WARN ACT NEWS

State WARN Act News: New Hampshire Governor Signs Advance Notice Bill

Governor John Lynch signed the New Hampshire Workers Adjustment and Retraining Notification Act into law today.  The Governor's press release on the signing states that "new law sends a strong message to New Hampshire workers that we care about their hard work, and we care about them and their families."   The law will take effect January 1, 2010 and provides a number of protections beyond those found in federal legislation.  For further information on the law, see our June 26,2009 entry.

WARN Act Reform in U.S. Congress: Senate Update On FOREWARN Legislation

U.S. Senator Sherrod Brown's proposed legislation has been assigned bill no. S. 1374.  The bill has been read twice and referred to the Committee on Health, Education, Labor, and Pensions.  The Senate H.E.L.P. Committee is chaired Senator Edward M. Kennedy.  Committee members by rank include:

Democrats by Rank: Edward Kennedy (MA), Christopher Dodd (CT), Tom Harkin (IA), Barbara A. Mikulski (MD), Jeff Bingaman (NM), Patty Murray (WA), Jack Reed (RI), Bernard Sanders (I) (VT), Sherrod Brown (OH), Robert P. Casey, Jr. (PA), Kay Hagan (NC) and Jeff Merkley (OR).

Republicans by Rank: Michael B. Enzi (WY), Judd Gregg (NH) ,Lamar Alexander (TN), Richard Burr (NC), Johnny Isakson (GA), John McCain (AZ), Orrin G. Hatch (UT), Lisa Murkowski (AK), Tom Coburn, M.D. (OK) and Pat Roberts (KS).

Please let these Senators and your state's Senators know  that you support their efforts to strengthen the WARN Act.

WARN Act Reform in U.S. Congress: House Update On FOREWARN Legislation

Rep. George Miller and Rep. John McHugh's bill, H.R. 3042, has been referred to the House Committee on Education and Labor. The Committee is chaired by Rep. George Miller. Committee members include:

Democrats by Rank: George Miller (CA-07), Dale E. Kildee (MI-05),Donald M. Payne (NJ-10), Robert E. Andrews (NJ-01), Robert C. Scott (VA-03), Lynn C. Woolsey (CA-06), Rubén Hinojosa (TX-15) Carolyn McCarthy (NY-04), John F. Tierney (MA-06), Dennis J. Kucinich (OH-10), David Wu (OR-01), Rush D. Holt (NJ-12), Susan A. Davis (CA-53), Raúl M. Grijalva (AZ-07), Timothy H. Bishop (NY-01), Joe Sestak (PA-07), Dave Loebsack (IA-02), Mazie Hirono (HI-02), Jason Altmire (PA-04), Phil Hare (IL-17), Yvette Clarke (NY-11), Joe Courtney (CT-02), Carol Shea-Porter (NH-01), Marcia Fudge (OH-11), Jared Polis (CO-2), Paul Tonko (NY-21), Pedro Pierluisi (PR), Gregorio Kilili Camacho Sablan (Northern Mariana Islands) and Dina Titus (NV-3).

Republicans by Rank: Howard McKeon (CA-25), Thomas E. Petri (WI-06), Peter Hoekstra (MI-02), Michael N. Castle (DE-At Large), Mark E. Souder (IN-03), Vernon J. Ehlers (MI-03), Judy Biggert (IL-13), Todd Russell Platts (PA-19), Joe Wilson (SC-02), Cathy McMorris Rodgers (WA-05), Tom Price (GA-06), Rob Bishop (UT-01), John Kline (MN-02), Brett Guthrie (KY-2), Bill Cassidy (LA-6), Tom McClintock (CA-4), Duncan D. Hunter (CA-52), Phil Roe (TN-1) and Glenn Thompson (PA-05).

Please let these Representatives and your state's Representatives know that you support these efforts to strengthen the WARN Act.

WARN Act Reform in U.S. Congress: Senator Sherrod Brown and Representatives George Miller and John McHugh Introduce New Legislation!

