Reductions in Force (RIFs) under the Worker Adjustment and Retraining Notification Act (WARN Act) are burdensome, but you might be in luck—there are six exceptions to the act, as spelled out by HR.BLR.com.
First, there are three situations in which WARN rules may not apply at all:
(1) The closing in question is of a temporary facility.
(2) The closing or layoff is the result of the completion of a particular project where the employees involved were hired with the understanding that employment was limited to the duration of the facility or the project.
(3) The closing or layoff constitutes a strike or lockout. An employer does not need to provide notice to strikers or to workers who are part of the bargaining unit(s) that is involved in the labor negotiations that led to a strike or lockout when the strike or lockout is equivalent to a plant closing or mass layoff.
However, nonstriking employees who experience an employment loss as a direct or indirect result of a strike, and workers who are not part of the bargaining unit or units \ involved in the labor negotiations that led to a lockout, are still entitled to notice.
Three Exceptions to the 60-Day Notice Rule
In addition, there are three important exceptions to the 60 days’ notice requirement. Employers claiming these exemptions are still required to give as much notice as they can, along with a brief statement of why the notification period has been reduced.
The employer has the burden of proving that the conditions for an exception have been met. These exceptions are:
- The faltering company exception
- Unforeseen business circumstances exception
- Natural disaster exception
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Faltering Company Exception
The faltering company exception applies only to plant closings and not mass layoffs. The exception is narrowly construed. In order for it to apply, at the time notice would have been required, the employer must have been actively seeking capital or business that was realistically obtainable and, if obtained, would have allowed the employer to avoid or postpone the shutdown.
In addition, the employer must have reasonably and in good faith believed that giving the required notice would have prevented the employer from obtaining the financing or business.
Note: This exception is viewed in a companywide context, so a company with access to financing or with cash reserves may not use the exception based solely on the financial condition of the plant that is being closed.
Unforeseen Business Circumstances Exception
This exception applies to plant closings and mass layoffs caused by business circumstances that were not reasonably foreseeable at the time that the 60-day notice would have been required.
An important indicator that a circumstance is not reasonably foreseeable is that it is caused by some sudden, dramatic, and unexpected action or condition outside the employer’s control. Examples include a principal client’s sudden termination of a major contract, a strike at a major supplier, or an unexpected and dramatic economic downturn.
A government-ordered closing of an employment site or a government ordered mass layoff that occurs without prior notice may also fall under the unforeseen business circumstances exception.
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Natural Disaster Exception
This exemption applies to plant closings and mass layoffs due to any form of a natural disaster. Examples include floods, earthquakes, droughts, storms, tidal waves or tsunamis, and similar events.
The employer must be able to demonstrate that its plant closing or mass layoff was in fact due to the natural disaster. As much notice as possible must be given.
Plant closings or layoffs that are the indirect result of a natural disaster are not covered by this exception, but may fall under the unforeseen business circumstances exception.
In tomorrow’s Advisor, we’ll get another expert’s advice on RIFs, and find out about a new audio conference that answers general RIF questions as well as your specific questions.
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