Sometimes, a job is lost through no fault of the employer or the employee; economics or changing marketplace demands can simply make a job superfluous or extinct. Even in such situations, however, plant closing laws may give employees some rights as the workplace doors close.
These laws sometimes offer a way to challenge a job loss that is much quicker, easier, and less expensive than filing a lawsuit. But the amounts of money and other relief that workers can seek under plant closing laws typically are minuscule compared with the recoveries available via the wrongful discharge lawsuit route.
Also, keep in mind that neither the federal plant closing law nor the state and local laws in the same category actually forbid closing worksites and dismissing the people who work there. All these laws really do is require that companies give employees a little advance notice that their jobs are going to go away, like it or not.
At most, plant closing laws can provide some income between jobs for employees of companies that fail to provide a warning that they’re going to make a mass staff cut—and some punishments that might persuade a company that does not comply with the advance notice requirements of the plant closing laws not to repeat that behavior.
The WARN Act
The federal plant closing law—the Worker Adjustment and Retraining Notification (WARN) Act—requires employers with 100 or more full-time employees to provide 60 days of advance written notice that they are going to lose their jobs before closing a facility or putting into effect any other mass staff reduction that will last six months or more.
WARN applies to employers that have at least 100 employees, and only if there is a plant closing or mass layoff:
- A plant closing is the permanent or temporary shutdown of a single site of employment (or one or more facilities or operating units with a single site), which results in job loss for 50 or more employees (not including those who work fewer than 20 hours per week) during a 30-day period.
- A mass layoff is a reduction in force that results in job loss at a single site of employment, during a 30-day period, for (1) 500 or more employees (not including those who work fewer than 20 hours per week), or (2) 50 to 499 employees (not including those who work fewer than 20 hours per week), if the laid-off employees make up at least one-third of the employer's active workforce.
The law also covers staged plant closings or layoffs, which are defined the same as above but occur in stages over a period of 90 days. This rule is intended to prevent employers from circumventing the law by conducting a series of smaller layoffs.
Exceptions
The federal plant closing law does not apply if any of the following are true:
- The employees left voluntarily or were discharged for good cause, such as performance that does not meet the company’s standards.
- The plant closing or mass layoff was due to an economic strike or lockout.
- The staff cut is the result of a natural disaster.
- The employees affected were working on a project that was considered temporary and were told that when they were hired.
- Waiting 60 days to let the workers go would put the company in danger of going out of business.
- The employer could not have foreseen the circumstances that make the staff cut necessary.
- The employer offers the workers being cut new jobs at another site within reasonable commuting distance, and the new jobs start within six months of when the old ones ended, or the workers being cut are offered new jobs at another site anywhere and they agree to the transfers within 30 days of when the employer offers them.
- The employer voluntarily offers severance pay, not required under any contract or other agreement, that is equal to or greater than the number of days that the company is short on the 60-day notice requirement.
Penalties for Violations
As you can see, WARN has almost as many holes as fabric. But employers who manage to violate it despite all the exceptions can be made to pay the following penalties:
- back pay to each employee affected by the violation, up to a maximum of 60 days of pay
- reimbursement of the employees’ benefit costs that would have been paid by the company had the illegal staff cut not occurred
- a fine of up to $500 per day for each day of the violation, up to a maximum of $30,000 (this fine is paid to the state, not to the workers who were laid off), and
- any attorneys’ fees incurred.
This last penalty—requiring that legal fees be paid—is important because if you have received your walking papers as part of a mass firing that violates the federal plant closing law and the government refuses to go to bat for you, you and your coworkers will probably have no recourse but to file a lawsuit to enforce your rights.
State Plant Closing Laws
A growing number of states have their own plant closing laws. Even a few cities, such as Vacaville, California, and Philadelphia, Pennsylvania, have laws restricting companies that order mass dismissals.
Most of these laws merely add a minor restriction or two to the rules of WARN. However, some of the state plant closing laws do provide substantial benefits for the workers they cover. For example, Hawaii’s version requires an employer, under certain conditions, to make up the difference between a worker’s regular pay and the unemployment compensation the worker will receive for up to four weeks after the staff cut. Employers who shirk this legal duty must pay a high price: three months of compensation to every former worker.
Each of these laws specifies different restrictions, penalties, and methods of enforcement. You can usually learn the details of any state or local law governing mass dismissals by calling your state’s labor department.
CAUTION
Additional laws may apply. If the chart below indicates that your state has no statute, this means there is no law that specifically addresses the issue. However, there may be a state administrative regulation or local ordinance that does control plant closings. Call your state labor department for more information.
