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entitled 'The Worker Adjustment and Retraining Notification Act: 
Revising the Act and Educational Materials Could Clarify Employer 
Responsibilities and Employee Rights' which was released on October 20, 
2003.

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Report to Congressional Requesters:

United States General Accounting Office:

GAO:

September 2003:

the worker adjustment and retraining notification act:

Revising the Act and Educational Materials Could Clarify Employer 
Responsibilities and Employee Rights:

GAO-03-1003:

GAO Highlights:

Highlights of GAO-03-1003, a report to Congressional Requesters

Why GAO Did This Study:

In 2001, 1.75 million workers lost jobs through extended mass layoffs. 
The Worker Adjustment and Retraining Notification (WARN) Act requires 
advance notice of plant closures and mass layoffs. The report 
discusses 
(1) the extent to which plant closures and mass layoffs were subject 
to WARN’s requirements, 
(2) the extent to which employers with mass layoffs and plant closures 
provided notice, and 
(3) what issues employers and employees face when assessing the 
applicability of WARN to their circumstances.

What GAO Found:

About one quarter of the 8,350 plant closures and mass layoffs in 2001 
appear subject to WARN’s advance notice requirements. Mass layoffs 
were less likely to be subject to the requirements than plant 
closures. The difference between mass layoffs and plant closures stems 
primarily from a rule exempting mass layoffs from WARN’s requirements 
if businesses lay off less than one-third of their workforce (up to 
499 workers).

Employers provided notice for approximately one-third of layoffs and 
closures that appear subject to WARN requirements. Specifically, 
employers provided notices for almost one-half of plant closures, 
compared with approximately one-quarter of mass layoffs. The remaining 
mass layoffs and plant closures appear subject to WARN requirements, 
but notices were not provided. Two-thirds of the notices that 
employers provided gave the full sixty days’ advance notice required 
by the law. Employers that did not provide notice may be engaging in 
other practices that limit their liability under the law. In addition, 
other employers provided notice for mass layoffs and plant closures 
that were not subject to WARN’s requirements as encouraged in the law 
and the regulations. 

Employers and employees find WARN’s definitions and calculations 
difficult to apply to their circumstances. Almost all state dislocated 
worker units reported that employers and/or employees contact them 
with basic questions on WARN—GAO calculated that states received 
thousands of communications from employers, employees, and their 
representatives per year. The courts have interpreted some of the 
provisions in the law in varying ways, which adds to the confusion and 
uncertainty when employers and employees apply WARN to their 
circumstances. Because of this uncertainty, employers, employees, and 
courts incur costs in time and resources in determining the 
applicability of WARN to specific circumstances. Finally, the enhanced 
educational materials being developed by the Department of Labor to 
address some of these issues have not been made widely available and 
therefore fail to answer many of the questions asked by employers and 
employees. This lack of clarity and guidance could ultimately 
circumvent the purpose of advance notice—namely, to assist dislocated 
workers in becoming reemployed. 

What GAO Recommends:

The Secretary of Labor should make enhanced educational materials 
widely available to employers and employees for assistance in 
understanding the regulations. Further, Congress may wish to consider 
amending the WARN act by simplifying the calculation of thresholds, 
clarifying the definition of employer and how damages are calculated, 
and establishing a uniform statute of limitations. Labor provided 
informal comments and technical clarifications on this report, which 
we incorporated as appropriate. Labor informed us about efforts that 
it has already made to address our recommendation and chose not to 
comment formally.

www.gao.gov/cgi-bin/getrpt?GAO-03-1003.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Robert E. Robertson 
at (202) 512-9889 or robertsonr@gao.gov.

[End of section]

Contents:

Letter:

Results in Brief:

Background:

An Estimated 24 Percent of All Mass Layoffs and Plant Closures Appear 
Subject to WARN's Advance Notice Requirements:

Employers Provided Notice for about One-Third of Layoffs and Closures 
Subject to WARN Requirements, Most of Which Were Timely:

Employers and Employees Find WARN's Definitions and Calculations 
Difficult to Apply Due to Ambiguities in the Statute and Limited 
Guidance:

Conclusions:

Recommendation for Executive Action:

Matter for Congressional Consideration:

Agency Comments and Our Evaluation:

Appendix I: Objectives, Scope, and Methodology:

Mass Layoff Statistics Data:

WARN Notices:

Interviews:

Review of Court Cases:

Appendix II: Tests Applied to Find Liability in Parent/Subsidiary, 
Sister Corporation, and Lender/Borrower Situations:

Appendix III: Reported Court Cases under WARN Act, 1998-2002:

Appendix IV: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Staff Acknowledgments:

Related GAO Products:

Tables:

Table 1: Extended Mass Layoffs and WARN Coverage in 2001:

Table 2: Required Elements in the Notices:

Table 3: Different Tests Used by Courts to Determine Employer 
Liability:

Table 4: Reported Court Cases under WARN Act, 1998-2002:

Figures:

Figure 1: WARN Decision Matrix:

Figure 2: Events Subject to and Not Subject to WARN Requirements in 
2001:

Figure 3: Percentage of Mass Layoffs in 2001 Excluded from WARN 
Requirements Due to the One-Third Rule:

Figure 4: Amount of Employer Advance Notice to State Officials before a 
Mass Layoff or Plant Closure:

Figure 5: WARN-Related Court Cases by Litigation Subject 1998-2002:

Figure 6: Overlap between WARN Notices and Events That Appear Subject 
to WARN:

Abbreviations:

BLS: Bureau of Labor Statistics:

DWU: dislocated worker unit:

ETA: Employment and Training Administration:

MLS: Mass Layoff Statistics:

WARN: Worker Adjustment and Retraining Notification Act:

United States General Accounting Office:

Washington, DC 20548:

September 19, 2003:

The Honorable George Miller 
Ranking Minority Member 
Committee on Education and the Workforce 
House of Representatives:

The Honorable Major R. Owens 
Ranking Minority Member 
Subcommittee on Workforce Protections 
Committee on Education and the Workforce 
House of Representatives:

