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LABOR & EMPLOYMENT LAW — 07/3/09

“Forewarn Act” would expand WARN Act requirements, liability

Legislation that would strengthen the law requiring employers to notify workers of mass layoffs or plant closings was reintroduced in the House and Senate last week. The bipartisan Federal Oversight, Reform, and Enforcement of the WARN Act ("FOREWARN Act"), introduced on June 25, would strengthen enforcement of current law and close loopholes in the Worker Adjustment and Retraining Notification (WARN) Act.

The House bill (H.R. 3042) was introduced by Reps. George Miller (D-Calif), chairman of the House Education and Labor Committee, and John McHugh (R-NY). Reps. Lynn Woolsey (D-Calif.) and Marcy Kaptur (D-Ohio) are co-sponsors of the House bill. Sen. Sherrod Brown (D-Ohio) introduced the companion measure in the Senate (S. 1374).

"Current protections for workers being laid off are both confusing and rarely enforced," said Miller, in a press release announcing the bill's introduction. "While an early warning may not save their job, a meaningful early notice will help them prepare to find a new job or upgrade their skills for new employment."

"In the two decades since the WARN Act was enacted, our nation's economy has changed markedly," said McHugh. "It is time to modernize the WARN Act to fit today's economy, and thereby ensure workers and communities get the fair notice they deserve and need to prepare and adjust to their change in job status."

Congress passed the WARN Act in 1988 to give workers 60 days advance notice to adjust to an impending "plant closing" or "mass layoff." Compelling evidence demonstrated that retraining and other readjustment efforts have the greatest success when advance notice is provided, according to the release. However, the WARN Act's effectiveness has been undermined by existing loopholes and weak enforcement, the bill sponsors contend.

First, the WARN Act only covers 24 percents of all layoffs, according to a report by the by the Government Accountability Office (GAO). Of those layoffs, employers only provided notice approximately one-third of the time. The WARN Act has several exceptions that employers can invoke --both legitimately and illegitimately --including unforeseen business circumstances and whether a company is trying to attract capital to avoid a shutdown. Furthermore, the WARN Act is only invoked at companies with at least 100 employees that layoff 33 percent or more of their workforce.

In addition, weak penalties and enforcement measures may prevent employers from providing notice. GAO found that employers failed to provide notice to employees in two-thirds of layoffs and closures where the WARN Act applied. The WARN Act requires violating employers to pay an employee a day's pay for every day of notice not provided and does not provide the federal government the authority to enforce workers' rights.

The FOREWARN Act would:

• give the Department of Labor authority to enforce the WARN Act;
• increase penalties for violation to double back pay;
• reduce the mass layoff figure from 50 to 25, reduce the employer size from 100 to 75 employees, and lower the mass layoff trigger. The lower thresholds would protect employees in both manufacturing and services firms;
• lengthen the notification period from 60 to 90 days;
• require employers to provide written notification to the Department of Labor, including the reason for the plant closing or mass layoff, whether the employer has jobs elsewhere, and a statement of each employee's right to wages and benefits;
• expand required notice recipients to include the Secretary of Labor, elected officials including the governor, member(s) of Congress, and state representatives, and the appropriate labor union(s), when applicable.

The bill has been referred to the Committee on Education and Labor in the House and to the Senate Committee on Health, Education, Labor, and Pensions.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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