On June 25, 2009, Senator Sherrod Brown (D-OH) and Representatives George Miller (D-CA), Chairman of the U.S. House Education and Labor Committee, and John McHugh (R-NY) introduced companion bills before the U.S. Senate and U.S. House of Representatives (S.____ and H.R. 3042).  The bills would amend the WARN Act to improve advance notice and strengthen enforcement for the protection of workers facing the loss of their jobs as the result of business closings and mass layoffs.   Rep. Miller's press release reads:

WASHINGTON, D.C. -- U.S. Sen. Sherrod Brown (D-OH) and Representatives George Miller (D-CA), Chairman of the U.S. House Education and Labor Committee, and John McHugh (R-NY) introduced legislation today that would strengthen the law requiring employers to notify workers and communities of mass layoffs or plant closings. The bipartisan FOREWARN Act, would strengthen enforcement of current law and close loopholes in the Worker Adjustment and Retraining Notification (WARN) Act. 

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“Workers deserve more than just a pink slip when they lose their job because of our nation’s economic difficulties,” said U.S. Rep. George Miller (D-CA), chairman of the House Education and Labor Committee. “Current protections for workers being laid off are both confusing and rarely enforced. While an early warning may not save their job, a meaningful early notice will help them prepare to find a new job or upgrade their skills for new employment.”

“Across our country, communities and families have been devastated by mass layoffs.  We have seen this acutely in Northern and Central New York and know all too well the lasting and fundamental impacts mass layoffs and plant closures have on individuals, families, and communities.  In the two decades since the WARN Act was enacted, our nation’s economy has changed markedly,” said U.S. Rep. John McHugh (R-NY).  “It is time to modernize the WARN Act to fit today’s economy, and thereby ensure workers and communities get the fair notice they deserve and need to prepare and adjust to their change in job status.  Thus, I am pleased to have had the opportunity to work with Chairman Miller and Senator Brown to develop the Forewarn Act.” 

“Mass layoffs send shockwaves through individual households and entire communities,” U.S. Sen. Sherrod Brown (D-OH) said. “This bill is about protecting workers and helping communities respond to mass layoffs. The WARN Act was supposed to give employees time to find a new job. Unfortunately, fair notice has become the exception not the rule. This bill will modernize the WARN Act by closing loopholes and strengthening its enforcement. Workers and communities should be armed with best arsenal of protective measures during these challenging economic times.” 

Over the past several months, laid-off employees have filed lawsuits over violations of the WARN Act against companies as varied as Lehman Brothers, retailers like Sam’s Club and Goody’s, the electronics chain Tweeter, ABX Air, USA Jet Airlines, and major law firms.

Congress passed the WARN Act in 1988 to give workers and communities 60 days advance notice to adjust to an impending “plant closing” or “mass layoff.”  Compelling evidence demonstrated that retraining and other readjustment efforts have the greatest success when advance notice is provided. 

The WARN Act’s effectiveness has been undermined by existing loopholes and weak enforcement. First, the WARN Act only covers 24 percents of all layoffs, according to a report by the by the Government Accountability Office (GAO). Of those layoffs, employers only provided notice approximately one-third of the time. The WARN Act has several exceptions that employers can invoke— both legitimately and illegitimately— including unforeseen business circumstances and whether a company is trying to attract capital to avoid a shutdown. Furthermore, the WARN Act is only invoked at companies with at least 100 employees that layoff 33 percent or more of their workforce. 

Second, weak penalties and enforcement measures may prevent employers from providing notice. GAO found that employers failed to provide notice to employees in two-thirds of layoffs and closures where the WARN Act applied.  The WARN Act requires violating employers to pay an employee a day’s pay for every day of notice not provided and does not provide the federal government the authority to enforce workers’ rights. 

The FOREWARN Act would give the U.S. Department of Labor (DOL) the authority to enforce the WARN Act, and would increase penalties for violation to double back pay. In addition, it would reduce the mass layoff figure from 50 to 25, reduce the employer size from 100 to 75 employees, and lower the mass layoff trigger. The lower thresholds would protect employees in both manufacturing and services firms. It would also lengthen the notification period from 60 to 90 days and require employers to provide written notification to the Department of Labor that includes the reason for the plant closing or mass layoff, whether the employer has jobs elsewhere, and a statement of each employee’s right to wages and benefits. The bill would also expand recipients of notification to Secretary of Labor, elected officials including the governor, member(s) of Congress, and state representatives, and the appropriate labor union(s) when applicable.