The Honorable Robert E. Andrews 
Ranking Minority Member 
Subcommittee on Employer-Employee Relations 
Committee on Education and the Workforce 
House of Representatives:

In 2001, job losses through extended mass layoffs[Footnote 1] reached 
1.75 million, the highest level since 1995. To assist workers who have 
recently been laid off with job training and to facilitate their 
reemployment, Congress enacted the Worker Adjustment and Retraining 
Notification (WARN) Act[Footnote 2] in 1988, which requires employers 
to provide advance notice to employees and state and local officials in 
the event of a mass layoff or plant closure. Advance notice allows 
workers and their families some transition time to adjust to the 
prospective loss of employment, to seek and obtain alternative jobs, 
and if necessary, to enter skill training that will allow these workers 
to compete successfully in the job market. According to both business 
and labor leaders, advance notice allows time for state officials to 
provide information about skill training and retraining services before 
the layoff or closure occurs.

WARN generally requires employers with 100 or more workers to provide 
60-days advance notice for both mass layoffs and plant closures 
involving 50 or more employees. WARN requirements differentiate between 
mass layoffs and plant closures by including a provision in the law, 
called the "one-third" rule, which only applies to mass layoffs and 
requires employers to give advance notice for layoffs of 50-499 
employees only if they are reducing their workforce by at least 33 
percent. The employer is responsible for determining if the layoff or 
closure meets WARN criteria, and providing a notice that contains 
certain information about the mass layoff or plant closure as outlined 
in the regulations. The Department of Labor is not responsible for 
enforcing WARN; enforcement is done entirely through the federal 
courts. However, Labor was required to issue implementing regulations, 
which it did in 1989. Labor is also responsible for providing 
assistance in understanding these regulations and has provided 
educational materials to facilitate employers' and employees' 
understanding of WARN.

To identify issues about compliance with and implementation of the WARN 
Act, you asked us to provide you with information on (1) the extent to 
which mass layoffs and plant closures were subject to WARN's advance 
notice requirements, (2) the extent to which employers with mass 
layoffs or plant closures that appear subject to WARN's advance notice 
requirements provided notice, and (3) what issues employers and 
employees face when assessing the applicability of WARN to their 
circumstances.

To determine the extent to which mass layoffs and plant closures appear 
subject to WARN's advance notice requirements, we used the Bureau of 
Labor Statistics[Footnote 3] (BLS) Mass Layoff Statistics (MLS) data 
for 2001 to determine which events appear subject to WARN according to 
the criteria included in the statute and the regulations. To determine 
the extent to which employers with mass layoffs and plant closures 
subject to WARN's advance notice requirements provided notice, we 
obtained all WARN notices received for mass layoffs and plant closures 
in 2001 from all 50 states and the District of Columbia.[Footnote 4] 
BLS then matched its MLS data for 2001 with the notices states sent us, 
which provided an estimate of the number of events subject to WARN's 
advance notice requirements where the employers provided 
notice.[Footnote 5] To assess the extent to which notices met the 
requirements of the WARN Act, we analyzed a random, nationwide sample 
of 600 WARN notices from 2001 to determine the extent to which the 
notices contained the required elements outlined in the law.[Footnote 
6] To determine what issues employers and employees face when assessing 
the applicability of WARN to their circumstances, we interviewed 
dislocated worker officials in all 50 states[Footnote 7] and the 
District of Columbia, labor experts, employee and employer groups, law 
firms, and selected a random sample of 50 employers that provided 
states with a WARN notice in 2001.[Footnote 8] Finally, we reviewed the 
WARN Act provisions, WARN Act regulations, Department of Labor's 
educational materials, and all reported court cases decided between 
1998 and 2002 that discuss or apply WARN provisions to describe the key 
issues raised through the courts by laid-off workers and employers. We 
conducted our work between October 2002 and July 2003 in accordance 
with generally accepted government auditing standards. (See app. I for 
our scope and methodology.):

Results in Brief:

On the basis of 2001 data from BLS, we found that an estimated 24 
percent of all mass layoffs and plant closures appear subject to WARN's 
advance notice requirements. However, mass layoffs were less likely to 
be subject to WARN's advance notice requirements than plant closures. 
Specifically, employers were required to provide advance notice for 
approximately 13 percent of the 7,097 mass layoffs, while employers 
were required to provide advance notice for approximately 82 percent of 
the 1,253 plant closures. This difference between mass layoffs and 
plant closures stems primarily from the law's "one-third" rule, which 
applies only to mass layoffs. In 2001, while approximately 661,000 
workers were involved in a mass layoff or plant closure that met WARN 
criteria, over 415,000 workers were involved in mass layoffs that did 
not meet the one-third rule; therefore, their employers were not 
required to provide advance notification.

On the basis of 2001 data from BLS, we found that employers provided 
notice for an estimated 36 percent of mass layoffs or plant closures 
that appear subject to WARN's advance notice requirements. 
Specifically, employers provided notices for almost one-half (46 
percent) of plant closures, compared with approximately one-quarter (26 
percent) of mass layoffs. The remaining mass layoffs and plant closures 
appear subject to WARN requirements, but notices were not provided. 
This discrepancy might be explained partially by the use of other 
practices, not precluded by WARN, that employers and employee 
representatives reported, such as asking employees to sign waivers of 
their rights to advance notice. Of the 36 percent of mass layoffs and 
plant closures with a WARN notice, about two-thirds of the notices (an 
estimated 68 percent) provided at least the required 60-day advance 
notice. Almost all of the notices included all required elements 
outlined in the regulations. In addition, other employers provided 
notice for mass layoffs and plant closures that were not subject to 
WARN's requirements as encouraged in the law and regulations.

