09
Oct
2008

New York Passes WARN Act Providing Greater Protection For Employees

Employment Law Insider & Alert

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PUBLISHED ON: October 9, 2008

Against the backdrop of large scale layoffs in the financial services industry and elsewhere, employees in New York soon will have another weapon at their disposal.New York Governor David A. Paterson recently signed into law the New York State Worker Adjustment and Retraining Notification ("WARN") Act, which requires private employers with 50 or more full-time employees to provide at least 90 days' notice before a mass layoff, plant closing or relocation.

The New York law is modeled after the federal WARN Act, which was passed in 1988, but is stricter and supple-mental in a number of ways, providing significantly greater employee protections. It becomes effective in February 2009, 180 days after its August 5, 2008 enactment. According to the New York State Department of Labor, New York becomes the fourth state to enact a state statute with requirements that are more stringent than the federal WARN Act (California, New Jersey and Illinois being the others).

Enhanced Coverage and Notice Requirements

The New York WARN Act requires private employers with 50 or more employees to provide at least 90 days' advance notice before a mass layoff, plant closing or relocation. This casts a much broader net than the federal WARN Act which, by contrast, applies only to employers with 100 or more employees, and which mandates only 60 days' advance notice. Thus, the New York WARN statute covers smaller employers and increases by 50% the advance notice required!

Lower Thresholds for Triggering Events

Like the federal WARN Act, the New York law requires notice in the event of a “plant closing” or “mass layoff.” However, the New York WARN Act requires advance notice when the “plant closing” results in an employment loss of 25 employees, compared with 50 employees under the federal law. Similarly, the New York WARN Act defines a “mass layoff” as a reduction in force resulting in an employment loss for either (i) 33% of the work force, provided there are at least 25 affected employees—as compared to 50 under the federal WARN Act—or (ii) a total of 250 employees—as compared to a total of 500 employees under the federal law. Additionally, the New York WARN Act, unlike the federal law, requires a covered employer to provide the required advance notice in the event of a “relocation” of all or substantially all of its industrial or commercial activities to a different location at least 50 miles away.

Notice to Whom?

The New York WARN Act requires that written notice be provided to affected employees as well as their union representatives, if applicable. By contrast, under the federal WARN Act, if the bargaining representative receives notice, affected employees need not receive individual notices. Notice also must be provided to the New York State Department of Labor and a body referred to as the “local workforce investment board.” Unlike the federal WARN Act, notice evidently need not be provided to the chief elected official of the applicable local government entity.

Enforcement and Penalties

Like the federal law, the New York WARN Act gives affected employees the right to sue their employers for violations. However, unlike the federal law, the New York WARN Act also grants the New York State Department of Labor enforcement authority.

In the event of a violation, New York employees may be entitled to receive back pay and the cost of lost benefits or medical expenses for the period of the violation up to a maximum of 60 days. Employers also may be required to pay attorneys’ fees to prevailing plaintiffs and civil penalties of up to $500 per day of violation.

Exceptions

Similar to the federal WARN Act, the New York law recites three circumstances under which the advance notification period may permissibly be reduced to fewer than 90 days.

First, an employer may provide reduced notice of a plant closing (but not mass layoff) if: (1) the employer was actively seeking capital or business at the time that notice would have been required; (2) the capital or business sought, if obtained, would have enabled the employer to avoid or postpone the termination of employees; and (3) the employer reasonably and in good faith believed that giving the required notice would have precluded the employer from obtaining the needed capital or business.

Second, an employer may provide reduced notice of a plant closing (but not mass layoff) if the need for notice was not reasonably foreseeable at the time the notice would have been required.

Third, an employer may provide reduced notice of a plant closing or mass layoff due to any natural disaster (e.g., flood, earthquake or drought).