“Ask Sarah” Column

Dear Sarah,

We’re facing budget pressure and may need to eliminate several positions. I keep hearing about “60 days’ notice” in layoffs. Does that apply to us?

Signed, Trying to Plan Ahead

Dear Trying,

You’re thinking of the Worker Adjustment and Retraining Notification Act (“WARN”), and yes, sometimes employers really do have to give 60 days’ advance notice before certain layoffs. But not always and not everyone. Here’s a quick summary:

First, WARN only covers commercial businesses with 100 or more employees. If you’re smaller than that, WARN doesn’t apply to you, with the caveat that if you have operations outside Texas, you need to check state law as well, as some states have separate requirements.

Second, WARN only applies to certain events. If you’re eliminating only a handful of positions, you’re probably outside WARN territory because WARN is triggered by a “plant closing” or “mass layoff,” which usually means:

• 50 or more employees lose their jobs at a single site, or
• A large percentage of your workforce is impacted.

If you’re not a covered employer, due to size, or even if you are, if WARN is not triggered by the size of the layoff, you do not need to comply with WARN notice provisions. On the other hand, if you are a covered employer and WARN is triggered, you must give written notice 60 days in advance to affected employees (and in some cases, to government entities like the Texas Workforce Commission).

Employers sometimes rely on exceptions like “unforeseeable business circumstances” or sudden funding loss. These can apply but they are not a free pass, and they’re often questioned after the fact, so if you plan to rely on one of these exceptions, you should consult counsel first.

Many of our Firm’s clients are governmental entities. WARN generally does not apply to federal, state, or local governments providing public services, but it can apply to separately organized public or quasi-public entities that operate in a commercial or business-like manner.
So, what should you do? If you’re even close to the thresholds, pause before announcing anything and consult counsel. WARN issues are much easier to manage on the front end than to defend later.

And remember that even if WARN doesn’t apply, layoffs come with other decisions that can create risk if you’re not thinking them through, including:

• Ensuring the employees selected for the layoff are selected for clear, job-related reasons (performance, skills, business need) that were consistently applied. If it starts to feel subjective, it probably is.
• Considering whether to offer severance in exchange for a release of claims. Severance is not required by law, but many employers choose to offer it to reduce risk and help their employees land on their feet.
• Planning the conversations. You will need to decide who’s delivering the message, what they’re going to say, and when they’re going to say it. If many employees are impacted, you’ll want to time the conversations to happen close in time.
• And don’t forget all the other logistical details, such as final pay, benefits, access to systems—these things tend to get rushed, and that’s when mistakes happen. Slow down just enough to get it right.

Keep in mind that this is a high-level summary of a complicated federal law and doesn’t cover all its nuances. Employment counsel can help you walk through each of these concerns and can share practical guidance that helps make a challenging situation a bit easier. This is certainly one of those situations where you don’t want to go it alone.

“Ask Sarah” is prepared by Sarah Glaser, Managing Director and Chair of the Firm’s Employment Law Practice Group. If you would like additional information or have questions regarding this column or other matters, please contact Sarah at 512.322.5881 or sglaser@lglawfirm.com.