On the basis of interviews with interested parties and a legal review 
of court cases, we found that certain definitions and requirements of 
WARN are difficult to apply when employers and employees assess the 
applicability of WARN to their circumstances. In particular, employers, 
employee representatives, and others reported it problematic to apply 
the statute's provisions when calculating the layoff threshold (i.e., 
whether the requisite number of employees have been laid off within 
prescribed time frames) that triggers WARN requirements. In addition, 
the courts have applied the statute's provisions in varying ways, 
resulting in decisions that do not always clarify employer 
responsibilities and employee rights under the law. For example, the 
courts have interpreted the damages for violating the statute's advance 
notice provision in two ways; in some cases the courts have calculated 
damages using calendar days, while in other cases they have used work 
days. The use of one calculation versus the other either increases or 
decreases the amount of money the employer is required to pay for a 
WARN violation by approximately 30 percent and affects the amount of 
money workers receive when they do not receive 60-days advance notice 
of a layoff or closure. Finally, although the Department of Labor has 
taken steps to improve educational materials on WARN originally 
developed in 1989, Labor has not made these materials widely available 
to employers or employees.

To educate and inform employers and employees about WARN, we recommend 
that the Secretary of Labor take immediate action to make revised 
educational materials widely available to employers and employees for 
assistance in understanding the regulations. In responding to 
preliminary findings of this report, Labor officials said that updating 
the regulations would not address many of the issues outlined in this 
report. Consequently, we include a Matter for Congressional 
Consideration to clarify employer responsibilities and employee rights 
under WARN, specifically clarifying definitions and layoff thresholds 
through amending the statute. Labor provided informal comments and 
technical clarifications on this report, which we incorporated as 
appropriate. Labor informed us about efforts that it has already made 
to address our recommendation and chose not to comment formally.

Background:

WARN generally requires that employers with 100 or more full-time 
workers give their affected employees or their representatives, the 
state's dislocated worker unit, and local government officials 60 days 
advance notice of an impending closure or layoff. Employers with 100 or 
more full-time workers generally account for less than 2 percent of all 
employers. However, these employers employ 64 percent of the labor 
force.

The purpose of advance notice is twofold. First, advance notice 
provides workers and their families with an appropriate amount of time 
to transition and adjust to the prospective job loss, to seek and 
obtain alternative jobs, and if necessary, to participate in skill 
training and retraining so that these workers can re-enter the job 
market. Second, advance notice promotes the delivery of rapid response 
services to the affected workers through the state's dislocated worker 
unit (DWU), by allowing the DWU to go to the employment site and 
provide information about job services before workers are laid off and 
more difficult to locate.

A number of factors determine whether employers are required to provide 
notice under WARN. (See fig. 1.) First, employers must decide if the 
mass layoff or plant closure at a single site will affect at least 50 
employees, excluding part-time workers. For a mass layoff, employers 
must also consider if the layoff will affect at least 33 percent of the 
workforce (excluding part-time workers) and will be expected to exceed 
6 months.[Footnote 9] Alternatively, employers with 100 or more 
employees who in the aggregate work at least 4,000 hours per week 
(excluding overtime) are covered. Employers must then determine if at 
least 50 full-time workers will be laid off during any 30-day period, 
or for two or more groups, over a 90-day period.[Footnote 10] If the 
mass layoff or plant closure has met all these criteria, it would be 
subject to WARN's requirements and notice must be provided at least 60 
days before the first layoff. Certain layoffs and closures are exempt 
from advance notice, including those that involve the completion of a 
particular project, certain transfers or reassignments, and strikes or 
lockouts.

Figure 1: WARN Decision Matrix:

[See PDF for image]

[End of figure]

WARN also lists three exceptions that allow employers to give less than 
60 days advance notice. These are (1) "faltering company," which is 
defined as those employers involved in a closure who are trying to seek 
new business or raise capital at the time that 60-day notice would have 
been required; (2) "unforeseeable business circumstances," which 
applies to closings and mass layoffs caused by business circumstances 
that were not reasonably foreseeable at the time that 60-day notice 
would have been required; and (3) a natural disaster. Employers that 
wish to use these exceptions must still provide notice in as much time 
as possible and also give a brief statement of why the exception is 
being used in the WARN notice.

Congress did not assign any agency responsibility for enforcing WARN. 
The Department of Labor is responsible for issuing regulations, 
providing educational information about the act, and for providing any 
future revisions to the regulations as may be necessary. Employees 
seeking redress under WARN must pursue their cases through the federal 
courts.[Footnote 11] The time frames for employees to file under WARN 
vary by state because the act does not contain a statute of 
limitations. Courts can award damages of up to 60 days back pay and 
benefits as remedy to workers for WARN violations.[Footnote 12] The 
courts must reduce the damages for each day the employer gave notice, 
if less than 60 days, or for any wages paid during the violation 
period. The courts may also award the winning party reasonable 
attorney's fees.

An Estimated 24 Percent of All Mass Layoffs and Plant Closures Appear 
Subject to WARN's Advance Notice Requirements:

Of the 8,350 mass layoffs and plant closures in 2001, 24 percent appear 
subject to WARN advance notice requirements and involved approximately 
661,000 workers. Fewer mass layoffs appear subject to these 
requirements than plant closures (13 percent vs. 82 percent). This is 
due primarily to the one-third rule that only applies to mass layoffs, 
specifically layoffs affecting at least 33 percent of the workforce. 
Figure 2 provides a summary of events subject and not subject to WARN 
requirements in 2001.

Figure 2: Events Subject to and Not Subject to WARN Requirements in 
2001:

[See PDF for image]

[End of figure]

The 948 mass layoffs that appear subject to WARN involved about 300,000 
workers. In comparison, the 6,149 layoffs not subject to WARN's 
requirements involved over 1 million workers. Forty-five percent of the 
mass layoffs were not subject to WARN because the "single event" did 
not affect at least one-third of the employer's workforce. (See fig. 
3.) These layoffs affected approximately 415,000 workers whose 
employers were not required to provide notice.

Figure 3: Percentage of Mass Layoffs in 2001 Excluded from WARN 
Requirements Due to the One-Third Rule:

[See PDF for image]

Note: Exclusions do not total 87 percent due to rounding. Other 
exclusions include layoffs that affect less than 100 workers and public 
sector layoffs. It also includes those workers who are seasonal, 
involved in labor disputes, involved in weather-related layoffs, on 
leave, and finished with a contract.

