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Under WARN Act, Fourth Circuit Says the Key Employee Count Is 60 Days Before Layoffs

    Client Alerts
  • July 02, 2021

The Worker Adjustment and Retraining Notification (WARN) Act requires covered employers to provide employees with 60 days’ advance notice of a facility closing or mass layoff. However, WARN only applies to companies with at least 100 employees overall. Last week, the Fourth Circuit Court of Appeals (which includes North Carolina, South Carolina, and Virginia) issued a decision that explored at what point in time that minimum employee count is measured.

In Schmidt v, FCI Enterprises LLC, the defendant abruptly closed its business, neither providing WARN notice nor equivalent pay and benefits to 130 affected employees. The district court agreed that the employer had violated WARN. The defendant appealed to the Fourth Circuit on the basis that it did not have enough employees to fall under WARN’s jurisdiction.

The Fourth Circuit agreed, reversing the lower court decision. The court said that for jurisdictional purposes, WARN requires that the employer have at least 100 employees as of the date notice should have been provided. In this case, the defendant had fewer than 100 workers as of 60 days prior to its shutdown. In the intervening period, it hired new employees, but these workers were considered to be part-timers under WARN because they had worked less than 60 days.

This case reminds employers to check their employee count when determining any obligation to provide WARN notices. Employers close to the 100 employee threshold may conclude that the timing of the notice requirement excludes them from mandatory notices.