For all business leaders it is important to note the many federal laws and restrictions that dictate steps and provisions you must make in your organization. Some of these laws exists to protect the business leaders while some work to protect the consumers. Others, like the 1989 Worker Adjustment and Retraining Notification (WARN) Act, signed into place by President George H.W. Bush, exists to protect the employee. By understanding the WARN act and how it applies to your company you are better able to protect your business interests and the well-being of your company and employees.
The WARN act serves to require business leaders to give their employees adequate warning before shutting down the company or performing large scale layoffs. Ideally, this time will make it possible for employees to find other work or get the training they need to enter a new work field. If a business fails to inform their employees adequately, as dictated by the WARN act, they could face numerous lawsuits and further legal actions.
- The WARN act applies to companies that have 100 or more employees. It dictates the following:
- The employer must give adequate warning if they are shutting down the business
- The employer must give adequate warning if they will be laying off 50-499 workers
- The employer must give adequate warning if they will be laying off over 33% of the workforce
- Under this act “adequate warning” requires that business leaders inform their employees at least 60 calendar days before the scheduled closing or layoffs will occur
It is important to note that companies which have experienced a natural disaster or financial hardship due to unforeseen circumstances may be exempt from this law. Also, if a company was making a good faith effort to raise capital before the closing or layoffs they may also be exempt from the law.