[End of figure]

In contrast to mass layoffs, 82 percent of plant closures appear 
subject to WARN's requirements. (See fig. 2.) These 1,026 plant 
closures affected about 360,000 workers. In comparison, the 227 plant 
closures were not subject to WARN's requirements and involved 
approximately 20,000 workers. Plant closures may be excluded from 
WARN's requirements for a variety of reasons; for example, plant 
closures that involve seasonal workers or workers who have completed a 
contract. (See app. I for further explanation.):

Employers Provided Notice for about One-Third of Layoffs and Closures 
Subject to WARN Requirements, Most of Which Were Timely:

While 1,974 mass layoffs and plant closures appear to be subject to 
WARN's advance notice requirements in 2001, BLS estimated that 
employers provided notice for only 717 of these events. Most of the 
notices provided gave at least the required 60-day advance notice. In 
addition, almost all notices included the required elements outlined in 
the regulations. Other employers provided notice for mass layoffs and 
plant closures that were not subject to WARN's requirements as 
encouraged in the law and the regulations.

Employers Provided Notice for about One-Third of WARN-Covered Mass 
Layoffs or Closures:

Data from BLS indicated that employers provided notices for 717, or 36 
percent, of the 1,974 mass layoffs and plant closures that appear 
subject to advance notice requirements under WARN in 2001. Employers 
provided notices for plant closures at a higher rate than for mass 
layoffs. Specifically, they provided notices for almost one-half (46 
percent) of plant closures, compared with approximately one-quarter (26 
percent) of mass layoffs. The remaining two-thirds (64 percent) of mass 
layoffs and plant closures appeared to be subject to WARN requirements, 
but employers did not provide notices. (See app. I.):

In those cases where notices were not provided, employers may be 
engaging in other practices, not precluded by WARN, that limit their 
liability under the law. Representatives for both employers and 
employees told us about two practices in particular: pay in lieu of 
notice and waivers. For the former, employers offer employees money 
instead of their full 60-days notice.[Footnote 13] For the latter, 
employers ask employees to sign a contract waiving their rights under 
WARN--sometimes in exchange for a severance package.[Footnote 14] In 
both cases, employees might receive payment for foregoing the advance 
notice, but the lack of an advance notice means that the state is less 
likely to be able to deploy services to facilitate workers' 
reemployment before the plant closure or mass layoff. An employer 
representative told us that some employers use these other practices 
because they are confused, in general, about the law, and its 
applicability to their circumstances. According to employers and their 
representatives, employers have difficulty determining when WARN 
requirements apply to mass layoffs, in particular, because of the 
layoff threshold requirements. In addition, employer representatives 
told us about concerns that employers have about providing advance 
notice, which might influence an employer's decision to engage in other 
practices.[Footnote 15] Specifically, some employers fear that 
providing advance notice will affect their businesses negatively by 
causing employees to leave before the scheduled layoff or commit 
sabotage. Although 17 of the 23 employers we interviewed that provided 
advance notice told us that some employees resigned after they received 
advance notice, only 2 employers indicated that this was a hardship. 
Two experienced acts of sabotage.

Interestingly, employers provided more notices than there were WARN 
events in 2001. Employers provided 5,349 notices, but there were only 
1,974 plant closure and mass layoffs that appeared to meet the WARN 
criteria for advance notice. The volume of notices provided suggests 
that employers appear to be heeding the portion of the law and 
regulations that encourages advance notice in ambiguous situations even 
if it is not required by WARN. Providing advance notice when not 
required may lead to the delivery of rapid response services for 
dislocated workers. Some state officials told us that they provide 
rapid response services for layoffs and closures that do not meet WARN 
requirements if they receive notice.

Of the Notices Provided, Two-Thirds Were Timely:

On the basis of a sample of WARN notices, we found that employers with 
mass layoffs or plant closures that were subject to WARN requirements 
and sent a notice to their state officials generally provided notice on 
time and almost always included all of the required elements as 
outlined in the law. We estimated that two-thirds (68 percent) of the 
notices that state officials received were dated 60 or more days before 
the mass layoff or plant closure; the estimated average advance notice 
was 49 days.[Footnote 16] (See fig. 4.) We further estimated that 32 
percent of employers gave state officials less than 60 days to prepare 
for the event.[Footnote 17] Regardless of when states received notice, 
approximately 90 percent of all notices included all of the required 
elements as outlined in the regulations.

Figure 4: Amount of Employer Advance Notice to State Officials before a 
Mass Layoff or Plant Closure:

[See PDF for image]

[End of figure]

Employers and Employees Find WARN's Definitions and Calculations 
Difficult to Apply Due to Ambiguities in the Statute and Limited 
Guidance:

On the basis of our interviews with interested parties and a legal 
review of court cases, we found that certain definitions and 
calculations of WARN are difficult for employers and employees to apply 
when assessing the applicability of WARN to their circumstances. The 
courts have applied the statute's provisions in varying ways, resulting 
in decisions that do not always clarify employer responsibilities and 
employee rights under the law. In addition, Labor has made several 
efforts to enhance educational materials on the WARN Act, but these 
materials are not yet widely available to employers and employees.

Employers and Employees Find WARN's Definitions and Calculations 
Difficult to Apply:

A variety of indicators suggest that employers and employees find WARN 
definitions and calculations difficult to apply. These include 
inquiries made regarding WARN provisions, litigation stemming from the 
provisions, and an examination of the steps necessary to decide if and 
when WARN is applicable. In our 1993 report,[Footnote 18] we found that 
the employers had similar issues with WARN.

