than 60 days in advance, an exception should be listed with a brief
statement of why the exception is applicable.
[7] We did not formally interview state officials in Nevada, but they
provided all WARN notices and other relevant information.
[8] From the 50 employers, we interviewed 23. See app. I for further
explanation.
[9] The employer must also determine whether there has been a reduction
in hours of work of more than 50 percent during each month of any 6-
month period.
[10] The 90-day period applies unless employers demonstrate in court
that the layoffs are the result of separate and distinct actions and
causes and are not an attempt to evade WARN's requirements.
[11] Cases are initially filed with one of the U.S. district courts
located in the 50 states, District of Columbia, or the U.S.
Territories. Each state has at least one district court. A decision of
the district court may be appealed to 1 of the 13 U.S. courts of
appeal, also referred to as circuit courts. Parties may request review
of circuit court decisions by the U.S. Supreme Court, but the Supreme
Court accepts only a small percentage of such requests.
[12] Courts can also award up to $500 per day, for up to 60 days, to
local governments.
[13] The Department of Labor states that neither the act nor the
regulations recognize the concept of pay in lieu of notice and that
failure to give notice does a significant disservice to workers and
undermines other services that are part of the purpose of the WARN Act.
However, the statute does specifically provide that the amount for
which the employer is liable must be reduced by any wages paid during
the period of violation. 29 U.S.C. 2104 (a)(2)(A).
[14] Neither the act nor the regulations address waivers under WARN;
however, the courts have upheld employees' waiver of WARN Act claims.
See Joe v. First Bank System, Inc., 202 F.3d 1067 (8th Cir. 2000).
[15] A previous GAO report found that researchers and opponents of WARN
expressed concerns about the cost of providing notice, but parties we
spoke with did not express this as a concern. See U.S. General
Accounting Office, Dislocated Workers: Worker Adjustment and Retraining
Notification Act Not Meeting Its Goals, GAO/HRD-93-18 (Washington,
D.C.: Feb. 23, 1993). Employers' estimates of costs of providing the
notice ranged from $0 to $5,800, with an average cost of less than
$1,300. This range excludes costs from lawsuits related to WARN.
[16] This estimate includes those employers that provided notice after
the layoff or plant closure and those employers that used exceptions to
account for less than 60 days notice.
[17] This estimate includes those employers that used exceptions to
account for less than 60 days notice. The most commonly used exception
was unforeseeable business circumstance.
[18] See U.S. General Accounting Office, Dislocated Workers: Worker
Adjustment and Retraining Notification Act Not Meeting Its Goals, GAO/
HRD-93-18 (Washington, D.C.: Feb. 23, 1993).
[19] Callers also included unions, legislative staff, and others.
[20] North Star Steel Co. v. Thomas, 515 U.S. 29 (1995).
[21] Employment loss is an employment termination, other than a
discharge for cause, voluntary departure, or retirement, a layoff
exceeding 6 months, or a reduction in hours of work for individual
employees of more than 50 percent during each month of any 6-month
period.
[22] District court judges are required to follow decisions of the
circuit court for the region in which the district court sits. For
example, a district court Judge in Maryland is bound by the decisions
of the Court of Appeals for the 4TH Circuit, which is located in
Richmond, Virginia, but includes all the districts in Maryland,
Virginia, North Carolina, South Carolina, and West Virginia. District
courts may look to other circuit courts for guidance if their regional
circuit court has not addressed a particular issue. District court
judges are not bound by other district court decisions.
[23] Because these questions were similar to those answered in our 1993
report on WARN, we replicated much of the methodology from the earlier
report. See U.S. General Accounting Office, Dislocated Workers: Worker
Adjustment and Retraining Notification Act Not Meeting Its Goals, GAO/
HRD-93-18 (Washington, D.C.: Feb. 23, 1993).
[24] BLS is an agency within the Department of Labor. The MLS program,
run by BLS, collects data on mass layoff actions that result in workers
being separated from their jobs.
[25] We asked the state dislocated worker units to provide us with
notices because they are the only recipient of all WARN notices for the
entire state. We used these notices as a proxy measure for employers
notifying all relevant parties.
[26] These numbers are only an estimate from the available data. Like
any data set, they include sampling errors and other data limitations.
[27] Notices sent to the state officials should include: the date of
first separation, address of employment site, name and contact
information, number of affected workers, and if the notice is sent less
than 60 days in advance, an exception should be listed with a brief
statement of why the exception is applicable.
[28] An example of the difference between WARN and MLS would be events
that affected at least 50 workers during a 90-day period (appearing
subject to WARN requirements) that prompted fewer than 50 dislocated
workers to submit claims for Unemployment Insurance during a 5-week
period. This event would not meet MLS criteria but appears subject to
WARN. Another example of the difference would be an employer that
mistakenly reported the reason for the extended mass layoff as one that
was covered by WARN when the correct reason would not have been covered
by WARN. This event would meet MLS criteria and would appear subject to
WARN but should not be counted as subject to WARN.
[29] BLS deleted events from its list when factors of the extended mass
layoff were outside the scope of WARN. These included layoffs at
establishments where (1) the employment level was not provided, (2) the
employment level was less than 100, (3) the ownership was not private,
or (4) the layoff did not affect at least one-third of the workforce.
[30] BLS deleted events from its list when the reason for the extended
mass layoff was outside the scope of WARN. These included events due to
(1) seasonal layoffs, (2) labor disputes, (3) leave, (4) weather, (5)
natural disasters, or (6) completed contracts.
[31] BLS defines an extended mass layoff as an employment loss at a job
site of at least 50 people who file claims with Unemployment Insurance
over a 5-week period and the employer indicates that the layoff of at
least 50 people would last at least 31 days.
[32] We asked the states to send us records of notices that they
determined to be WARN notices provided for layoffs and closures that
occurred during calendar year 2001. However, the following caveats
apply:
Arizona, Georgia, and Tennessee provided both WARN and non-WARN notices
that they received because their data systems did not distinguish
between the two; we included all the notices these three states sent to
us for both the matching procedure and the content analysis. The
inclusion of some potentially non-WARN notices does not affect the
matching procedure result, which focuses on compliance, because these
notices would be counted as "overcompliance" (encouraged by the law)
and not noncompliance (prohibited).
Kentucky, Michigan, Minnesota, New Mexico, New York, and North Carolina
provided records of notices received between July 2000 and December
2001 because their data systems record the date of the notice, not the
layoff or closure. The inclusion of some notices for events in 2000
does not affect the matching procedure result, which focuses on
compliance, because these notices would be counted as "overcompliance"
(encouraged by the law) not noncompliance (prohibited).
Pennsylvania reported that it was unable to provide us with data for
layoffs and closures occurring in July 2001 due to data systems
conversion.
Washington, D.C. could not provide us with any notices for 2001, but
according to BLS, there were no WARN events in D.C. for the year 2001.
[33] Sampling errors of estimated percentages from this sample were 4
percent or less. The sampling error for the estimated average advance
notice is between 3 and 4 days.
[34] We did not formally interview state officials in Nevada, but they
provided all WARN notices and other relevant information.
[35] The structured interview questions were based on the survey of
employers conducted for the 1993 report.
[36] Through the Plant Closing Project, the Guild Law Center publishes
a WARN Act Practitioner's Guide and WARN Act Case Law Updates and
Summaries.
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