Representatives Reps. Lynn Woolsey (D-Calif.), Marcy Kaptur (D-OH) and Sens. Richard J. Durbin (D-IL), Russ Feingold (D-WI), Tom Harkin (D-IA), and John F. Kerry (D-MA). have co-sponsored the legislation introduced before their respective chambers. 

The text of the proposed bills is not yet available online.

Update:  Senator Sherrod Brown (D-OH) and Representatives George Miller (D-CA) and John McHugh (R-NY) introduced the Federal Oversight, Reform, and Enforcement of the WARN (FOREWARN) Act into both the House and Senate.  This legislation would strengthen the existing WARN Act in numerous ways.  Under FOREWARN, the U.S. Department of Labor (DOL) would also have authority to enforce the law.  FOREWARN would lower the mass layoff threshold from 50 employees to 25 and reduce the employer size threshold from 100 employees to 75.  It would also lengthen the notification period from 60 to 90 days and require employers to provide written notification to the Department of Labor that includes the reason for the plant closing or mass layoff, whether the employer has jobs  available elsewhere, and a statement of each employee’s right to wages and benefits.  It would further expand recipients of such notification to the Secretary of Labor, elected officials including the governor, member(s) of Congress, and state representatives, and the appropriate labor union(s) when applicable.  FOREWARN's expansions also include an employer posting requirement and provide educational materials to be available to affected employees.  Most importantly, FOREWARN would increase penalties for violation of the law to double back pay and it would prevent the waiver of any of these WARN rights outside of a settlement negotiated by the Secretary of Labor, a state attorney general, or a private attorney on behalf of affected employees.  

Colibri Workers - Update from Rhode Island

In a June 28, 2009 article, In These Times contributing editor, Kari Lydersen, provides an update on the courageous struggles of former Colibri Group workers to obtain back pay under the WARN Act.  Ms. Lydersen also has a forthcoming book, Revolt On Goose Island: The Chicago Factory Takeover, and What It Says About The Economic Crisis, which covers the sit-in by Republic Windows workers earlier this year at a factory in Chicago.  Among other issues, the Republic Windows sit-in occurred in response to the employer's failure to meet WARN Act requirements.

State WARN Act News: New Hampshire WARN Act Bill Passes Legislature

In the New Hampshire General Court, the Senate and House of Representatives have passed the New Hampshire Worker Adjustment and Retraining Notification Act.  The Act has been submitted to the Governor for signature.

The Act would apply to any employer of 75 or more full-time workers in the state and requires employers to provide 60 days advance notice of a plant closing or mass layoffs.  Plant closings are defined as a shutdown of operations affecting 50 or more full-time employees.  Mass layoffs are defined as an employment loss at a single site of employment that affects 250 or more full-time workers or that affects at least 25 full-time employees if they constitute 33 percent of the full-time employees of the employer.  The Act empowers the state commissioner of labor to determine liabilities and civil penalties for violations of the Act and permits employees to bring suit in court.  The Act also permits the state department of labor to take a lien against the business revenues and property of violating employers and provides that the state attorney general may petition the court for an order of restitution to injured persons whenever the state attorney general has reason to believe that an employer is violating or is about to violate the statute.

State WARN Act News: Advance Notice Law Introduced in Minnesota State Legislature

The Minnesota State Legislature has taken up legislation to empower to the state labor commissioner to enforce the advance notice requirements of an existing statute (Chpt. 116L, § 116L.976).  Currently the state has a well-intentioned but highly ineffective statute that asks businesses to voluntarily comply with advance notice to workers facing a worksite closing or mass layoff.  As a result, the state statute is rarely observed in practice. (Michigan has a similar statute).  While voluntary statutes can inform good faith employers who need guidance, these statutes too frequently provide bad faith actors with short term marketplace advantages over companies who observe the fundamental rights of their employees and the communities in which they are located.