The questions employers and employees ask about the application of WARN 
provides one indicator of the difficulties they have in applying its 
provisions. State DWUs, the Department of Labor, and employer groups 
all reported that employers and employees contact them with basic 
questions about WARN.[Footnote 19] Of the state DWU's able to provide 
an estimate, 36 states reported receiving thousands of inquiries each 
year on WARN. This number does not include the additional eight 
dislocated worker units in states that reported receiving inquiries but 
could not estimate the number. Moreover, the amount of inquiries 
surpasses the amount of events that appear to meet WARN criteria and 
even surpasses the amount of total events in 2001. According to 
dislocated worker officials, employers called to ask whether their 
circumstances required compliance with WARN and where to send notices, 
while employees called to ask whether their layoff was covered and what 
their rights were. An Employment and Training Administration (ETA) 
official within the Department of Labor reported receiving 553 
inquiries on the WARN Act in 2002. She also reported that employees 
were the most frequent callers and most often asked about practices 
employers used in lieu of notice or about severance. Additionally, 
employer groups reported receiving inquiries about WARN from employers 
and their representatives, and one employer representative told us his 
organization provides WARN information sessions for employers twice 
each year.

In addition to these queries, litigation over certain provisions 
provides further evidence of the difficulties experienced by employers 
and employees in applying WARN provisions. During our legal review of 
court cases from 1998-2002, we found that certain provisions resulted 
in more litigation in the courts. (See fig. 5.) In this time frame, we 
identified 68 reported decisions addressing WARN. (See app. III.) The 
most commonly litigated issues in these cases were related to layoff 
thresholds. Lawyers who litigated WARN cases told us that layoff 
threshold issues involved multiple definitions that were difficult to 
comprehend. Employers, employer and employee representatives, and 
lawyers cited the statute's definition of calculating the 50 employees 
who have been laid off, the one-third rule, and the aggregation of 
multiple layoffs within a 90-day period as difficult to apply to their 
specific circumstances. Lawyers we spoke with said that neither the 
statute nor Labor's guidance were sufficient for helping them 
understand these definitions. In addition, because the WARN Act does 
not have a statute of limitations, the court must decide for each case 
whether the case was filed within the appropriate time period. To do 
this, the courts look to the most analogous state statute of 
limitations as opposed to federal law.[Footnote 20] The applicable 
state statute of limitations, however, is not always easy to identify 
and often varies from state to state.

Figure 5: WARN-Related Court Cases by Litigation Subject 1998-2002:

[See PDF for image]

Note: Only major issues are represented in the graphic; therefore, they 
do not add up to the 68 reported decisions addressing WARN.

[A] WARN requires that layoffs or closures occur at a single site of 
employment in order to calculate the requisite number of workers 
affected by a layoff or closure. These cases discuss a "single site" as 
being geographically connected. Even where several distinct operations 
are performed at a geographically connected site, that building or 
complex will be counted as one site. In some limited cases, 
geographically separate sites may still be considered a single site of 
employment because of other business-related connections; for example, 
sites that share the same staff and management and are used for the 
same purpose.

[B] WARN notices are required to be provided to all "affected 
employees." These court cases have dealt with this issue and found, for 
example, that workers who are temporarily laid off prior to a WARN 
event are entitled to notice.

[C] Establishes who the employer is for purposes of WARN notification. 
These cases discuss, for example, the relationship between parent and 
subsidiary companies when determining the employer responsible for 
providing advance notice.

[End of figure]

Some labor law attorneys we spoke with said that applying the layoff 
threshold definitions is difficult because doing so involves multiple 
steps they characterized as complicated. In determining whether or not 
the WARN threshold has been met, employers must first decide if at 
least 50 employees or one-third of the workforce have suffered an 
employment loss[Footnote 21] at a single site. Employers must exclude 
all employees who have worked fewer than the last 6 out of 12 months or 
fewer than 20 hours per week. The layoff threshold calculations are 
further complicated when a short-term layoff (i.e., a layoff lasting 
less than 6 months) that is not covered under WARN is extended beyond 6 
months becoming a long-term layoff (i.e., a layoff lasting more than 6 
months) and thus triggering the WARN requirements.

In addition, applying the layoff threshold definitions can be further 
complicated when multiple layoffs occur across a 90-day period. If 
there are waves of layoffs within a 90-day period that result in an 
employment loss for at least 50 workers and one-third of the workforce, 
then these combined events may be subject to WARN. For example, if a 
company employs 150 employees and has three layoff events involving 20 
workers during each event over 90 days, then these events in aggregate 
would be subject to WARN's requirements. Waves of layoffs are not 
always aggregated for purposes of determining whether WARN is 
triggered; however, if the issue is challenged, the employer must 
demonstrate that the employment losses were the result of separate and 
distinct causes and not an attempt to evade WARN's requirements. 
Moreover, if there are multiple layoffs within a 90-day period and one 
of them alone triggers WARN, the rest are not subject to WARN's 
requirements unless they otherwise meet WARN's requirements. For 
example, if a company employs 150 employees and has three layoffs 
within a 90-day period involving 20 workers for the first and second 
events but 60 employees in the third, then this last event alone would 
be subject to WARN's requirements, while the other two would not be 
subject to WARN's requirements even though they all took place within a 
90-day period.

Lawyers also told us that the difficulties in applying the layoff 
thresholds allow some employers to manipulate numbers to qualify under 
the one-third rule or lay off workers in waves over a period of time so 
that WARN thresholds do not apply during a 90-day period. According to 
lawyers representing employers and employees, some employers have a 
difficult time applying these standards while other employers are so 
savvy at manipulating the numbers that it is difficult for employees to 
know if and when their rights have been violated.

Court Decisions Interpret Certain WARN Provisions Inconsistently:

Areas of inconsistency among the courts' interpretations of certain 
WARN Act provisions have caused difficulties for employers, employees, 
and their lawyers when assessing the applicability of WARN to their 
circumstances. Depending upon the circuit,[Footnote 22] the courts 
interpret two WARN provisions differently: (1) the calculation of 
damages and (2) the definition of "employer" when two companies are 
closely related--an issue that is associated with determining the 
employer responsible for giving notice.

When calculating damages, the law states that employees are entitled to 
up to 60 days back pay for a violation of WARN. However, the law does 
not state if the 60 days should be interpreted as calendar days or as 
workdays. The difference between the calendar day versus workday 
approach would be the difference between 60 and 42 days pay, which 
decreases or increases the amount an employer must pay for a WARN 
violation by approximately 30 percent. The courts have different 
interpretations of the law, and the regulations do not address the 
calculation of damages.

