Worker Adjustment and Retraining Act ("WARN ACT")

In these economically stressed times, many employers are considering laying off employees.  The Federal WARN Act requires that employers of a certain size must notify employees and others at least 60 days in advance of a plan shutdown, mass layoffs (which include situations where the number of employee working hours are reduced) and certain situations where employees are relocated.

Many employers do not realize that there is also an Illinois WARN Act which (a) covers more employers, (b) has a lower threshold for triggering a WARN Act notice, and (c) requires notification to more recipients than the Federal WARN Act.  This article highlights the differences between the Federal WARN Act and the Illinois WARN Act.

Size of the Employer

The Federal WARN Act applies to employers that employ at least 100 or more full-time employees who collectively work a minimum of 4,000 hours per week.

The Illinois WARN Act applies to employers who employ at least 75 or more full-time employees who collectively work a minimum of 4,000 hours per week.  Therefore, upon the occurrence of a triggering event, employers in Illinois employing between 75-99 full-time employees will be required to comply with the Illinois WARN Act although they are exempt from complying with the Federal WARN Act.

Affected Employee Threshold

Under the Federal WARN Act, a "mass layoff" is defined as a reduction in force (which is not a plant closing) which results in an employment loss within a 30-day period at a single site of employment of at least: (1) 500 or more full-time employees, or (2) 50 or more full-time employees which comprise at least one-third (33%) of all full-time employees at the site.

Under the Illinois WARN Act, a "mass layoff" is defined as reduction in force (which is not a plant closing) which results in employment loss within a 30-day period at a single site of employment of at least:  (1) 250 or more full-time employees, or (2) 25 full-time employees which comprise at least one third (33%) of all full-time employees at the site.

Under both Acts, the term "employment loss" is defined as: (1) an employment termination, other than a discharge for cause, voluntary departure or retirement, (2) a layoff exceeding six (6) months, or (3) a reduction in hours of work of more than 50% during each month of any six (6) month period.

Both Acts similarly define a "plant closing" as a permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more full time employees.

Employee Relocation

Under both Acts, the definition of an "employment loss" specifically excludes instances when the plant closing or layoff is the result of a "relocation" of the employer's business if, before the closing, the employer offers to transfer the employees to a different site of employment within a reasonable commuting distance with no more than a 6-month break in employment.  Additionally, under the Illinois WARN Act, an employment loss will not occur if an employer offers to transfer employees to another site of employment (regardless of distance) with no more than a 6-month break in employment and the employee accepts within 30 days of the offer or plant closing/layoff.

Scope of the Notice Required

Under the Federal WARN Act, employers are required to provide notice to a:  (1) representative of each affected employee, (2) if no such representative, then to the affected employee, (3) to the State, and (4) to the chief elected official of the unit of local government within which closing or layoff has occurred.

Under the Illinois WARN Act, employers are required to provide notice to the:  (1) affected employees and representatives of affected employees, (2) Department of Commerce and Economic Opportunity, (3) chief elected official of each municipal and county government within which the employment loss, relocation, or mass layoff occurred.  Additionally under the Illinois WARN Act, if the employer receives state or local economic support pursuant to the Business Economic Support Act ("BESA"), then it must also provide notice to the Governor, Speaker and Minority Leader of the House of Representatives, and the President and Minority Leader of the Senate, and the Mayor of each municipality where the entity has locations in the State.

Enforcement Options

Enforcement options available to affected employees also vary under the Acts.

Under the Federal WARN Act, affected employees or their union representatives may bring an action in Federal court for alleged non-compliance.

Under the Illinois WARN Act, the Illinois Department of Labor has the authority to create rules to enforce the statute, including the ability to grant employees the right to pursue administrative hearings.  Additionally, the IDOL may examine books and records of an employer in connection with a proceeding or investigation.

Finally, under both Acts, if an employer is found in violation, it may be held liable for back pay, the value of any lost benefits and/or a penalty of up to $500 per day for each day the notice to employees is late.  Additionally, under the Federal WARN Act, employees have the ability to seek reimbursement of attorneys' fees.

Other states may also have their own WARN Act, so it is important to check state law as well as federal law in advance of instituting a plant shutdown or mass layoff.  Pedersen & Houpt can assist you in complying with federal and state employment laws before initiating a layoff.

For information on employment law, please contact a member of our Employment Practice Group.

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