Alabama
Ala. Code § 25-3-5
When law applies: Substantial layoff or closing of any plant or industry.
State assistance for employees: Commissioner of labor to provide seminars to unemployed or underemployed employees on legal rights regarding debts. To lessen the financial burden of closure or layoffs, commissioner may meet with management and with labor or other organizations, may facilitate communication with creditors, and may set up programs to provide financial assistance. No employer or employee group may be required to contribute to or participate in these programs.
Alaska
Alaska Stat. § 23.15.635
State assistance for employees: Department of Labor offers employment and training programs to workers who are liable to be displaced because of reductions in workforce or job elimination.
California
Cal. Lab. Code § 1401
When law applies: Mass layoff, relocation, or closing of any industrial or commercial facility with at least 75 employees.
Notification requirements: Employer must give employees at least 60 days’ advance notice in writing before mass layoff, relocation, or termination. Employer must also notify the Employment Development Department, the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs. Notice shall include the elements required by the federal WARN Act.
Colorado
Colo. Rev. Stat. § 23-60-306
When law applies: Plant closings; workers displaced by technological changes.
State assistance for employees: Workers who have lost their previous jobs because of plant closings are eligible for retraining for new jobs through customized training programs provided by the State Board for Community Colleges and Occupational Education.
Connecticut
Conn. Gen. Stat. Ann. §§ 31-51n, 31-51o
When law applies: Permanent shutdown or relocation of facility out of state.
Employers affected by requirements: Employers with 100 or more employees at any time during the previous 12-month period.
Severance requirements: Employer must pay for existing group health insurance coverage for terminated employee and dependents for 120 days or until employee is eligible for other group coverage, whichever comes first.
Exceptions: Facility closure due to bankruptcy.
District of Columbia
D.C. Code Ann. §§ 32-101, 32-102
When law applies: When a new contractor takes over a service contract.
Employers affected by requirements:
Contractors and subcontractors who employ 25 or more nonprofessionals as food service, health service, or janitorial or building maintenance workers.
Severance requirements:
• Within 10 days after a new contract is awarded, previous contractor must give new contractor names of all employees. New contractor must hire all employees who have worked for past 8 months for a 90-day transition period. After 90 days must give each employee a written performance evaluation and retain all employees whose performance is satisfactory.
• Contractor whose contract is not renewed and who is awarded a similar contract within 30 days must hire at least 50% of the employees from the former sites.
Florida
Fla. Stat. Ann. §§ 288.972, 379.2352, 446.60
When law applies: Job loss or displacement due to industry changes.
State assistance for employees:
• Department of Labor and Employment Security establishes Workforce Florida, which provides counseling, training, and placement services to displaced workers in the defense industry and local telecommunications exchange workers.
• State agencies must give priority hiring to anyone who loses full-time employment in the commercial saltwater fishing industry because of the constitutional amendment limiting the use of nets to harvest marine species.
Hawaii
Haw. Rev. Stat. §§ 394B-1 to 394B-13
When law applies: Permanent or partial closing of business; relocation of all or substantial portion of business operations out of state.
Employers affected by requirements: Employers with 50 or more employees at any time during the previous 12-month period.
Severance requirements: Employer must provide 4 weeks’ dislocated worker allowance as a supplement to unemployment compensation; amount is the difference between the weekly former wage and the unemployment benefit. Employers who do not follow notice and severance requirements are liable to each employee for 3 months of compensation.
Notification requirements: Employer must provide each employee with written notice 60 days in advance of closing or relocation.
State assistance for employees: Dislocated workers’ program in Department of Labor and Industrial Relations provides assistance and training for workers who have lost their jobs or received a notice of termination.
Illinois
820 Ill. Comp. Stat. §§ 65/1 to 65/99
When law applies: Mass layoff, relocation, or employment loss.
Employers affected by requirements: Any business enterprise that employs 75 or more full-time employees or 75 or more employees who in the aggregate work at least 4,000 hours per week (not counting overtime).
Notification requirements: Employer must give 60 days’ written notice to affected employees and representatives of affected employees, and to both the Department of Commerce and Economic Opportunity and the chief elected official of each municipal and county government within which the employment loss, relocation, or mass layoff occurs.
Exceptions: Employer seeking capital in good faith; completion of explicitly temporary project; unforeseen circumstances; strike or lockout; physical calamity or war.
