Company Culture

What is the WARN Act? Here’s how it may apply to your company after mass layoffs

If a sweep of firings catches you and your fellow employees by surprise, you may have more protection than you think.

Within a space of about a week, Twitter, under its new billionaire CEO Elon Musk, saw mass firings of about half of its workforce.

Some of Twitter’s top executives walked away with multimillion dollar packages. But most employees did not, and they were caught off guard and unsure if they were being treated legally.

That’s because warning employees about an impending mass layoff is the law — though not one that is simple to navigate.

In 1989, the Worker Adjustment and Retraining Notification (WARN) Act was signed into law, legally requiring companies with 100 or more employees to provide them with a 60-day notification of a layoff of 50 or more employees that make up at least 33% of the company’s workforce.

At the time, the WARN Act was a response to auto plant, steel mill and other factory closings. It still applies to factories, but today a lot of the companies making sweeping layoffs are big tech companies.

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Twitter employees, who had notice of only hours before the 3,700 layoffs began, quickly filed a federal class action lawsuit against Musk.

Does the WARN Act protect you?

If you work for a large corporation, yes, any private company or nonprofit with 100 or more employees must comply.

If you’ve heard about tech workers getting laid off seemingly overnight and no one mentioned the WARN Act, it’s likely because the company that laid them off give them either 60 days back pay or a severance package financially worth 60 days of work or more. Philadelphia-based Gopuff, for example, laid off hundreds of employees with little notice in March, then again in July, but the affected would receive severance packages.

This is a bit of a grey area. There are technically no exceptions to the 60 day notification, including back pay. Functionally, however, companies sometimes will voluntarily pay the money that a court would rule they owed the employee if the employee sued them.

Laid-off Twitter employees were told that they would continue to be paid and receive benefits as required by law (the 60 days), plus one additional month of severance pay after that, which they will receive after signing a release form. The contents of the release form aren’t known, but it’s common for employers to include clauses that say you agree not to take legal action against the company.

So, while the laid off Twitter employees wouldn’t receive damages if the 60 days were sufficiently paid, the lawsuit could bring penalties for each day of violation.

Did your layoff violate the WARN Act?

If you find yourself suddenly laid off from a large company, you may have a civil case against your former employer if all of these apply:

  • You were given less than 60 days notice that a mass layoff event was coming
  • Your employer is not a federal, state or local entity
  • You are not a business partner for the company
  • You were not fired for cause, you did not leave the job voluntary departure and you did not retire
  • You were not offered a reasonable transfer to another office that you refused
  • The layoff is to last more than six months, the firing was permanent, or your hours of work have been reduced by more than 50% for at least six months
  • You were not laid off at the completion of a temporary project
  • You have worked six months or more in the 12 months preceding they layoff
  • You worked more than 20 hours a week
  • You are not a contractor or the employee of a contractor with the company
  • You are not part of a labor bargaining unit that led to a strike (regular striking workers are protected)
  • The company was not clearly faltering
  • The layoff was not the result of a flood, earthquake, drought, storm or other emergency

If you live in California, Illinois, Maryland, New Jersey, New York, Tennessee or Wisconsin, your state has its own layoff laws on top of the WARN Act, which in most cases are stricter than the federal law. For example, in New York, layoff laws apply to companies with a minimum of 50 employees, and threshold number of laid off employees is just 25; in California, it applies to companies with at least 75 employees, including part-time employees, and the number of layoffs does not have to be a certain percentage of employees.

If you and your fellow firees decide to take the company to court, it’s likely the company will claim that they layoffs were in “good faith” and/or that there were unexpected circumstances that you may not be aware of.

To get an idea of how companies defend themselves in WARN Act cases and what the courts weigh when deciding them, you can read read about previous cases online.

Companies: Twitter
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