Christopher DeGroff Published in Employment Law360
"Relief For Struggling Employers Under WARN?"

Christopher DeGroff’s article, "Relief For Struggling Employers Under WARN?," was published in the July 9, 2009 issue of Employment Law360. Chris’ article discusses the Worker Adjustment and Retraining Notification Act (WARN), which Congress enacted in 1988 to give employees and their communities time to prepare for large-scale employment losses. Chris notes, “In this perilous economy, employers must frequently make deep staffing cuts to make ends meet. Time is of the essence, but the WARN Act must be part of the calculus.”

Chris explains that failing to give 60 days’ written notice to employees exposes employers to potential multi-plaintiff lawsuits seeking back pay, benefits, attorneys fees and even government fines. The dilemma facing struggling employers is that they often cannot predict staffing cuts two months in advanced, yet cannot hemorrhage payroll while waiting out WARN’s notice period. Chris notes that “WARN does have an exception for unforeseeable business circumstances (UBC), which provides exception permits fewer than 60 days’ notice if the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”

According to Chris’ article, WARN does not define “reasonably foreseeable,” but its regulations specify that employers may rely on the exception after unexpectedly losing a major client or contract, experiencing a strike at a major supplier, or in the midst of an “unanticipated and dramatic major economic downturn.” Chris notes, “Few cases interpret the UBC exception, but a handful of decisions show that employers can successfully invoke the exception if they have the facts to back it up.” Chris explains that “UBC is not a free pass to WARN and that employers must still give as much notice as is practicable. An employer seeking to invoke the UBC should have specific evidence to back its story; facts showing both that (1) it could not have reasonably anticipated certain events and issued WARN notices 60 days before the WARN-triggering reductions, and (2) it was not objectively practicable to issue earlier WARN notices.”

Chris concludes, “Recognizing certain economic realities, Congress attempted to carve out a safe harbor for employers who simply could not comply with WARN’s notice provisions. What has emerged, however, is a complicated exception requiring a fact-sensitive analysis with only limited guidance from WARN’s regulations and the courts. As with most WARN issues, the best advice is: when in doubt, give the full 60 days’ WARN notice. In those circumstances where that is impossible, however, the unforeseeable business circumstances exception remains a useful and sometimes necessary tool for those employers that have developed the evidence to support it.”