The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers to provide 60 days advance notice to employees of certain qualifying plant closings and mass layoffs. The WARN thresholds are based on the number of employees let go in relation to the overall size of the facility’s workforce. In some circumstances, layoffs that occur on different dates can be combined for purposes of determining whether they meet the WARN threshold.
In practice, some employers stagger their layoffs to avoid WARN’s notification requirements. In some cases, employers schedule the layoffs in this manner because they are unsure about whether the final numbers will meet WARN minimums. By spreading out the layoffs, companies can avoid a situation where they unexpectedly incur WARN liabilities to a group of employees previously terminated. Last month, the Sixth Circuit Court of Appeals confirmed that nothing in WARN prohibits employers from scheduling layoffs to avoid the law’s notice requirements.
In Morton v. Vanderbilt Univ., the University terminated a group of employees in July 2013. In September 2013, the defendant provided notice to a second group of employees that they would be terminated in November. If combined with the second group, the July terminations would have reached the required number of layoffs for WARN notice. Vanderbilt provided notice to the second group of employees in September, but continued their pay and benefits until November, even though they were relieved of all job duties. The plaintiff sued on behalf of the employees terminated in July, claiming entitlement to WARN notice.
The district court concluded that the September notice served as the effective date of termination for the second group because the employees had no duties after that date. The Sixth Circuit disagreed, reversing a grant of summary judgment for the plaintiffs. The second group of employees continued to have an employment relationship with Vanderbilt through November, because they continued to receive pay and benefit accruals. WARN does not prohibit employers from scheduling layoffs to avoid the law’s notice requirements.
Employers anticipating staggered layoffs should plan the timing of the terminations well in advance. In many cases, the employer may opt to provide WARN notice even if it ultimately does not reach the notice threshold. In other situations, pushing additional layoffs to dates outside of the WARN aggregation window can avoid claims for notice from employees laid off at a time when the employer was not sure notice was even required.