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@083 CHAP 5
┌──────────────────────────────────────────────┐
│ PLANT CLOSINGS, LAYOFFS: REQUIRED NOTICES │
│ BY EMPLOYERS TO EMPLOYEES UNDER "WARN" ACT │
└──────────────────────────────────────────────┘
If your business grows to the size where you have 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" bill that was enacted by Congress in 1988 and went
into effect on February 4, 1989. This law, called the
"WARN" Act (Worker Adjustment and Restraining Notification
Act), would affect you if you laid off 50 or more em-
ployees, 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 wor-
kers 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 not-
ify the local city or county government and state labor
agency of the planned shutdown or cutback.
@CODE: CA
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 mak-
ing 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 ab-
ility to sell off, reorganize, merge or consolidate opera-
tions, 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.