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Philadelphia Employment Lawyers

Reduction in Force (RIF), Mass Layoff, Site or Branch Closing

Reduction in Force (RIF) is a valid business reason for an employer to discharge its employees. Certain circumstances make it financially necessary for an employer to decrease the volume of its staff, and the law does not prevent an employer from taking this type of action. However, it is illegal for an employer to make discriminatory terminations under the guise of a RIF. Sometimes employers improperly include certain employees in a RIF based solely on their age, disabilitynational origin,  race, religion or sex . Many times a RIF has a disproportionate effect on members of a certain protected class. For example, an employer has a mass layoff through which it terminates solely older employees and keeps younger, less qualified, less experienced individuals on staff.

The business justification for the reduction in force or layoffs must be established and the employer should develop selection criteria that support the retaining of one employee over another. For example, if a large contract is lost, the functions supporting the lost contract should be the focus of the layoff. Unless dictated by union contract, employers have discretion in developing the selection criteria which can include seniority, skills, performance, and/or disciplinary record. More than one factor may be used. Because they are subjective and may be challenged as discriminatory, Forced Ranking Systems used to rank employees against one another based on performance criteria must be uniformly and rationally applied.

If you were laid off due to company closings and shutdowns and think you may be a member of a protected class who was improperly included in the layoff, contact Sidney L. Gold & Associates, P.C., online or call today at 215-569-1999 to schedule an appointment for a free consultation with an experienced NJ employment lawyer.

The Worker Adjustment and Retraining Notification Act (WARN)

The Worker Adjustment and Retraining Notification Act (WARN) was enacted on August 4, 1988 and became effective on February 4, 1989. WARN offers protection to workers, their families and communities by requiring employers to provide notice 60 days in advance of covered plant closings and covered mass layoffs. This notice must be provided to either affected workers or their representatives (e.g., a labor union), to the State dislocated worker unit, and to the chief elected officials of the local government.

WARN protects workers, their families, and communities by requiring employers to provide notification 60 calendar days in advance of plant closings and mass layoffs. Advance notice gives workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain other jobs and, if necessary, to enter skill training or retraining that will allow these workers to compete successfully in the job market. WARN also provides for notice to state dislocated worker units so that they can promptly offer dislocated worker assistance.

Employers Covered by the WARN Act

The WARN Act is administered by the Employment and Training Administration (ETA). It generally covers employers with 100 or more employees who have worked at least six months in the last 12 months and who work at least 20 hours per week, or those employers with 100 or more employees, including part-time workers, who in the aggregate work at least 4,000 hours per week, exclusive of overtime. Private, for-profit employers and private, non-profit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. Regular federal, state, and local government entities that provide public services are not covered.

Plant Closings and Mass Layoffs Triggering Notice Requirements

A covered plant closing occurs when a facility or operating unit is shut down for more than six months, or when 50 or more employees lose their jobs during any 30 day period at a single site of employment. For a mass layoff, a covered employer must give notice if there is to be a mass layoff which does not result from a plant closing, but which will result in an employment loss at the employment site during any 30 day period for 500 or more employees, or for 50-499 employees if they make up at least 33% of the employer’s active workforce.

Exempt Plant Closings and Mass Layoffs

An employer does not need to give notice if a plant closing is the closing of a temporary facility, or if the closing or mass layoff is the result of the completion of a particular project or undertaking. This exemption applies only if the workers were hired with the understanding that their employment was limited to the duration of the facility, project or undertaking. An employer cannot label an ongoing project “temporary” in order to evade its obligations under WARN.

An employer does not need to provide notice to strikers or to workers who are part of the bargaining unit(s) which are involved in the labor negotiations that led to a lockout when the strike or lockout is equivalent to a plant closing or mass layoff. Non-striking employees who experience an employment loss as a direct or indirect result of a strike and workers who are not part of the bargaining unit(s) which are involved in the labor negotiations that led to a lockout are still entitled to notice.

Who Must Receive Notice

Employees entitled to notice include managers and supervisors as well as hourly and salaried workers. The employer must give written notice to the chief elected officer of the exclusive representative(s) or bargaining agency(s) of affected employees and to unrepresented employees who may reasonably be expected to experience a layoff. This includes employees who may lose their employment due to “bumping,” or displacement by other workers, to the extent that the employer can identify those employees when notice is given. If an employer cannot identify employees who may lose their jobs through bumping procedures, the employer must provide notice to the incumbents in the jobs which are being eliminated. Employees who have worked less than 6 months in the last 12 months and employees who work an average of less than 20 hours a week are due notice, even though they are not counted when determining the trigger levels.

The employer must also provide notice to the State dislocated worker unit and to the chief elected official of the unit of local government in which the employment site is located.

Sale of Businesses

In a situation involving the sale of part or all of a business, the following requirements apply:
(1) In each situation, there is always an employer responsible for giving notice.
(2) If the sale by a covered employer results in a covered plant closing or mass layoff, the required parties (discussed later) must receive at least 60 days notice.
(3) The seller is responsible for providing notice of any covered plant closing or mass layoff which occurs up to and including the date/time of the sale.
(4) The buyer is responsible for providing notice of any covered plant closing or mass layoff which occurs after the date/time of the sale.
(5) No notice is required if the sale does not result in a covered plant closing or mass layoff.
(6) Employees of the seller (other than employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week) on the date/time of the sale become, for purposes of WARN, employees of the buyer immediately following the sale.