Penalties: Up to 60 days of back pay and the value of benefits for that time. Up to $500 per day civil penalty, unless employer pays the back pay within 3 weeks of announced layoffs; federal penalty payments count toward state penalty.
Kansas
Kan. Stat. Ann. §§ 44-603, 44-616
When law applies: Employers involved in:
• manufacture, transportation, or preparation of food products or clothing
• fuel mining or production
• public utilities, or
• transportation
must apply to state Secretary of Labor for approval before limiting or discontinuing business operations.
Louisiana
La. Rev. Stat. Ann. §§ 23:1842 to 23:1846
When law applies: Job loss related to state environmental protection laws.
State assistance for employees: Workers who have lost jobs because employer has relocated to another state to avoid compliance with state environmental protection laws or instituted technological changes because of laws are eligible for services through the Displaced Worker Retraining Program administered by the Department of Workforce Development.
Maine
Me. Rev. Stat. Ann. tit. 26, § 625-B
When law applies: Discontinuation or relocation of business operations at least 100 miles from original location.
Employers affected by requirements: Employers with 100 or more employees at any time during the previous 12-month period.
Severance requirements: Employer must give severance pay of one week for each year of employment to all employees who have worked for at least 3 years; pay due within one regular pay period after employee’s last full day of work.
Notification requirements: Employer must give employees at least 60 days’ advance notice in writing before relocating a plant. Employer must also notify the director of the Bureau of Labor Standards and municipal officials where the plant is located. Within 7 days, if employer lays off 100 or more employees, employer must report to the director the expected duration of the layoff and if the layoff is definite or indefinite.
Maryland
Md. Code Ann. [Lab. & Empl.] §§ 11-301 to 11-304
When law applies: Shutdown of workplace or a portion of the operations that results in layoffs of at least 25% of workforce or 15 employees, whichever is greater, over any 3-month period.
Employers affected by requirements: Employers with 50 or more employees who have been in business at least one year.
Severance requirements: Employers are encouraged to follow Department of Labor voluntary guidelines for severance pay, continuation of benefits, and notification.
Notification requirements: 90 days whenever possible.
Exceptions: Bankruptcy, seasonal factors common to industry, labor disputes, temporary workplaces, or construction sites.
State assistance for employees: Department of Labor will provide on-site unemployment insurance bulk registration (when more than 25 workers are laid off), retraining, job placement, and job-finding services.
Mass. Gen. Laws ch. 149, §§ 179B, 182, 183; ch. 151A, §§ 71A to 71H
When law applies:
• Permanent cessation or reduction of business operations which results or will result in the permanent separation of at least 90% of the employees within 6 months.
• Sale or transfer of ownership of a business with 50 or more employees.
Employers affected by requirements:
• Employers receiving assistance from state business financing or development agencies.
• Employers with 50 or more employees who sell or transfer control of a business.
Severance requirements:
• Employers receiving state agency assistance must make a good faith effort to provide 90 days’ group health insurance coverage for employees and dependents, at the same payment terms as before plant closing.
• When a company with 50 or more employees is sold or changes hands, new owner must give severance pay of 2 weeks’ compensation for every year of service to employees who have worked at least 3 years. Employees terminated within 2 years of the sale are due severance within one regular pay period after last day of work; employees terminated within one year of sale are due severance within 4 pay periods after the sale.
Notification requirements:
• Employers receiving state agency assistance are expected to provide 90 days’ notice.
• Employers with 12 or more employees must notify the Director of Labor and Workforce Development when business changes location.
• New owner of business with 50 or more employees must provide written notice of rights to each employee and to any collective bargaining representative within 30 days of completion of sale.
State assistance for employees:
• Reemployment assistance programs which provide counseling, placement, and training are available through the employment and training division of the Department of Workforce Development.
• Employees who have worked for a company for at least one year are eligible for up to 13 weeks of reemployment assistance benefits.
Michigan
Mich. Comp. Laws §§ 450.731 to 450.737
When law applies: Permanent shutdown of operations at any establishment with 25 or more employees.
Notification requirements: Department of Labor encourages businesses that are closing or relocating to give notice as soon as possible to the Department, the employees and any organization representing them, and the community.
State assistance for employees: Department of Labor may study the feasibility of the employees establishing an employee-owned corporation to continue the business.
Minnesota
Minn. Stat. Ann. §§ 116L.17, 116L.976
When law applies:
• Plant closing: Announced or actual permanent shutdown of a single site.