Because of this uncertainty, much litigation surrounds the calculation 
of back pay and whether the law intended workers to receive 60 or 42 
days of pay for a WARN violation. The third circuit alone has found 
that back wages should be calculated as calendar days--1 day of wages 
multiplied by 60. The other circuit courts that have addressed the 
calculation of WARN damages have all upheld the workday interpretation 
and use the rationale that the back pay was meant to describe the wages 
that would have been earned on average during a 60-day time period.

Lawyers representing both employers and employees would like the law to 
be clarified, regardless of whom the outcome favors. For example, if 
the calendar day approach were decided as the mandatory way to 
calculate damages, then employers would be paying more money in 
damages, but employers wishing to settle a WARN violation could better 
estimate pay because they would know exactly how much they were liable 
for if the case went to court.

The courts also have taken various approaches in determining who the 
"employer" is for purposes of complying with WARN. Different courts 
have chosen to use varying tests as outlined in several laws to 
determine the employer responsible for providing WARN notice. 
Specifically, there is no uniformity among the courts around the issue 
of identifying the responsible employer when there are two closely 
related companies (e.g., the parent of a subsidiary), and it is unclear 
as to who is responsible for sending the notice prior to a layoff. The 
WARN statute defines an employer as a business enterprise but does not 
further define the term to address parent and subsidiary companies.

To give employers, employees, and the courts guidance on determining 
who the employer is, WARN's regulations outline a five-factor employer 
test. However, this test differs from other federal and state employer 
tests, which results in the application of various tests when making 
determinations regarding the employer and inconsistent outcomes for 
employers and employees in court. As a result, the tests the courts 
have applied have varied from case to case. (See app. II.) Each test 
examines a number of factors meant to determine which of the two 
closely related companies can be identified as the employer. For some 
cases, the courts have used the five-factor test established in the 
WARN regulations. In others, they have used a slightly different four-
factor test called "federal common law" in combination with the five-
factor test. And in still other cases, courts have looked to state law 
in addition to the other laws. In most cases, the courts have used some 
combination of these three. According to ETA officials, in promulgating 
regulations and the five-factor test they contain, Labor did not intend 
to create a new employer test that could be used instead of existing 
federal common law.

The Department of Labor's Enhanced Educational Materials Are Not Widely 
Available:

Organizations representing both employers and employees indicated that 
confusion over WARN definitions and calculations may stem, in part, 
from a lack of guidance. The implementing regulations that the 
Department of Labor published in 1989 tasked Labor with providing 
assistance in understanding the regulations. In the same year, Labor 
produced an eight-page informational brochure on the WARN Act for 
employers and later made the regulations available over the Internet. 
However, the inquiries about WARN discussed earlier indicate that 
employers and employees still have basic questions about WARN and find 
its definitions and calculations difficult to apply to their 
circumstances. Further, the brochure published in 1989 does not address 
case law established since the act passed in 1988.

The Department of Labor has made several efforts to enhance educational 
materials on the WARN Act, but these materials are not yet widely 
available to employers and employees. These efforts have taken place 
over the past 3 years and include taking steps to revise the brochure 
for employers and developing an additional brochure for employees. In 
addition, ETA officials told us that they have made some efforts to put 
explanatory information about WARN regulations on the Internet. Labor 
has also taken the initial steps to develop an interactive flow chart 
that employers could use to determine if WARN is applicable. Labor's 
enhanced educational materials can be made widely available independent 
of any changes to the law and will begin to address the need for 
additional educational materials on WARN.

Conclusions:

The assessment of the applicability of WARN is important, because for 
every potential mass layoff or plant closure employers are responsible 
for determining if their circumstances require compliance with WARN, 
and employees are responsible for determining if their rights have been 
violated. Although the Department of Labor has issued implementing 
regulations and educational materials on WARN, these efforts have not 
been sufficient to clarify employer responsibilities and employee 
rights under the WARN Act. The lack of clarity stems, in part, from the 
statute that contains provisions the courts, employers, and employees 
find difficult to apply to specific situations. Because of this 
uncertainty, employers, employees, and courts incur costs in time and 
resources in determining the applicability of WARN to individual 
circumstances. This lack of clarity could ultimately circumvent the 
purpose of advance notice--namely, allowing states to prepare for 
workforce reductions and quickly return dislocated workers to the 
workforce.

Recommendation for Executive Action:

To educate and inform employers and employees about WARN, we recommend 
that the Secretary of Labor take immediate action to make revised 
educational materials widely available to employers and employees for 
assistance in understanding the regulations.

Matter for Congressional Consideration:

To clarify employer responsibilities and employee rights under WARN and 
to address varying court decisions, the Congress may wish to consider 
amending WARN by simplifying the calculation of layoff thresholds, 
clarifying how damages are calculated, defining the term "employer" to 
address closely related corporations, and establishing a uniform 
statute of limitations.

Agency Comments and Our Evaluation:

We provided the U.S. Department of Labor with a draft of this report 
for review and comment. Labor generally concurred with our conclusions 
about the difficulties in WARN implementation and provided informal 
comments and technical clarifications, which we incorporated as 
appropriate. Labor informed us that it has already made efforts to 
address our recommendation and thus chose not to comment formally. 
Furthermore, officials have indicated that they will continue to work 
towards making enhanced educational materials widely available. In July 
2003, the department published new WARN educational brochures for 
employers and employees. However, distribution of the brochures is 
currently limited to individuals inquiring about WARN through the 
department, and the brochures have not yet been posted on ETA's Web 
site. Additionally, Labor is developing a WARN e-law advisor program to 
help employers and employees understand their rights and 
responsibilities under federal employment laws. However, department 
officials were unable to provide an estimate on when the e-law advisor 
program would be finished.

As agreed with your offices, unless you publicly announce the contents 
of the report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the Secretary of Labor, appropriate congressional committees, and 
other interested parties. In addition, the report will be made 
available at no charge on GAO's Web site at http://www.gao.gov.

