The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers to provide 60 days’ advance notice of a mass layoff or plant closing that affects a sufficient number of employees. While smaller layoffs do not trigger these notice requirements, regulations issued under WARN provide for combining job losses from related entities for purposes of reaching these thresholds. This month, the Fourth Circuit Court of Appeals (which includes North Carolina, South Carolina, and Virginia) combined layoffs by companies with common ownership and management even though they were not in a parent-subsidiary relationship.

The plaintiffs in the case were miners at five coal companies who were laid off without advance warning. While none of the individual companies had enough employees to require WARN notice, the plaintiffs sued, alleging that the layoffs should be combined under WARN’s single employer rule. The district court agreed, holding for the plaintiffs.

On appeal, the Fourth Circuit affirmed this decision, noting the intertwined nature of the separate employers. The companies shared the same officers, the president of each entity was a family member, they shared the same business address, had common HR policies and structures, and routinely exchanged employees. The court held that WARN’s single employer rule does not require a common corporate ownership structure to combine layoffs for notice purposes.

Employers undergoing reductions in force should carefully review whether similar measures taken by related entities could be combined for purposes of reaching the WARN threshold. Separating employees into different W-2 employers will be insufficient on its own to prevent a court from considering them to be a single employer.

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