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14 Jun 2021 | by devteam

Companies Face Unchartered Water with Layoffs

The down turn in the oil and gas industry is causing big and small employers to have to make a reduction in force (RIF). For example, ConocoPhillips recently announced on September 1, 2015 that it expects to have a 10% reduction in force and that this reduction will impact more than 500 of its Houston employees. ConocoPhillips’ RIF follows other companies such as Halliburton, BP and Chevron. While these Fortune 500 companies have legal departments advising of them of legal implications, many of the medium sized companies impacted by this decline in the oil and gas industry face unchartered waters when dealing with the Worker Adjustment and Retraining Notification Act (WARN Act). The WARN Act is a federal law that requires certain employers to give advance notice of significant layoffs to the employees and others.

Although the basic idea behind the WARN Act is fairly straightforward, the law is filled with technical requirements which can easily trip up supervisors and HR specialists. In general, the WARN Act requires business with least 100 employees to give 60 days’ advance notice of a mass layoff or plant closing to affected employees, unions, and local and state governments. Determining whether the WARN Act actually applies to a business, however, can become difficult.

For example, a business is covered by WARN if they have 100 or more employees, not counting employees who have worked less than 6 months in the last 12 months and not counting employees who work an average of less than 20 hours a week.

Additionally, the definition of mass layoff and plant closing under the WARN Act has its nuances. The WARN Act defines a mass layoff in two ways:

  1. A reduction in force which results in an employment loss at the single site of employment during any 30-day period for:
    1. 500 or more full-time employees at a facility; or
    2. 50 or more full-time employees at a facility constituting 33% of the workforce.[1]
  2. If the minimum number is not met within the 30-day period, there still may be a mass layoff if within any 90 day period, employment losses for two or more groups exceed:
    1. 500 or more full-time employees at a facility; or
    2. 50 or more full-time employees at a facility constituting 33% of the workforce.

Unless the employer can demonstrate that the employment losses are the result of separate and distinct actions and causes, not an attempt by the employer to evade WARN.[2]

The term “plant closing” means the permanent or temporary shutdown of a “single site of employment”, or one or more “facilities or operating units” within a single site of employment, if the shutdown results in an “employment loss” during any 30-day period at the single site of employment for 50 or more employees, excluding any part-time employees. A “temporary shutdown” triggers the notice requirement only if there are a sufficient number of terminations, layoffs exceeding 6 months, or reductions in hours of work as specified under the definition of “employment loss.”[3]

Furthermore, to determine whether the minimum statutory thresholds for a mass layoff or plant closing are met, a distinction must be also made between who is counted:

  • Full-time temporary workers are counted in determining whether there has been a mass layoff,[4] but are not entitled to the WARN notice because they are not considered “affected employees.”[5]
  • Part-time employees are not counted in determining whether there has been a mass layoff,[6] but are entitled to WARN notice because they are considered “affected employees.”[7]

Additionally, the 30- and 90-day periods for determining mass layoffs continuously roll. In other words, each additional day where at least one employee suffers an employment loss triggers a new 30- and 90-day period. For example, if the minimum threshold is not met in either Day 1-30, but met from Day 3-33, there was a mass layoff beginning from Day 3-33. Or, if the minimum threshold was not met on either Day 1-30 or Day 1-90, but met from Day 10-100, then there has been a mass layoff.

An employer that violates the WARN Act notice requirement is liable to each affected employee for an amount equal to back pay and benefits for the period of violation up to 60 days in addition to civil penalties.

In addition to being aware of how many employees are presently losing their job, a company must actively ensure the timing and number of past and future employment losses do not trigger WARN coverage. Employers should both ahead and behind 30 days and 90 days to determine whether employment actions both taken and planned will reach the minimum numbers for a mass layoff.[8]

The labor and employment attorneys at Monty & Ramirez LLP can help guide your business through the reduction in force process, including determining whether the WARN Act applies and preparing threshold is met and preparing WARN notices.

[1] 20 C.F.R. § 639.3(c)(2)

[2] 29 U.S.C. § 2102(d)

[3] 20 C.F.R. § 639.3(b)

[4] 20 C.F.R. § 639.3(c)(2)

[5] 20 C.F.R. §§ 639.3(e), 639.6(b) and Bradley v. Sequoyah Fuels Corp., 847 F. Supp. 863

[6] 20 C.F.R. § 639.3(c)(2)

[7] 20 C.F.R. § 639.6(b)

[8] 20 C.F.R. § 639.5(a)


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