What is the WARN Act?

The Worker Adjustment and Retraining Notification Act (WARN) requires certain employers to provide at least 60 calendar days’ notice before a layoff or plant closing that impacts 50 or more workers (29 U.S.C. 2101–2109). Employers have WARN obligations if they have 100 or more full-time employees (or 100+ employees who work at least 4,000 hours/week in total).

Covered employers must follow WARN Act requirements ahead of a qualifying event, including:

• Plant closure that results in employment loss for 50 or more employees
• Mass Layoff where a third or more of employees at a particular site (50 or more) face employment loss
• Mass Layoff where 500 or more employees face employment loss, independent of proportion to other employees

Employment loss occurs when a fulltime employee is let go for reasons other than cause, retirement, or voluntary departure. And if an employee’s hours are reduced by more than half over a 6-month period, that is also an employment loss sufficient to trigger WARN requirements.

Who Enforces the WARN Act?

There is no singular enforcement authority for WARN. The U.S. Department of Labor and Texas Workforce Commission may issue guidance on employer obligations and employee rights, but they do not enforce WARN or punish violations. Instead, the WARN Act allows affected employees, employee representatives, or local governments to file civil suit in federal district court.

If the courts find a WARN violation occurred, the employer may face civil penalties; impacted employees may be awarded up to 60 days’ back pay and benefits as well as attorneys’ fees.

What Rights Do Laid-off Employees Have in Texas?

Eligible Texas employees do have WARN rights, as well as recourse when those rights are violated. The federal WARN Act establishes baseline protections for employees in all states. Some states provide additional protections above and beyond the federal minimum, but Texas does not.

Critically, WARN does not prohibit layoffs. The law only provides for advanced notice for employees and state entities. However, some employment terminations are unlawful under Texas and Federal law. If an employer attempts to use a layoff as pretext to illegally fire an employee, that termination can be challenged.

How a Texas Employment Attorney Can Support You

Because there is no enforcement authority beyond the courts, it is highly advised to speak with a Texas employment attorney to determine whether your rights as an employee have been violated, and what recourse may be available to you. A lawyer can help a Texas employee facing layoffs by:

Holding Your Employer to Account for Their Legal Obligations

An attorney can evaluate whether or not: (1) your employer qualifies for WARN obligations, (2) your layoff or plant closure triggers WARN, (3) your employer violated their obligations, and (4) you may be entitled to remedies.

How Employers Get Around Their WARN Obligations

While there are circumstances in which an employer cannot reasonably be expected to issue 60 days’ notice of a layoff, like a natural disaster, not all failures to “warn” are aboveboard.

Pay-in-Lieu-of-Notice: Employers may get around WARN notice obligations by paying their employees severance instead of issuing a 60-day notice. But unless the pay is commensurate with the time period for which warning was not given, the employees may have a claim to those additional wages and benefits. Have an employment attorney review any such payout or agreement to ensure you receive the full amount to which you’re entitled.

Superficial Subsidiaries: Some employers attempt to get around legal obligations like WARN by artificially deflating their employment numbers. For example, a company may distribute their employees across smaller, distinct companies that, in reality, are part of one larger entity. Courts consider more than the name of a “separate” company. They also look at the reality of the companies and how they conduct business to determine how separate they truly are. An employment attorney should know the tactics to look for and assess whether your employer may be misrepresenting the nature of their business and violating the law.

Misclassifying Employees: Part-time, temporary, and contracted employees do not count toward the threshold required to trigger WARN notice. Companies may misclassify their employees to avoid liability. But if the reality of the employee’s job and relationship to the employer does not reflect this classification, it will come under heavy scrutiny in court. If you believe your classification does not accurately represent you, it is critical to speak with an attorney. You may be entitled to additional protections.

Staggering Layoffs: Because layoff numbers must reach a certain threshold before triggering WARN notice requirements, businesses may stagger layoffs to get around the WARN Act. However, the WARN Act can apply retroactively; if a covered company lays off 30 employees in October, and then another 30 employees in December, the WARN Act still requires them to issue notice.

Exceptions to WARN Act Obligations

Even if your employer qualifies for WARN Act obligations, there may be exceptional circumstances where they are not required to issue 60 days’ notice.

Natural Disaster: If an employer must close a plant or initiate mass layoffs as a direct result of a natural disaster, like a drought destroying a harvest, they may be excepted from WARN obligations.

Faltering Company: If a company is negotiating a deal that would make the layoffs unnecessary, and word getting out could compromise that deal’s success, they are not obligated to issue notice. But the employer must have a good-faith belief that the closure or mass layoff could be prevented by a successful business or financial arrangement.

Unforeseeable Circumstances: If a situation arises that the employer could not reasonably be expected to anticipate causes a layoff or plant closure, the employer is not obligated to provide 60 days’ notice. An example would be a catastrophic disruption other than a natural disaster, like losing access to necessary supplies/materials during wartime.

The question of whether or not one of these exceptions applies to a given layoff or plant closure can be heavily litigated. An employment attorney can help determine if your employer’s claim to an extenuating circumstance is genuine or just an excuse to shield themselves from liability. If the latter, you and your affected coworkers may be entitled to lost wages, benefits, and attorneys’ fees.

What remedies are available under the WARN act?

As the WARN Act provides for 60 days’ notice, remedies only cover this failed-to-warn period: 60 days at most (29 U.S.C. §2104(a)). Courts may award the value of collateral employment benefits lost during this timeframe, such as:

• Back pay
• Benefits (like healthcare coverage)
• Attorneys’ fees

Employers may face additional civil penalties for each day they failed to issue notice.

Note: The WARN Act does not empower courts to stop a mass layoff or plant closure. It only entitles certain employees to 60 days’ advanced notice.

Pretextual Employment Loss

If you suspect you were selected for an otherwise lawful layoff as a pretext to cloak unlawful discrimination or retaliation, seek legal counsel immediately. Depending on the nature of the discrimination or retaliation you face, different deadlines and procedural requirements apply. An attorney can make sure your claims are filed in the right way, within the required deadline, and with the right people.

Class Action

The WARN Act permits similarly situated employees to file a class action claim (29 U.S.C. §2104(a)(5)). By collectively filing suit with coworkers subjected to the same large-scale layoff or plant closing without adequate notice, you may reduce your upfront litigation costs. Courts may award attorney fees, but the initial investment can make individual litigation unrealistic for some. In many cases, class action may be preferable: reducing costs for the employees and the courts. This is not true in all situations, however. Consult counsel to assess the path most advantageous to you.

How We Can Help

Tully Rinckey’s Texas Labor and Employment team cover multiple areas, including Texas employment law, federal employment law, and military law. Our attorneys can assist employees facing employment loss in the public and private sectors. Some key services we can provide laid-off employees include:

• Assessing your employer’s compliance with their legal obligations under the WARN Act, USERRA, Title VII, and the ADEA
• Reviewing your paystubs, company policies, employment contracts, and collective bargaining agreements to determine your employee status and entitlements
• Vetting any severance agreements to ensure compensation is adequate and the terms are to your benefit
• Helping you recover entitlements, like backpay, benefits, and attorneys’ fees
• Determining whether your selection for layoff may have been pretextual: disguising a wrongful termination (like retaliation)
• Representing employees in class action WARN or other employment claims
• Alerting you to your rights as an employee so you can act from an informed position and choose the course most advantageous to you. In addition to WARN rights, you may also qualify for safeguards under other more protective laws like USERRA, Title VII, the Texas Whistleblower’s Act, or the Age Discrimination in Employment Act (ADEA)