Minnesota House File No. 1963 would empower the state commissioner to enforce the advance notice requirements of § 116L.976.  by permitting the commissioner to issue orders requiring an employer to comply with advance notice requirements. The department is required to serve the order upon the employer or the employer's authorized representative. An employer who wishes to contest the order must file written notice of objection within 15 calendar days after being served.  The commissioner may also bring an action in the district court to enforce or require compliance   The commissioner can also order violating employers to pay back pay to aggrieved parties and treble damages. Any employer who is found by the commissioner to have repeatedly or willfully violated the Act shall be subject to a civil penalty of $1,000 for each violation for each employee. In addition, the commissioner may order the employer to reimburse the department and the attorney general for all appropriate litigation and hearing costs expended in preparation for and in conducting the contested case proceeding. An employee may also bring a civil action seeking redress for a violation or violations of section 116L.976 in district court. An employer who violates the requirements is liable to the employee for the full amount of the wages, gratuities, and overtime compensation and for an additional equal amount as liquidated damages. In addition, in an action under this subdivision the employee may also seek treble damages and other appropriate relief provided by law.

Due to legislative rules of odd-year adjournments, the bill has been returned to the House Civil Justice Committee where it remains pending.

State WARN Act News: Indiana & Iowa Consider State WARN Acts

The midwest "I" states have been moving towards enactment of state advance notice legislation. Illinois passed state legislation in 2005.   Indiana has introduced such legislation during the past three legislative sessions and Iowa has introduced bills during the last two sessions.  

In February, Representative Dennis Tyler authored and along with Representatives  Terri Austin, John Bartlett and David Niezgodski introduced House Bill 1166 before the Indiana House of Representatives.  The bill would require advance notice of business closures or mass layoffs. The bill applies to any employers of between 50 and 100 employees in the state and the definition of employers includes a company or an officer of a company.  Employers are required to provide 60 days written notice of plant closings and mass layoffs.  Plant closings are defined as the permanent or temporary shutdown of a single site of employment resulting in an employment loss to at least 20  employees.  Mass layoffs are defined as a reduction of force resulting in an employment loss at a single site of employment to at least 20 employees.  If an employer violates the bill's requirements, an aggrieved employee would be permitted to  commence an action in court.  Employers that violate notice requirements to municipalities can be found to have committed a Class C infraction for each day that the violation occurs.  The bill is pending before the House Committee on Pensions and Labor.

In Iowa, Senate Study Bill 1055 and House Study Bill 62 have been submitted to both chambers of the state's General Assembly.  The Senate Study Bill has been assigned to the Labor and Business Relations Committee and remains pending before a subcommittee of that body.  The House Study bill has been now be introduced before the House of Representatives as House File 681 and has been referred to the House Labor Committee.  The bills and file would require employers to provide advance notice of business closings and mass layoffs. Employers who employ 25 or more full-time workers would be covered.  Business closings are defined as the permanent or temporary shutdown of a single site of employment resulting in employment loss for 25 or more workers.  A mass layoff is defined as a reduction in force of 25 or more employees.  Employers would be required to provide 30 days notice of business closings and mass layoffs.   The state department of labor would be empowered to conduct investigations and determine violations of the Act.  Violators would be liable for civil penalties of not more than $100 for each day of violation.

United States Congress: Two Bills To Amend WARN Act

Alert Laid Off Employees in Reasonable Time Act.  On April 23, 2009, U.S. Representative Luis Gutierrez introduced House Bill 2077.  The bill would require an employer to give 60-day written notice to employees and to appropriate state and local government officials before ordering a mass layoff that results in employment loss for a single employer at more than one site of employment when the layoff affects at least 50 employees representing 33% of the full-time employees or affects 500 or more employees.  Violators would be liable to each aggrieved employee for double the back pay.  The bill was referred to the House Committee on Education and Labor and in early June was referred to the Subcommittee on Workforce Protections.

Regional Economic Recovery Coordination Act of 2009. On February 25, 2009, Senator Sherrod Brown introduced Senate Bill 480, which would amend the Worker Adjustment and Retraining Notification Act to require employers to notify the Secretaries of Labor and Commerce of a plant closing or layoff and the number of employees affected.  The bill has been referred to the Committee on the Environment and Public Works.

