Proposed Legislation Would Boost WARN Act Penalties and Encompass More Employers

On June 14, 2012, Senator Sherrod Brown (D-Ohio) introduced a bill in the Senate that would bolster protections to dislocated workers by amending the Workers Adjustment and Retraining Notification Act (WARN). WARN, as it currently stands, requires employers with 100 or more employees to notify their employees and the surrounding community in advance of plant closures and mass layoffs of 50 or more employees. Critics of WARN claim that it only covers 24 percent of all layoffs, and employers only comply about one-third of the time.The proposed Federal Oversight, Reform, and Enforcement of the WARN Act (Forewarn Act) would amend WARN by increasing the Department of Labor’s authority to enforce the law. “A plant closing or mass layoff doesn’t just affect workers, but also their livelihood of nearby businesses,” Sen. Brown said recently. “The current WARN Act has too many loopholes that allow larger businesses to avoid doing the right thing and giving proper advance notice to their employees.” The Forewarn Act would bring more employers within WARN’s scope by reducing the affected employer size to 75 employees and the mass-layoff trigger to 25 employees. Further, it would require employers to notify affected parties 90 days prior to the layoff or closure instead of the current 60 days. Employers also must notify additional parties, including the Department of Labor, elected officials, and applicable labor unions.

Of particular importance to large employers, the Forewarn Act also proposes increasing damages for noncompliance. Currently, employers are liable for one day’s worth of back pay for every day they failed to give required notice with a maximum liability of 60 days of pay. The proposed bill doubles back pay and, because of the lengthened notification period, increases the maximum accrual to 90 days’ worth of double back pay. This is significant for any employer, but particularly to those with smaller workforces that were previously exempted from its scope.

The Forewarn Act has the potential to encompass many more employers should it become law. Although various iterations of the Forewarn Act have previously failed to become law in other legislative sessions, it is thought that the current unpredictable state of the national economy with persistently high unemployment rates may bolster support for the Forewarn Act this time around. As with all important developments, we will track the bill’s progress and report on any important changes or updates to the current state of WARN in future editions of Legal News: Employment Law Update.