Question: We employ 110 employees, all at a single facility, and unfortunately need to cut 55 jobs. I understand the federal WARN Act applies to employers with 100 or more employees, but new hires and part-time workers don’t count toward that total. How are those defined?
Answer: Your basic understanding is correct, but there are two alternative calculations to run when determining whether the 100-employee threshold is met under federal law. Also, if you’re located in California or Washington, your state mini-WARN Act may apply.
The federal Worker Adjustment and Retraining Notification Act (WARN Act) generally requires 60 days’ advance notice before a covered mass layoff or plant closing at a single site of employment. A covered employer has either: (1) 100 or more employees, not counting “part-time employees” which we’ll discuss next, or (2) 100 or more employees (including the entire workforce regardless of tenure or work schedule) who in the aggregate work at least 4,000 nonovertime hours per week. (See the WARN Act regulations at 20 CFR 639.3(a)(1).)
How the WARN Act Defines “Part-Time Employees”
“Part-time employees” (who are subtracted from the total roster in the first calculation but included in the second calculation) have a very specific definition under the WARN Act. You must make your assessment as of the day that notice will be due (typically 60 days before the planned mass layoff or plant closing). Part-time employees for purposes of the WARN Act are employees who either: (1) worked an average of fewer than 20 hours per week in the previous 90 days (or their actual period of employment, if shorter) or (2) were employed for fewer than 6 of the 12 months before the date on which notice is required (in essence, new hires, including full-time workers). (See the WARN Act regulations at 20 CFR 639.3(h).)
Running the Two Alternative Covered Employer Calculations
Suppose you count up these so-called “part-time employees” (which include full-time workers with fewer than 6 months of service in the last 12 months, as explained above) and you determine that 15 people meet that definition 60 days before the date of the planned employment losses. Under the first alternative calculation for “covered employer,” you would subtract those 15 employees from your workforce of 110 to get a tally of 95 employees, which would get you off the hook for federal WARN Act compliance. But you can’t stop there—you also need to run the second alternative calculation, in which you verify whether you have at least 100 employees (yes, you have 110) and assess whether the number of nonovertime hours worked per week by your entire workforce totals at least 4,000 hours. If you hit that mark of 4,000 hours in the aggregate, you’re a covered employer under the federal WARN Act and must comply with the 60-day notice obligations before a covered mass layoff or plant closing, unless an exception applies.
State Mini-WARN Acts: Special Rules for Washington and California
If the affected employees are located in California or Washington, you should also determine whether the state mini-WARN Act may apply. The Cal/WARN Act applies if a facility (rather than the company as a whole) employs (or has employed in the preceding 12 months) 75 or more employees (see the statute at Cal Labor Code 1400 to 1408). The Washington Securing Timely Notification and Benefits for Laid-Off Employees Act (Washington WARN Act) applies to employers with 50 or more employees (see the statute at RCW Chapter 49.45).
When to Seek Legal Counsel for Downsizing and Layoffs
As a rough rule of thumb, any time that you anticipate 50 or more employees will suffer an employment loss, you should seek legal counsel to determine whether the federal WARN Act (or state mini-WARN Acts in California or Washington) may apply. For details on what constitutes a mass layoff or plant closing under the federal WARN Act, as well as information on the unique requirements in California and Washington, see our Legal Guide, WARN Act: Mass Layoff or Plant Closure. Also see our Model Form, WARN Act Notices. These laws are complicated—Vigilant members, contact your Vigilant Law Group employment attorney for specific advice when contemplating significant downsizing.