WARN Act Case Decisions: Update

Gross v. Hale-Halsell Co., 554 F.3d 870 (2009).  Plaintiffs were employed by Hale-Halsell Co. (“HHC”). HHC owned fifty percent of United Supermarkets, which was also HHC’s largest customer. At times, HHC failed to meet orders that United requested. United terminated the relationship, and HHC began experiencing financial troubles.  In January 2004, HHC met with some of its employees informing them of impending layoffs. Approximately two hundred employees were to be laid off the very next day. The plaintiffs brought this action and HHC moved for summary judgment on the basis that it was excused from the WARN Act requirements based on the unforeseeable business circumstance exception and the faltering company exception.  The district court granted the summary judgment holding that the termination of the United-HHC relationship was unforeseeable and caused the mass layoffs. The plaintiff appealed.

The Court of Appeals recognized that in asserting the unforeseeable business circumstance exception, the company has the burden of proving the circumstances faced were not reasonably foreseeable and that the unforeseeable circumstances was in fact the cause of the layoffs. The court concluded that the evidence showed that HHC could not reasonably foresee that United would terminate their relationship, which would make the circumstance unforeseeable.  The court then went on to discuss the causation issue.

With regard to causation, the court concluded that HHC’s decision to shut down came shortly after termination of the relationship with United. From this, the court held that United’ withdrawal was the cause of HHC’s decision to layoff its workers. Because the requirements of the unforeseeable business circumstances exception found to have been met. The court affirmed the decision of the district court.

In re Continental AFA Dispensing Co., 403 B.R. 653 (Bkrtcy.E.D.Mo.,2009).  In July 2008, Debtors terminated the majority of their 743 employees and in August 2008 filed for Bankruptcy.   On August 11, 2008 Joshua Bridges, Plaintiff, filed a class action adversary proceeding complaint on behalf of himself and a class of similarly situated employees seeking damages under the WARN Act.

The main issue the court dealt with was whether an employee terminated pre-petition by a debtor can be granted an administrative expense claim for back pay under the WARN Act.  The granting of administrative expense status gives those claims top priority for payment.   The court found that to be granted administrative expense claim status under the Bankruptcy Code the plaintiffs had to show that the services were rendered post-petition, and those services provided a direct and substantial benefit to the Debtor’s estate.  The Debtors admitted that they had breached the 60 day requirement under the WARN Act by terminating the employees, but argued that the termination occurred pre-petition, and therefore, the plaintiff’s services were not performed to preserve the estate. The court denied the claim for administrative expense status, stating that a WARN Act claim, for an employee terminated pre-petition, is not “an actual and necessary expense of preserving an estate.” 

In re Powermate Holding Corp., 94 B.R. 765 (Bkrtcy.D.Del.,2008).  On March 10, 2008, the Debtor Defendants sold their Minnesota assets and terminated the employment of all the workers at that location.  On March 17, 2008 the Debtor Defendants eliminated an additional 260 employees without prior notice, and then filed for Chapter 11 Bankruptcy.      Plaintiffs filed a claim charging violations of the WARN Act.  The Debtor Defendant moved for a dismissal or a determination that those damages were not entitled administrative expense priority status. 

In light of the 2005 changes to the United States Bankruptcy Code, the court first determined how the amendment of 11 USC § 503(b)(1)(A)(i) and (ii) should be interpreted.  Within these sections, the court found the two subsections (i) and (ii) as categories within a particular subset of allowable administrative expenses that were “actual, necessary costs and expenses of preserving the estate.” § 503(b)(1)(A). Therefore the court held that the amendment was to be independently evaluated in determining whether the WARN Act claims were administrative expense claims. This was in contrast to In re First Magnus Financial Corp., 390 B.R. 667 (Bkrtcy.D.Ariz.,2008), which interpreted that conjunction “and” to mean that both provisions, (i) and (ii), should be read together, requiring both sections to be satisfied for a claim to qualify as an administrative expense.

The court found that the decisive factor in determining whether a claim should receive administrative expense status was the relation of the petition date to the time when the rights or claims to back pay vested.  If the claim vested pre-petition the claim would not be entitled to administrative expense status because the back pay would be attributable to the time occurring prior to the commencement of the bankruptcy case. If the claim vested post-petition the claim would be entitled to administrative expense status because the back pay would be attributable to the time occurring after the commencement of the case.

The court concluded that WARN Act claims vest at the time of termination. Therefore the Plaintiff and employees claims vested entirely when they were terminated pre-petition, and were not entitled to administrative expense claim status in this case. The court also stated that other courts had consistently held that pre-petition claims, such as the present claims, were entitled to fourth or fifth level priority status pursuant to 11 U.S.C. § 507(a)(4) and (5).

