A lumber company violated the Worker Adjustment and Retraining Notification (WARN) Act when it terminated forty employees, after giving a notice of an impending plant closure to its 200 employees. The company was selling its mill and all employees were going to be terminated. But three weeks after issuing the 60-day notice of impending closure, the company terminated its night shift because of log shortages. The court found no evidence that the company was facing legitimate business reasons for terminating the employees prior to the 60-day notice time frame. Instead, the court said the company created the log shortage by failing to obtain and maintain an adequate supply because it was anticipating the mill’s closing. Under those circumstances, the company violated the WARN Act by terminating the employees prior to the 60-day notice period and owed the terminated employees back wages and attorneys’ fees (Clay Beach v. JD Lumber, Inc., D Idaho, Aug. 2010).
Tips: Ordinarily, terminating 40 employees wouldn’t meet the 50-employee threshold for liability for a covered plant closure under the WARN Act. The problem, though, is that in general you must aggregate employment losses by looking at a 90-day window. In this case, the two major downsizing actions occurred within 90 days of each other, and easily surpassed the 50-employee mark. Therefore the WARN notice should have been given 60 days before the first wave of terminations.
The WARN Act can be difficult to apply and very costly to misapply. When faced with a potential mass layoff or plant shutdown, be sure to consult your Vigilant staff representative sooner rather than later. Also check out our Legal Guide, “At a Glance: WARN Act” (5793).