New York recently enacted a Worker Adjustment and Retraining Notification Act (“NY WARN”) to become effective on February 1, 2009. Because this new statute provides significantly broader coverage than its federal counterpart, employers are well-advised to revisit their compliance obligations prior to the effective date.
The federal Worker Adjustment and Retraining Notification Act (“federal WARN”) requires employers with more than 100 employees to provide at least 60 days’ advance written notice to employees affected by a “mass layoff” or “plant closing” or their union representatives, as well as similar notice to designated state and local government officials. Failure to give such notice may result in liability to affected employees for back wages and benefits for the period for which notice was not provided (up to the full 60 days), as well as civil fines.
In comparison, NY WARN provides broader coverage than federal WARN. NY WARN requires employers with more than 50 (not 100) full-time employees to give at least 90 (not 60) days’ advance written notice to affected employees, their union representatives, the New York State Department of Labor, and the local workforce investment board(s) in the event of a defined “plant closing,” “mass layoff,” or “relocation.” Moreover, unlike most courts that have interpreted federal WARN, in assessing penalties for non-compliance, NY WARN will look to the number of calendar days for which notice is not provided, rather than the number of work days within the non-compliance period.
A “mass layoff” under NY WARN is a reduction in force resulting in employment losses at a single employment site within a 30-day period of at least 33% of the workforce and at least 25 full-time employees, or at least 250 full-time employees regardless of the percentage of the workforce. In contrast, a “mass layoff” under federal WARN occurs if at least 33% of the full-time employees at a single employment site and at least 50 full-time employees suffer an employment loss within a 30- day period; or, alternatively, at least 500 full-time employees lose employment.
A “plant closing” under NY WARN is defined as a “shutdown” of a single employment site (or of one or more facilities or operating units within a single site) if it results in employment losses of at least 25 full-time employees within a 30-day period. Federal WARN, by comparison, requires at least 50 full-time employees to lose employment in a similar shutdown scenario.
Finally, NY WARN defines a covered “relocation” as “the removal of all or substantially all of the commercial or industrial operations of an employer to a different location” at least 50 miles away, regardless of the number of employees involved. Federal WARN does not separately address relocations that are not either plant closings or mass layoffs.
As with federal WARN, under NY WARN, a 90-day (not 30-day) employment loss aggregation period will be used to determine whether a plant closing or mass layoff has occurred if there are insufficient losses within a 30-day period to trigger NY WARN, and the employment losses within the aggregate 90-day period do not result from distinct causes or actions.
Similar to federal WARN, NY WARN contains provisions pertaining to strikes and lockouts, sales, unforeseeable business circumstances, faltering companies, natural disasters, and layoffs extended beyond six months. However, there are notable differences in the treatment of many of these concepts under the respective statutes.
Furthermore, unlike federal WARN, which only provides for a private right of action, NY WARN authorizes the New York State Department of Labor to enforce the statute administratively. The New York State Department of Labor is directed to “prescribe such rules as may be necessary to carry out” NY WARN, and is in the process of drafting appropriate regulations. Employer advocates have requested the Department to address evident inconsistencies and gaps in the statute (for example, the fact that NY WARN requires at least 90 days’ notice of covered events but penalizes employers only up to a maximum of 60 days’ wages and benefits where notice is not timely given, and the statute can be read to require notice to government officials of all “losses of employment,” even where such losses are not part of a plant closing or mass layoff).
Although NY WARN will take effect on February 1, 2009, employers who may be considering workforce reductions, facility closings, or relocations over the next few months should consider the statute’s potential implications. Based on the language of the statute, if a covered action is planned to occur in its entirety on or within 90 days after February 1, 2009, an employer could be required to issue NY WARN notices 90 days prior to the planned action, i.e., as early as November 3, 2008. Although the New York Department of Labor has issued an informal opinion letter stating that employers would not be required to provide notices for covered actions occurring prior to February 1, 2009, there remains an open question as to how the statute will be interpreted where the notice period “straddles” the statute’s effective date and the covered action is not fully completed before February 1.