State WARN Act News: Wisconsin Considers Amendments to Advance Notice Law

The Wisconsin Legislature is considering two bills that would amend the state's existing statute that requires advance notice to workers before business shutdowns and mass layoffs.  Assembly Bill 266 and Senate Bill 183 would strengthen procedures for providing information to workers and services from the state's rapid response team.  The bills would also create civil penalties for violations of the state's advance notification law.  The Assembly's bill is presently before the Committee on Workforce Development and the Senate bil is before the Committee on Labor, Elections and Urban Affairs. 

State WARN Act News: Mississippi Bill Introduced Earlier This Year

We missed this one earlier this year.  In Mississippi, House Bill No. 682 was introduced  to require advance notice to workers faced with a business closing or mass layoff.  The bill was authored by Rep. William J. McCoy.  The bill's provisions were  substantially similar to the requirements of the federal WARN Act.  The bill however would have allowed the state Attorney General to bring suit on behalf of aggrieved employees and municipalities. Unfortunately, the calendar deadline expired without passage, but hopefully will be reintroduced and acted upon in the next legislation. 

Rep. McCoy and the co-authors (Rep. Bill Moak, Rep.George Flaggs, Jr. and  Rep. Frances Fredericks)  of the bill should know that their efforts to protect the fundamental rights of our nation's workers and their families and communities are much appreciated.

State WARN Act News: WARN Act Bill Pending In North Carolina

In the North Carolina General Assembly, Representatives Rick Glazier, Marvin Lucas, Deborah Ross, and Bill Faison introduced House Bill 1169 earlier this year.  The bill was filed, passed a first reading and was referred to the House Committee on Commerce, Small Business and Enterpreneurship.  The bill remains in committee. 

The bill would require an employer to provide written notice at least 90 calendar days in advance of a plant closing or a mass layoff.  Plant closings and mass layoffs are defined similarly to the federal statute.  A WARN-NC notice is required when an employer is laying off at least 50 people in a single site of employment or employs 100 or more workers.  Any employer who violates the act is liable to each affected employee for an amount equal to back pay and benefits for the period of the violation, up to 90 days.  The Commissioner is empowered to enforce the act. The Attorney General shall represent the Department of Labor or designate some member of his or her staff to represent them in all actions or proceedings in connection with the Act.  Within 90 days of an employer's failure to provide an affected employee with the WARN-NC notice required by this Article, the affected employee may bring a civil action in court against the employer to obtain monetary damages.

State WARN Act News: Updates on California and Rhode Island Bills

California's bill to amend the state's advance notification statute passed the Assembly Committee on  Labor and Employment and was then referred to the Committee on Appropriations where the bil has received two hearings and remains pending.  However certain deadlines for fiscal approval have passed and it is uncertain whether further action on the bill will occur this year. After its introduction, the bill was targeted by chamber of commerce organizations  who have far too-frequently opposed sustainable and ethical business practices   Our friends in the business community are encouraged to contact their local chambers of commerce and support policies, leadership and business organizations who advance ethical and sustainable business practices.

In Rhode Island, the Worker Protection and Job Loss Notification Act has been held for further study on the recommendation of the House Labor Committee.

See our April 26, 2009 entries for more information on the substance of these bills.

State WARN Act News: California Considers Amendments To State WARN Statute

On February 26,2009, California Assembly Member Sandré Swanson introduced legislation to amend the advance notification provisions of the state Labor Code. Most notably, Assembly Bill 842 seeks to amend the Code to require that:

• Employers provide 90 days advance notice of a plant closing or mass layoff. State law presently requires 60 days advance notice;
• The California Labor and Workforce Development Agency (LWDA) maintain a guide of benefits and services available to dislocated workers and maintain a guide of economic development benefits and services for employers to avert plant closings and mass layoffs;
• The LWDA transmit the guides an employer upon their filing notice of a plant closing or mass layoff and that employers provide such information to their employees; and
• An employer who seeks to be exempt from notice under the "actively seeking capital exception" engage in consultation with specified public agencies while seeking capital.

On April 22, 2009, the bill passed out of the Assembly Committee on Labor and Employment and has now been referred to the Committee on Appropriations.