The WARN Act: What does it mean for employers?

Unfortunately, redundancies are a common part of business in the US, with 96% of businesses taking some form of downsizing action in 2023.

If your organization is one of these — or is likely to be in the coming years — you need to be aware of the Worker Adjustment and Retraining Notification (WARN) Act. This also applies if you’re a foreign business and you have — or plan to have — employees in the US. 

In this article, we’ll explain what the WARN Act is, who it applies to, and what you, as a business, need to know. So let’s jump straight in.

What is the WARN Act?

Passed in 1988, the federal WARN Act requires employers to give advance notice (known as a WARN notice) in the event of mass layoffs. It is designed to give the affected workers time to look for a new job or retrain.

Note that, under the law, “employer” is defined as an organization that has at least 100 full-time workers.

The WARN Act does not apply to:

• Part-time employees (i.e., employees who work, on average, 20 hours or less per week)

• Retirees

• Resignees (or those who leave voluntarily)

• Anyone fired with cause

• Anyone transferred to a different site of employment

• Employees who have been at the company less than six months

The WARN Act is also not applicable to:

• Those currently on strike (or aggrieved employees with ongoing labor disputes)

• Seasonal or temporary workers

• Independent contractors, freelancers, consultants, and other workers who are considered self-employed

• Government employees at the local, state, and federal levels

What about state WARN acts?

While the WARN Act is federal, many US states have their own version of the legislation. Some of these contain subtle differences, while others are significantly different.

For example, New York’s state WARN Act expands coverage to organizations with at least 50 full-time employees (as opposed to 100). In California, the number is 75 — and it also applies to part-time employees.

As a result, it's important to know and understand the relevant state laws.

To learn more about the different state requirements, check out our dedicated US State Explorer tool.

What triggers the federal WARN Act?

As the chart below indicates, layoffs affect millions of US-based workers each year.

However, it’s crucial to note that not every round of layoffs triggers the WARN Act. For eligible employers (i.e., those with over 100 full-time employees), the main triggers are:

• The shutdown of an employment site that affects at least 50 covered employees

• At least 50 employees having their working hours cut in half every month for six months

Circumstances that don’t trigger the law include:

• The shutdown of temporary or seasonal employment sites where the workers were aware of their temporary nature

• The shutdown of a facility due to a strike or labor dispute (where the shutdown isn’t a distinct action toward evading WARN notice requirements)

• Situations where the break in employment doesn’t last for more than six months

How does a WARN notice work?

If a WARN notice is required, it must be issued at least 60 days in advance. Each affected employee should also receive notice of their employment termination individually through a reasonable method of delivery.

Note that, in some states, the notice period is different. In New York, for instance, notices must be issued at least 90 days in advance.

If the affected employees don’t have a union leader (or another exclusive representative of your employees’ interests), the notice should include the following information:

• Whether the coming job losses are temporary or permanent

• Whether you’re shutting down the entire operating unit

• The exact dates for when the initial layoffs start, and when each employee receiving a 60-day advance notice is going to be dismissed

• Guidance about bumping rights or the ability to swap places with someone else, where applicable

• Contact details for a company official who can provide further information

What happens if you violate the WARN Act?

If you don’t issue the notices on time, you will be required to pay each dislocated worker their back pay plus their benefit plan for up to 60 days. You may also be subject to penalties of up to $500 per day for each day you’re in violation.

If your employees opt to sue you and you lose, your company could also be ordered to pay all the legal fees on top of any other penalties issued.

Are there exceptions to the WARN Act?

There are three sets of circumstances where you are not required to provide a WARN notice, as follows:

1. Your company is faltering. When your company shuts down in the middle of trying to raise capital, and you believe — in good faith — that issuing any layoff notices would interfere with your ability to raise funds.

2. A natural disaster occurs. When there’s no reasonable period for notice due to a destructive natural event, such as an earthquake or floods.

3. There are unforeseeable business circumstances. When an unexpected action causes layoffs before you can provide notice to employees. An example would be losing a major contract with an important business partner.

Does the WARN Act apply to remote employees?

Due to its age, the WARN Act doesn’t explicitly mention remote employment. However, a 2022 case in Delaware defined remote employees as “outstationed,” meaning they would come under the jurisdiction of their parent office. This interpretation is supported by the US Department of Labor’s guidelines.

For example, if you have a remote employee in Chicago and their direct manager is based in your New York City headquarters, the remote employee would likely be classed as an “outstationed” part of your New York office.

In each case, it’s crucial to ensure that you get professional legal advice. When you onboard your future and existing team members through Remote’s employer of record (EOR) platform, we can help give you clarity and ensure you are fully compliant.

Do other countries have WARN-like laws?

Many countries and regions have similar laws to WARN, albeit with different timeframes and criteria. Here are some examples of layoff regulations in some of the world’s other big labor markets:

In the European Union (EU)

In the EU, the base set of regulations for mass layoffs is covered in the European Collective Redundancies Directive.

Under this law, a mass layoff is defined as the dismissal of:

• At least 10 employees in a company with between 20 and 100 employees (within a 30-day period)

• At least 10% of the active workforce in a company with 100 to 300 employees (within a 30-day period)

• At least 30 employees in a company with 300 or more employees (within a 30-day period)

• At least 20 employees within a 90-day period, regardless of how many employees the company has

However, similar to the US, each member state has the freedom to enact its own collective redundancy laws. For instance:

• In Germany, mass layoffs start with the dismissal of at least 6 employees in a company with 21 to 59 employees

• In Spain, it starts with at least 10 employees in a company with 100 or more full-time employees

• In the Netherlands, it starts with at least 20 active employees from any one work site

• In Italy, it starts with at least five employees in a company with at least 15 employees

In Australia

Under Australia’s Fair Work Act, any employer that wants to lay off at least 15 employees must provide advance notice to Centrelink detailing:

• Why the layoffs are happening

• How many people are being laid off

• The affected workers’ employment types

In India

In India, redundancy rules are covered by the Industrial Disputes Act.

This act’s language centers around industrial workers in plantation and plant closings, but it requires companies to seek government approval before conducting mass layoffs.

In the UK

In the UK, the primary legislation for mass layoffs is covered by the Trade Union and Labor Relations (Consolidation) Act (TULCRA). It defines a collective dismissal as one that lays off at least 20 employees from one work site within 90 days.

Want to know how things work in a specific country? Check out our Country Explorer tool!

How can Remote help?

Complying with the WARN Act — at both federal and state levels — can be tricky, especially if you have remote employees. And if you have team members in other parts of the world too, things can get downright obtuse.

If you have a dispersed team, it’s highly advisable to work with a global HR partner that provides EOR services, like Remote. We ensure that you are fully compliant with all employment and tax laws in your team members’ locations, wherever they are based. We also manage their payroll, benefits, and day-to-day HR needs, saving you time, money, and resources — and giving you peace of mind.

To learn more about how Remote can help keep you compliant, speak to one of our friendly experts now.

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