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From: www.itworld.com
Impending layoffs need warning
April 10, 2001 —
FORMER COMPUTER ASSOCIATES employees are charging that the Islandia, N.Y.-based software developer tried to disguise recent mass layoffs as individual firings. Why does this matter? Think "bad press," of course, but there are also possible violations of the Workers Adjustment and Retraining Act (WARN). The purpose behind WARN is to ensure that employees receive a 60-day advance notice before a plant closing or a mass layoff so they can have time to find other jobs or get training, says Heather Gatley, a partner in the law firm of Steel, Hector, & Davis, in Miami.
Determine if mass layoffs and WARN apply
WARN applies to companies with 100 or more employees who have worked more than 20 hours a week for the past six months, Gatley says. A mass layoff event occurs when 33 percent of a single site's full-time employees, minimum of 50, are laid off within a 30-day period. But regardless of percentages, if 500 or more employees are laid off from multiple locations within a 90-day period, WARN also applies.
A plant closing, as defined by WARN, occurs when a single site of employment is shut down, either permanently or temporarily, and 50 or more full-time employees lose their jobs. Transferring employees to another location within a reasonable commuting distance is not a WARN closing.
Employers may not stagger layoffs to avoid application of WARN, Gatley says. "There is a fine line. Courts will review what was in [management's] head at the time of the layoffs. If employers knew they would be laying off more than 50 employees at a time and the business reasons for layoffs were in place when the layoffs began, courts will say that WARN applied."
Meet WARN notice requirements
The WARN notice must be given to each affected employee, any affected union, and to the state's dislocated worker unit or head of the local government where the plant or office is located.
Notice to employees who are not represented by a union may be sent by mail or included with a paycheck. The notice must include the date that the layoffs will start, whether the layoffs are permanent or temporary, and who at the company can be contacted for further information. "Also give the employees the demographics of who is being let go, including which job titles are being eliminated," Gatley says.The attorney advises companies to include information on employees' eligibility for severance pay and to explain the economic reasons for the layoffs and the steps the company took to prevent the situation.
Review notice exceptions
"There are four exceptions that allow employers to reduce the 60-day notice requirement," Gatley says. First, the "faltering company" exception applies if, at the time the notice would have been required, the employer was actively seeking capital or business that, if obtained, would have postponed or eliminated the need for layofffs. "This is more than sending out e-mails looking for money -- dot-coms are raising issues on this exception," Gatley says.
A second, "unforeseen business circumstance" exception applies if, at the time the notice would have been required, management did not reasonably foresee a sudden and unexpected event outside the employer' s control that precipitated the layoffs. "This might apply if the company had one principal client that cancelled the contract or if there was a major economic downturn. Today's downturn is not likely to meet the requirements of this exception," Gatley says.
The third exception is for layoffs caused by natural disasters, such as earthquakes, floods, or storms. And finally, the fourth is for completion or closure of a project deemed temporary at its inception.
Avoid penalties for WARN violations
"Employees may sue under WARN. The Department of Labor also enforces WARN," Gatley says. The penalty for not giving 60 days' notice is $500 per day. Courts can also require that the company give laid off employees back pay and benefits for up to 60 days.
"A company can pay out the 60 days instead of giving employees the 60 days' notice. This is still a violation of WARN," Gatley says. "But if the payout is given within three weeks of the reduced notice, courts won't usually assess fines."
Coordinate corporate communications
At the time that layoffs are being considered and when WARN notices are given, Gatley advises companies to review corporate communications. "At the time that managers are deciding whether to make mass layoffs, companies want to make sure that they don't have recent announcements out that are to the contrary. If you have an announcement about a possible merger or acquisition, you don't want to do an about face with general corporate messaging," Gatley says.
Evaluate layoff decisions carefully
"If a company decides they might need to do mass layoffs, they need to evaluate statistically supported business reasons for the layoffs," Gatley says. The attorney advises clients to explore layoff alternatives: reassignments, transfers, hiring freezes, or compensation reductions or freezes. If layoffs are appropriate, Gatley advises employers to look carefully at the job titles being eliminated and the employees affected. "You want to avoid future claims of age, race, or gender discrimination. Handling layoffs based on client, contract, job category may be less likely to have a 'disparate impact' on employees." Gatley says.
[Editor's note: The "CCH HRM Employment Relations" guide (http://hr.cch.com) was also used as a source for this article.]
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