If you or your staf have any questions about this report, please 
contact me at (202) 512-9889. Other contacts and staff acknowledgments 
are listed in appendix IV.

Robert E. Robertson 
Director, 
Education, Workforce, and Income Security Issues:

Signed by Robert E. Robertson: 

[End of section]

Appendix I: Objectives, Scope, and Methodology:

We were asked to provide information on (1) the extent to which mass 
layoffs and plant closures appear subject to the Worker Adjustment and 
Retraining Notification (WARN) Act's advance notice requirements, (2) 
the extent to which employers with mass layoffs or plant closures that 
appear to meet WARN criteria provided notice, and (3) what issues 
employers and employees face when assessing the applicability of WARN 
to their circumstances.[Footnote 23] To attain the objectives for this 
engagement, we began by reviewing the WARN Act provisions, the U.S. 
Department of Labor's regulations, and the preamble to the regulations. 
We also reviewed Labor's explanatory brochure on WARN for employers, as 
well as the draft brochures for employers and employees.

To determine the extent to which mass layoffs and plant closures appear 
subject to WARN's advance notice requirements, we asked the Bureau of 
Labor Statistics (BLS)[Footnote 24] to determine which events in its 
Mass Layoff Statistics (MLS) data for 2001 appear subject to WARN 
according to the criteria included in the statute and the regulations. 
To determine the extent to which employers with mass layoffs and plant 
closures that appear subject to WARN's advance notice requirements 
provided notice, we asked all 50 states and the District of Columbia to 
provide us with all WARN notices received for mass layoffs and plant 
closures in 2001.[Footnote 25] BLS then matched its MLS data for 2001 
with the WARN notices states sent us, which provided an estimate of the 
number of events subject to WARN's advance notice requirements where 
the employers provided notice.[Footnote 26] To assess the extent to 
which notices met the requirements of the WARN Act, we conducted 
analysis on the content of a random, nationwide sample of 600 WARN 
notices to determine the extent to which the notices contained all of 
the required elements outlined in the law.[Footnote 27] To determine 
what issues employers and employees face when assessing the 
applicability of WARN to their circumstances, we talked to dislocated 
worker officials in all 50 states and the District of Columbia, labor 
experts, employee and employer groups, law firms, and 23 employers from 
a random sample of 50 employers that provided WARN notices to states in 
2001. Finally, we reviewed all reported court cases decided between 
1998-2002 that discuss or apply WARN provisions to describe the key 
issues raised through the courts by laid-off workers and employers.

Mass Layoff Statistics Data:

In order to determine the extent to which mass layoffs and plant 
closures appear subject to WARN's advance notice requirements, we asked 
BLS to perform some work utilizing its MLS data. There are no data 
collected on the WARN Act, and although the type of information 
obtained by MLS and the information required by the WARN provisions 
differ slightly (see next paragraph),[Footnote 28] the MLS data are the 
best available for measuring WARN layoffs and closures. Due to the 
differing criteria, BLS could only assess whether mass layoffs and 
plant closures in the analysis "appear" to meet WARN requirements. 
Because MLS does not generate sufficiently detailed information about 
all the circumstances involved in each event and BLS's confidentiality 
pledge to employers prevented us from contacting the employers 
directly, we could not conclusively determine whether every closure 
that appeared to meet the WARN criteria actually met each provision of 
the law. With these caveats in mind, we asked BLS to provide us with 
information on the total number of extended mass layoffs in 2001 and to 
subtract from that total the mass layoffs and plant closures that did 
not appear to meet the WARN criteria due to exclusions[Footnote 29] and 
exemptions[Footnote 30] that are provided in the law. BLS provided us 
with a list of 1,974 extended mass layoffs[Footnote 31] from its MLS 
data that appear to meet WARN criteria. Table 1 shows the process by 
which BLS arrived at its list of events that appeared to meet WARN 
criteria.

Table 1: Extended Mass Layoffs and WARN Coverage in 2001:

Extended mass layoff events, 2001: Events; Layoffs: 7,097; Closures: 
1,253; Total: 8,350.

Extended mass layoff events, 2001: Less exclusions:; Layoffs: 4,611; 
Closures: 210; Total: 4,821.

Extended mass layoff events, 2001: Employment level not provided[A]; 
Layoffs: 1,070; Closures: 50; Total: 1,120.

Extended mass layoff events, 2001: Employment level less than 100; 
Layoffs: 206; Closures: 159; Total: 365.

Extended mass layoff events, 2001: Ownership not private; Layoffs: 125; 
Closures: 1; Total: 126.

Extended mass layoff events, 2001: Events with 50-499 separations not 
meeting the one-third criteria; Layoffs: 3,210; Closures: [B]; Total: 
3,210.

Subtotal, less exclusions; Layoffs: 2,486; Closures: 1,043; Total: 
3,529.

Extended mass layoff events, 2001: Less exemptions:; Layoffs: 1,538; 
Closures: 17; Total: 1,555.

Extended mass layoff events, 2001: Seasonal work; Layoffs: 1,254; 
Closures: 10; Total: 1,264.

Extended mass layoff events, 2001: Labor disputes; Layoffs: 17; 
Closures: 1; Total: 18.

Extended mass layoff events, 2001: Employees on leave; Layoffs: 75; 
Closures: 0; Total: 75.

Extended mass layoff events, 2001: Weather-related; Layoffs: 25; 
Closures: 0; Total: 25.

Extended mass layoff events, 2001: Natural disaster; Layoffs: 2; 
Closures: 0; Total: 2.

Extended mass layoff events, 2001: Contract completed; Layoffs: 165; 
Closures: 6; Total: 171.

Extended mass layoff events, 2001: Appear to meet WARN criteria; 
Layoffs: 948; Closures: 1,026; Total: 1,974.

[SOURCE: BLS.]

[A] For closures, includes those events for which no employment was 
provided and between 50-99 workers were separated.

[B] Not applicable.

