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1996-08-23
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@083 CHAP 5
┌──────────────────────────────────────────────┐
│ PLANT CLOSINGS, LAYOFFS: REQUIRED NOTICES │
│ BY EMPLOYERS TO EMPLOYEES UNDER "WARN" ACT │
└──────────────────────────────────────────────┘
For a business that has 100 or more full-time employees (or
the equivalent, based on 40 hour work weeks) at a single
location, you may be subject to the potentially onerous
provisions of the "Plant Closing" law that was enacted by
Congress in 1988 and which went into effect early in 1989.
@IF000xx](Since your firm currently has no employees, these rules are
@IF000xx]of no concern to @NAME.)
@IF099xx]Since your firm currently has only @EMP employees, these
@IF099xx]provisions don't apply to @NAME.
@IF100xx]Your company has @EMP employees in total. If at least 100 of
@IF100xx]your full-time employees (or the equivalent) work at a single
@IF100xx]location, these stringent new provisions, as described below,
@IF100xx]will very likely apply to @NAME.
This legislation, called the "WARN" Act (Worker Adjustment
and Restraining Notification Act), would affect you if you
laid off 50 or more employees, or one-third of the work
force, in a 30-day period. It applies to virtually any plant
closing or major layoff for any reason, with a few obvious
exceptions (such as for an earthquake or flood, or a labor
dispute such as a strike or lockout, for which no notice
need be given).
A "layoff" under this Act includes any of the following:
. A permanent termination of employment;
. A layoff of an employee for more than six months; or
. A loss of half the employees' working hours for six
consecutive months;
In case of any major layoff or shutdown, the law requires
you to give at least 60 days advance notice. If you give
less than that, you are required to pay the laid-off workers
for 60 days minus the actual number of days' notice you
gave. The law requires you to notify the labor union that
represents the employees, or, if none, the individual
employees by mailing the notice to their last known address
or including it in their pay envelope. You must also notify
the local city or county government and state labor agency
of the planned shutdown or cutback.
@CODE: CA
For example, you would be required to notify the Employment
Development Department, in the case of a shutdown or layoff
in California.
@CODE:OF
The WARN Act doesn't generally PROHIBIT a company from
making layoffs or shutting down a money-losing plant, but
it makes it more costly for the employer to do so, and also
gives local unions and politicians time to find some way to
attempt to coerce a company into maintaining an antiquated
facility that is no longer economically viable. Count on
being on the local 6:00 news if you try to shut down your
business or part of it, if you have become a major local
employer.
The WARN law does impose stiff restrictions on a firm's
ability to sell off, reorganize, merge or consolidate
operations, if such a decision would adversely affect the
jobs of 50 or more employees. In other words, if your
Japanese competition renders your plant obsolescent, you
may not be allowed to sell it off to a competitor if doing
so would cost 50 or more employees their jobs. If not, it
appears that your only option would be to simply board up
the plant and go broke. Despite the claim by its sponsors
that WARN would somehow make American business more
competitive against foreign competition, it seems that it
has made it much more costly to take a risk on building a
plant in the U.S., since if it fails you may have to go
down the tubes with it, rather than restructuring or selling
it off.
The unintended consequence of this supposed "job-saving"
legislation (which, coincidentally, was timed to invite
Reagan's veto just before the 1988 elections), will be to
make any employer think long and hard about hiring more
employees, and to start trying to find a way to automate
every phase of its business. In effect, the government has
taken the first major step towards West German-style social
legislation, requiring that companies who hire employees
must hire them for life, regardless of whether the business
remains viable. In short, like West German employers have
learned to do for years, you must become very careful about
hiring employees if your business is subject to the WARN
provisions, since you may be hiring them for life. In
Germany, the result has been virtually zero growth in the
number of jobs in the last decade or more, despite a very
prosperous economy. Of course, that could never happen
here....
This new law should create a great deal of employment for
lawyers, however, if that is any consolation. There has
already been a great deal of litigation over what does and
does not constitute a mass layoff or shutdown under WARN.
It's an ill wind that blows no one some good....
@CODE: ME HI
Note that a plant closing law similar to the federal law
has been enacted also by @STATE.