60-Day Notice Requirement

With three exceptions, notice must be timed to reach the required parties at least 60 days before a closing or layoff. When the individual employment separations for a closing or layoff occur on more than one day, the notices are due to the representative(s), State dislocated worker unit and local government at least 60 days before each separation. If the workers are not represented, each worker’s notice is due at least 60 days before that worker’s separation.

The exceptions to 60-day notice are:

  1. Faltering company. This exception applies only to plant closings and covers situations where a company has sought new capital or business in order to stay open and where giving notice would ruin the opportunity to get the new capital or business;
  2. Unforeseeable business circumstances. This exception applies to closings and mass layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required; and
  3. Natural disaster. This applies where a closing or layoff is the direct result of a natural disaster, such as a flood, earthquake, drought or storm.

If an employer provides less than 60 days advance notice of a closing or layoff and relies on one of these three exceptions, the employer bears the burden of proof that the conditions for the exception have been met. The employer also must give as much notice as is practicable. When the notices are given, they must include a brief statement of the reason for reducing the notice period in addition to the items required in notices.

Form and Content of Notice

WARN Act notices to representatives must contain:

  • The name and address of the employment site where the plant closing or mass layoff will occur, and the name and telephone number of a company official to contact for further information;
  • A statement about whether the planned action is expected to be permanent or temporary and whether or not if the entire plant is to be closed.
  • The expected date of the first separation and the anticipated schedule for making separations; and
  • The job titles of positions to be affected and the names of the workers currently holding affected jobs.

Notices to individual employees must be written in language understandable to the employees and must contain:

  • A statement about whether the planned action is expected to be permanent or temporary and, if the entire plant is to be closed, a statement to that effect;
  • The expected date when the plant closing or mass layoff will begin, and the expected date when the individual employee will be separated;
  • An indication whether or not bumping rights exist; and
  • The name and telephone number of a company official to contact for further information.

The notices may include additional information useful to the employees such as information on available dislocated worker assistance, and, if the planned action is expected to be temporary, the estimated duration.

Notices to State Dislocated Worker Units and the chief elected officials of local governments should contain:

  • The name and address of the employment site where the plant closing or mass layoff will occur, and the name and telephone number of a company official to contact for further information;
  • A statement as to whether the planned action is expected to be permanent or temporary and, if the entire plant is to be closed, a statement to that effect;
  • The expected date of the first separation, and the anticipated schedule for making separations;
  • The job titles of positions to be affected, and the number of affected employees in each job classification
  • An indication as to whether or not bumping rights exist; and
  • The name of each union representing affected employees, and the name and address of the chief elected officer of each union.

The notice may include additional information useful to the employees such as a statement of whether the planned action is expected to be temporary and, if so, it’s expected duration. As an alternative, an employer may give notice to the state dislocated worker unit and to the unit of local government by providing them with a written notice stating:

  • The name and address of the employment site where the plant closing or mass layoff will occur;
  • The name and telephone number of a company official to contact for further information;
  • The expected date of the first separation; and
  • The number of affected employees.

If the employer chooses the alternative notice, the information required for the longer form of notice must be maintained on-site where it is readily accessible to the state dislocated worker unit and to the unit of local government.

Penalties and Enforcement

An employer who violates the WARN provisions by ordering a plant closing or mass layoff without providing appropriate notice is liable to each aggrieved employee for an amount including back pay and benefits for the period of violation, up to 60 days. The employer’s liability may be reduced by such items as wages paid by the employer to the employee during the period of the violation and voluntary and unconditional payments made by the employer to the employee.

An employer who fails to provide notice as required to a unit of local government is subject to a civil penalty not to exceed $500 for each day of violation. This penalty may be avoided if the employer satisfies the liability to each aggrieved employee within 3 weeks after the closing or layoff is ordered by the employer.

WARN is enforced through the U.S. District Courts. Workers, their representatives, and units of local government may bring individual or class action suits against employers believed to be in violation of the Act. The court may allow reasonable attorney’s fees as part of any final judgment.

State and Local Laws

WARN does not preempt any other federal, state, or local law, or any employer/employee agreement that requires other notification or benefit. Rather, the rights provided by WARN supplement those provided by other federal, state, or local laws. Employers with multi-state operations must assess the application of all relevant laws.

Pennsylvania’s labor code requires employers to follow WARN Act notice requirements if the employer is a covered employer under the ACT. Adherence to the WARN Act allows both employers and workers to utilize the Pennsylvania Rapid Response Assistance program. Before the layoffs take place, the Program gives affected employees access to information and services relating to unemployment benefits, health and pension benefits, job search information, and education and training programs. Employers may receive information about ways to reduce or avoid layoffs, help in conducting an orderly shutdown, and assistance in continuing good relations with remaining workers and the community while also maintaining productivity during the transition.

Under New Jersey law, employees have certain rights and employers have certain obligations to give proper notice to their employees and others before taking certain employment actions such as mass layoffs and termination of operations. Employers that have been in operation in the State of New Jersey for longer than three years and employ 100 or more full-time employees must comply with the state law’s notice requirements. An employer who does not comply with the notice requirements when conducting a mass layoff must provide each terminated full-time employee who doesn’t receive proper notification severance pay equal to one week of pay for each full year of employment.

Call the Pennsylvania Employment Lawyers at Sidney L. Gold & Associates if You Have Been Affected by Mass Force Layoff

If you are a Pennsylvania or New Jersey employee and you believe your rights under the WARN Act have been violated, call the Pennsylvania employment lawyers from Sidney L. Gold & Associates at 215-569-1999 or contact us online for a free assessment of your possible reduction in force or mass layoff claim. We also handle employment claims in bankruptcy.

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