Reductions in Force - Implications of the State and Federal WARN Laws
In an economy in which the current economic crisis appears to be long term and the government announces plans to provide billions of dollars to bailout the capital markets, many businesses will be forced to restructure and streamline, either through mergers and acquisitions or through reductions in force. Although several employment law issues will emerge in connection with these business decisions, this blog is devoted to the notice requirements mandated by state and federal laws.
The federal Worker Adjustment and Retraining Notification Act (WARN), and a California law based on WARN, mandate 60- to 90-days’ advance notice before certain layoffs can be implemented. Any employer who fails to give the requisite notice is subject to liability for back pay which can be substantial. Proper notice is defined by the regulations and must be given not only to all affected employees and/or their union representatives but also to the highest level government official of the municipality involved.
The WARN Act and its state counterpart are very complex laws. As a general rule, the federal WARN act is only applicable to employers with 100 or more full time employees who have been employed for at least 6 of the preceding 12 months. The California WARN applies to any covered establishment with 75 or more employees, full or part-time. As with the federal WARN, employees must have been employed for at least 6 of the last 12 months to be counted.
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