• Substantial layoff: Permanent reduction in workforce (not due to plant closing) at a single site which results in job loss for at least 50 full-time employees during any 30-day period.
Notification requirements: Employers are encouraged to give 60 days’ notice to the Department of Trade and Economic Development. If federal WARN Act requires notice, then employer must report to state commissioner of employment and economic development the occupations of workers being terminated.
State assistance for employees: Department of Trade and Economic Development offers rapid response assistance to employees and businesses through the dislocated worker program. May include on-site emergency assistance, information about state and other agency resources, and help in setting up an employee-management committee.
Missouri
Mo. Rev. Stat. § 409.516(5)
When law applies: Any company making a business takeover offer.
Notification requirements: Company making offer must file a registration statement with the state securities commission disclosing any plans to liquidate, merge, or consolidate the target company, sell its assets, or make any other major change to its business, corporate structure, management, or employment policies.
New Hampshire
N.H. Rev. Stat. Ann. § 421-A:4(IV)
When law applies: Any company making a business takeover offer.
Notification requirements: Company making offer must file a registration statement with the secretary of state and with the target company disclosing any plans to liquidate, merge, or consolidate the target company, sell its assets, or make any other major change to its business, corporate structure, management, or employment policies.
New Jersey
N.J. Stat. Ann. §§ 34:1B-30, 52:27H-95
When law applies: Potential plant closings.
State assistance for employees: Department of Labor and other agencies mandated to assist workers who want to establish employee ownership plans to save jobs threatened by plant closure. If plant closure would cause significant employment loss to an economically distressed municipality, the commissioner of commerce may fund a profitability study of an employee stock ownership plan.
New York
N.Y. Lab. Law §§ 835 to 849; Pub. Auth. Law §§ 1836-a to 1836-g; Bus. Corp. Law § 1603(5)
When law applies:
• Plant closing: Permanent or temporary shutdown of a single site or one or more facilities or operating units within a single site which results in job loss for at least 25 full-time employees during any 30-day period. (If shutdown causes job losses at other sites, they also count toward the 25.)
• Substantial layoff: Reduction in workforce (not due to shutdown) at a single site which results in job loss for at least 33% full-time and 50 part-time employees or 500 full-time employees during any 30-day period.
• Any company making a business takeover offer.
Notification requirements: Company making offer must file a registration statement with the attorney general’s New York City office and with the target company disclosing plans for plant closures or major changes in employment policies.
State assistance for employees:
• The Department of Labor, in coordination with the Department of Economic Development and the dislocated worker unit, provides rapid response services after a plant closure, including: on-site intervention within 48 hours; basic emergency readjustment services; information about retraining, unemployment insurance, and technical assistance.
• The Job Development Authority encourages employees of plants that are about to be closed or relocated to continue to operate them as employee-owned enterprises; state assistance is available.
Ohio
Ohio Rev. Code Ann. §§ 122.13 to 122.136
When law applies: Permanent shutdown of operations at a business with at least 25 employees; relocation of all or substantial portion of operations at least 100 miles from original location.
State assistance for employees: Department of Development has an employee ownership assistance program that provides technical assistance and counseling; will conduct a feasibility study for workers who want to establish employee ownership plans to continue running a business threatened by plant closure.
Oklahoma
Okla. Stat. Ann. tit. 71, § 453(F)(3)
When law applies: Any company making a business takeover offer.
Notification requirements: Company making offer must file a registration statement with the state securities commission disclosing plans to close or relocate facilities or to make major changes in employment policies.
Oregon
Or. Rev. Stat. §§ 285A.510 to 285A.522, 657.335 to 657.340
When law applies:
• Plant closing: Permanent or temporary shutdown of a single site or one or more facilities or operating units within a single site which results in job loss for at least 50 full-time employees during any 30-day period.
• Mass layoff: Reduction in workforce at a single site not due to shutdown which results in job loss for at least 33% of the workforce and 50 full-time employees, or for 500 full-time employees during any 30-day period.
Employers affected by requirements: Employers with 100 or more full-time employees.
Notification requirements: Employers must notify the Department of Community Colleges & Workforce Development of plant closings or mass layoffs.
State assistance for employees: State assistance and professional technical training available to dislocated workers. Workers who are in training are entitled to unemployment compensation and related benefits.
Pennsylvania
43 Pa. Cons. Stat. Ann. §§ 690a.1 to 690a.6; 70 PCSA §§ 74; 75(4)
When law applies:
• Current or projected plant closures.
• Any company making a business takeover offer.
