4th Circuit decision highlights WARN Act risks for broader corporate families

Since the late 1980s, employers conducting large layoffs have had to ensure compliance with the Worker Adjustment and Retraining Notification (WARN) Act. While doing the calculus to determine whether there are WARN notice obligations may be straightforward, typically, complications can arise when the employer is one of several entities in a group of related companies. That was the focus of a recent decision from the U.S. 4th Circuit Court of Appeals (whose rulings apply to all employers in Maryland and Virginia).

WARN Act basics

The WARN Act requires covered employers—those with at least 100 employees—to provide 60-days’ advance notice prior to implementing a plant closing or mass layoff. The Act defines a “plant closing” as a shutdown of a single site of employment or an operating unit within a single site that affects at least 50 employees. A “mass layoff” is defined as any reduction in force at a single site that affects at least 33% of employees at the site and at least 50 employees total (or one that affects at least 500 employees).

The WARN Act requires that a written notice be provided to the affected employees, as well as certain governmental offices.

Common factors