Layoffs
Employers are generally free to hire and layoff employees based on availability of work or for economic
reasons, and to close plants for economic reasons. However, the Worker Adjustment and Retraining
Notification ("WARN") Act requires an employer with at least 100 full-time employees to provide 60-
days advance notice to employees, their representatives and certain government agencies prior the
layoff. California has an act similar to the WARN Act that is broader in scope and affects companies
with fewer employees.
The WARN Act is triggered by a plant closing or shutdown of a single site of employment, a mass layoff
of 50 or more employees affecting 1/3 of the workforce or 500 employees regardless of the percentage,
or total cessation of operations. The numerical requirements, the length of the layoffs, the time period
over which they occur and the exceptions to the law are very technical and beyond the scope of this
summary. The bottom line is that where the layoff is large, or a plant is closing, employees and the
surrounding community are given 60 days advance notice to adjust to the circumstances.
Penalties for non-compliance can be severe. The offending company may have to pay the affected
employees for each day the notice was not received up to a maximum of 60 days. Pay includes benefits
such as maintaining the employees' insurances and making contributions to savings and pension plans.
Even though companies have a right to layoff employees, they must also comply with all other
applicable laws. For example, it is illegal make layoff selections based on criteria such as age, gender,
race, national origin, disability status, pregnancy, and so on. Employers must always be vigilant that
layoff selections are based on objective, non-discriminatory criteria such as ability to perform the
remaining work, job performance, education, longevity, etc.
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