The Worker Adjustment and Retraining Notification Act (WARN) is administered by the U.S. Department of Labor Employment and Training Administration on the federal level and by the New York State Department of Labor on the state level.  Whether you are a longtime business owner or purchasing a new business, you must familiarize yourself with the complex requirements of the WARN Act.

On the federal level, a WARN notice is required when a business with more than 100 full-time workers is laying off at least 50 people at a “single site of employment.”  New York is one of a handful of states (New Jersey, California, Illinois, Wisconsin, and Tennessee) to establish more stringent WARN laws at the state level.

The New York WARN Act applies to private businesses (for-profit or not-for-profit) with 50 or more full-time employees within New York State.  WARN requires businesses to give advance written notice to all its employees as well as certain government agencies prior to particular layoffs, downsizing, or reductions in force.  It covers:

  • A “mass layoff” occurs when, over a 30-day period, a reduction-in-force results in an “employment loss” of more than six months for: (a) at least 25 full-time employees who represent at least 33% of all of employees at the work site; or (b) at least 250 full-time employees.
  • A “plant closing” is defined as an “employment loss” of 25 or more full-time employees during a 30-day period due to a permanent or temporary shutdown of the worksite.
  • Under WARN, a “relocation” occurs when “all or substantially all” operations are relocated to a location at least 50 miles from the current location and where 25 or more full-time employees suffer an “employment loss.”

The New York WARN requirements are complex.  To complicate matters further, employment losses are aggregated over a rolling 90-day period.  So, employers not only have to look at whether employment losses taking place at a particular point in time meet the thresholds above, but they must also be mindful of employment losses in the recent past and anticipated employment losses in the near future when determining whether notice is required.  Also, certain workers, such as part-time employees working fewer than 20 hours per week or employees that have worked less than six months in the past year, are not counted when calculating the number of employees for WARN.

Employers should be mindful of WARN when buying or selling a business.  In M&A transactions, the seller is responsible for providing WARN notice for employment losses up to and including the effective date of the sale.  The buyer is responsible for providing WARN notice for employment losses post-closing.  On the closing date, employees of the seller automatically become employees of the buyer for purposes of the WARN notice requirement.  Because of this, post-closing WARN liability is commonly negotiated between buyers and sellers.  The parties are best served to work together when it comes to transitioning employees or letting them go.

Businesses that do not comply with WARN’s requirements may be required to pay back wages and benefits to workers as well as a civil penalty to the Department of Labor.  Each scenario is different and employers should consult with experienced legal counsel before making employment decisions.