Articles Posted in WARN Act

Layoffs and reductions in force were the topics of a seminar we presented yesterday, during which we reviewed how to plan and implement workforce reductions, requirements for severance agreements and releases, and alternatives to layoffs.shutterstock_21093820

In following up to yesterday’s discussion, here is a list of the “Top 10 Layoff Tips”: 

1. Plan your business first.

As layoffs continue to occur, the WARN Act will become increasingly meaningful to employers, particularly those who are considering bankruptcy protection.

The WARN Act requires employers to give advance notice to employees who will be affected by a plant closing. Generally, 60 days’ written notice is required before closing a plant or implementing a mass layoff. Failure to comply with the Act can result in serious liability, including back pay and benefits for each affected employee for every day that the notice was not provided, for up to 60 days. This number can quickly add up to millions of dollars, which, for a company considering bankruptcy protection, can become an important factor in managing a bankruptcy estate.

On October 10, 2008, Delaware’s Bankruptcy Court issued a memorandum opinion which held, in a question of first impression for the Third Circuit, that an employee’s WARN Act claim is a general unsecured claim, rather than an administrative expense claim–a favorable opinion for debtor-employers.[1]

Layoffs are happening. And layoffs have lots of implications-morale implications, business and financial implications, and legal implications.  Any time an employer is considering separating one or more employee for lack of work, a whole host of legal considerations are triggered. For employers with at least 100 full-time employees at a job site, one of the most significant is the Worker Adjustment and Retraining Notification (WARN) Act.  image

In short, the WARN Act requires employers to give advance notice to employees who will be affected by a plant closing.  Generally, 60 days’ written notice is required before closing a plant or implementing a mass layoff.  Failure to comply with the Act can result in serious liability, including back pay and benefits for each affected employee for every day that the notice was not provided, for up to 60 days.  This number can quickly add up to millions of dollars.

Who Is Entitled to Notice?

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