In tough economic times employers need to be reminded about the Worker Adjustment and Retraining Notification Act of 1988 — or WARN Act for short. The WARN Act gives workers and their families time to plan for a transition caused by employment loss. This law requires large employers (those with 100 or more employees) to provide 60 days of written advance notice prior to a plant closing or mass layoff which “causes the employees an employment loss, including an employment termination other than discharge for cause, voluntary departure, or retirement.”  Employees entitled to notice under the WARN Act include hourly and salaried workers, as well as managerial and supervisory employees.  

Failure to provide the required notice under the WARN Act can lead to liability for back pay and benefits for the period of the violation, up to 60 days. This includes medical expenses incurred during the employment loss that would have been covered if the employment loss had not occurred. Moreover, in a 1996 case, the U.S. Supreme Court ruled that WARN Act grants a union the right to sue on behalf of its employee-members.   

The New York Times recently reported that though there are no statistics on total employment cases, lawyers say the number of WARN Act suits is rising fast due to the unprecedented economic upheaval. For example, former employees of Lehman Brothers have sued alleging that they were not given the required 60 days’ pay before their jobs vanished.  Moreover, a growing number of states have adopted more expansive WARN Act legislation than the federal version.  For example, under the New York WARN Act, which became effective February 1, 2009, employers who employ 50 or more full-time employees (compared to 100) must give at least 90 days’ (compared to 60) advance written notice to affected employees and others in the event of a defined “plant closing,” “mass layoff,” or “relocation.”    

Although Virginia and the District of Columbia have not adopted more expansive WARN Act legislation, Maryland was one of the first states to enact such expansive requirements.  Similar to the law in New York, under Maryland’s WARN Act (Maryland Code: Labor and Employment, Title II Division of Employment and Training, Subtitle 3 Economic Stabilization Act §301 - §304) employers who employ 50 or more full-time employees (compared to 100) who have been in business at least one year must give at least 90 days’ (compared to 60) advance written notice whenever possible to affected employees.  Maryland also provides for health care coverage or the option of continuing the current health plan, at the employee’s own expense, as well as retraining allowances and a severance pay package tied to the employees wage level or length of employment job assistance.

Jackson & Campbell, P.C.’s Employment Law Practice Group can assist you interpret the WARN Act and advise you on best practices with regard to this law in order to minimize your risk of litigation, as well as provide counsel on other related employment matters.