Notification requirements: Company making offer must file a registration statement 20 days in advance with the state securities commission, the target company, and the collective bargaining agent. Must disclose plans for closing down the target company, making major changes in employment policies, or changing any collective bargaining agreements.
State assistance for employees: Workers dislocated by plant closures are eligible for customized job training program through the Department of Labor & Industry and are eligible for assistance to support them while in training.
Rhode Island
R.I. Gen. Laws § 27-19.1-1
When law applies: Involuntary layoff; permanent reduction of workforce.
Severance requirements: Employees and dependents are entitled to at least 18 months’ continuation of health care coverage at own expense; premium rate must be the same as the one offered under the group plan. (Length of coverage cannot exceed time of continuous employment.)
South Carolina
S.C. Code Ann. § 41-1-40
Employers affected by requirements: Employers who require employees to give notice before quitting work.
Notification requirements: Employers must give same amount of notice they require of employees or at least 2 weeks’ warning. Notice must be in writing and posted in every room of the work building. Employers who do not comply are liable to every employee for any damages that result from failure to give notice.
Tennessee
Tenn. Code Ann. §§ 50-1-601 to 50-1-604
When law applies: Closing, modernization, relocation, or new management policy of a workplace or a portion of the operations that permanently or indefinitely lays off 50 or more employees during any 3-month period.
Employers affected by requirements: Employers with 50 to 99 full-time employees within the state.
Notification requirements: Employer must first notify employees who will lose their jobs due to a reduction in operations and then notify the Commissioner of Labor and Workforce Development. Must give circumstances of closing and number of employees laid off. Toll-free telephone line established to encourage employer compliance.
Exceptions: Construction sites; seasonal factors common to industry.
Texas
Tex. Gov’t. Code Ann. §§ 2310.301 to 2310.308; Tex. Util. Code Ann. § 39.906
When law applies: Industry restructuring or plant or facility closing.
Employers affected by requirements: Private employers who contract with Department of Defense or whose business is directly affected by defense-related economic factors.
State assistance for employees:
• Through defense readjustment projects, state provides funding to communities, programs, and businesses that assist or hire dislocated defense workers.
• Public Utility Commission allows employers to recover reasonable transition costs for severance, retraining, early retirement, outplacement, and related expenses for employees affected by electric utility industry restructuring.
Utah
Utah Code Ann. § 67-1-12
When law applies: Defense industry layoffs.
State assistance for employees: Workers in defense or defense-related jobs who are laid off may apply to the Office of Job Training for assistance in retraining or reeducation for job skills in demand.
Washington
Wash. Rev. Code Ann. §§ 50.04.075, 50.12.280, 50.20.042, 50.20.043, 50.70.030 to 50.70.050
When law applies: Employees who have been terminated or received a notice of termination and are unlikely to return to work at their principal occupations or previous industries.
State assistance for employees: The Department of Employment Security offers special training and counseling programs for dislocated workers in aerospace, thermal electric generation, and forest products industries in addition to any regular unemployment compensation.
Wisconsin
Wis. Stat. Ann. §§ 106.15, 109.07
When law applies:
• Business closing: Permanent or temporary shutdown of an employment site or of one or more facilities or operating units at a site or within one town that affects 25 or more employees.
• Mass layoff: Reduction in workforce that is not the result of a business closing and that affects at least 25% or 25 employees, whichever is greater, or at least 500 employees.
• Employees who have worked at least 6 of the previous 12 months and who work at least 20 hours/week.
Employers affected by requirements: Employers with 50 or more employees in the state.
Notification requirements: An employer who has decided upon a business closing or mass layoff in Wisconsin must give at least 60 days’ written notice to:
• the Dislocated Worker Committee in the Department of Workforce Development
• every affected employee
• the employees’ collective bargaining representative, and
• the highest official of the municipality where the business is located.
Employer must also include contact information for the local workforce development board. Employer who does not comply is liable to employees for pay and for the value of benefits employee would have received if closing or layoff did not take place, from the day that notice was required to the day notice was actually given or business closing or mass layoff occurred, whichever is earlier.
Wyoming
Wyo. Stat. §§ 27-13-101 to 27-13-103
When law applies: Workers unemployed due to plant closings or substantial plant layoffs.
State assistance for employees: Department of Employment, in conjunction with the Department of Education, the University of Wyoming, and the Community College Commission, offers occupational transfer and retraining programs and services for displaced workers.
Find us on Facebook
Follow us on Twitter
Find us on Google+
Watch us on YouTube
Listen to us on iTunes