[End of table]

WARN provisions do not match exactly with the data collected in MLS. 
WARN requires that notice be provided for plant closures and mass 
layoffs affecting at least 50 workers during a 30-or 90-day period, 
with some exclusions and exemptions. MLS uses reports of layoffs 
involving at least 50 workers and lasting more than 30 days. 
Information on extended mass layoffs is developed initially from each 
state's Unemployment Insurance database using a standardized automated 
approach for identifying establishments that have at least 50 initial 
claims filed against them during a consecutive 5-week period (the 
"extended mass layoff"). The state agency then contacts these 
establishments by telephone to determine if a "permanent" layoff or 
plant closing has occurred. A permanent layoff is one that lasts more 
than 30 days. An establishment is considered closed if, at the time of 
contact, the employer plans to close, is closing, or has already closed 
the work site. The telephone survey obtains specific information on the 
nature of the extended mass layoff, including the number of 
separations, the reason for and the duration of the extended mass 
layoff, and whether the establishment is remaining open.

To determine the extent to which employers with mass layoffs and plant 
closures that appear to meet WARN criteria provided notice to their 
state DWU, we asked BLS to link its MLS data with WARN notices we 
collected from states. First, we asked the DWUs from all 50 states and 
the District of Columbia to provide us with a list of all WARN notices 
that they received for mass layoffs and plant closures in 2001 (n = 
5,349).[Footnote 32] Then BLS matched the mass layoffs and plant 
closures that appear subject to WARN's advance notice requirements with 
the list of WARN notices. This match was conducted using employer name 
and state to determine if there was a match; it also provided us with 
an estimate of the number of events that appear to be covered by WARN 
where the employers also provided notice to the state dislocated worker 
unit. The number of notices, mass layoffs and plant closures, and the 
overlap are in figure 6.

Figure 6: Overlap between WARN Notices and Events That Appear Subject 
to WARN:

[See PDF for image]

[End of figure]

WARN Notices:

To determine the extent to which WARN notices were timely and complete, 
we performed a content analysis on a random, national sample of notices 
we collected. From the list provided by the dislocated worker units, we 
selected a random sample of 600 notices and asked states to provide us 
with copies of those notices. We performed a content analysis to 
determine the extent to which notices provided the amount of advance 
notice required in the law and contained required elements (see table 
2.) Specifically, we evaluated the extent to which employers included 
the name and address of the employment site, the date of first 
separation, a contact person for the company, the number of affected 
workers, and, if applicable, exemptions and a brief statement of the 
exemption.[Footnote 33] After reviewing copies of the notices provided 
by the state DWUs, we eliminated five WARN notices from the sample 
because they occurred in 2000 or 2002. We also eliminated 40 notices 
because states told us they were not able to provide those missing 
notices because either the employer did not provide a notice (the DWU 
learned of the event through other means, such as a newspaper article), 
the DWU lost the notice after it was received or the DWU destroyed the 
notice after it was archived. The final sample of 555 WARN notices 
represents about 10 percent of the adjusted universe of WARN notices 
for layoffs and closures in 2001.

Table 2: Required Elements in the Notices:

[See PDF for image]

[SOURCE: DEPARTMENT OF LABOR'S REGULATIONS.]

[A] The following information is not required to be included in the 
notices to dislocated worker units and local officials, but must be 
made available upon request by the dislocated worker unit or elected 
officials: (1) job titles of positions to be affected, (2) statement of 
type of layoff, (3) existences of bumping rights, (4) name of union 
representative, and (5) name and address of chief elected officer of 
each union.

[B] If no representative.

[C] Must also include schedule of separations.

[D] "Bumping rights" include displacing the least senior person in the 
affected employee's job classification. For example, a carpenter with 
seniority could bump the least senior carpenter in order to remain 
employed.

[End of table]

Interviews:

To determine what issues employers and employees face when potentially 
affected by WARN, we conducted semistructured interviews with (1) state 
DWUs or rapid response officials from all 50 states and the District of 
Columbia;[Footnote 34] (2) academic and professional experts on the 
WARN Act, including officials from the Guild Law Center; (3) employer 
groups, such as Labor Policy Association and Small Business 
Administration; (4) employee groups, such as the AFL-CIO and United 
Auto Workers; and (5) lawyers with experience litigating WARN cases, 
from both the employer and employee sides. These groups provided us 
with a multifaceted look from the employer and employee perspective at 
the issues faced when potentially affected by WARN. In our interviews 
with the state dislocated worker units in all 50 states and the 
District of Columbia, we asked the officials to estimate the number of 
inquiries they receive per year. Thirty-six states were able to provide 
estimates.

To collect information on employer perspectives and experiences 
regarding the clarity of provisions and the consequences associated 
with filing a WARN notice, we conducted structured interviews[Footnote 
35] with a small, randomly selected set of employers who provided a 
WARN notice to their state dislocated worker unit for a mass layoff or 
plant closure in 2001. We attempted to contact 50 employers. Of those, 
18 had closed entirely and/or we were unable to locate any current 
contact information for them. From the remaining 32 employers, 9 
declined to participate in the interview for a variety of reasons. We 
interviewed 23 employers. With these data, among other sources, we were 
able to assess which WARN provisions were unclear to the employers, 
other practices used to limit potential WARN liability, and costs 
associated with providing notice.

Review of Court Cases:

To determine what issues employers and employees face when potentially 
affected by WARN, we reviewed court cases from 1998-2002 that were 
substantively about the WARN Act. In order to find all of the relevant 
court cases that dealt with the WARN Act, we used Lexis, Westlaw, and 
the Guild Law Center's Plant Closing (WARN Act) Project.[Footnote 36] 
The Department of Labor's ETA also provided us with a list of cases 
that we checked against our own research and the Guild Law Center's 
Plant Closing Project to establish a list of cases addressing WARN 
during the past 5 years.

From our list of all reported court cases that discuss or apply WARN 
provisions, we summarized the outcomes of each case and then coded each 
case according to the issues addressed. (See app. III and fig. 5.) We 
reviewed the cases to identify patterns between the interviews and 
court cases where employers and employees seem to be confused with the 
law and its regulations. In addition, we reviewed law review articles 
discussing the inconsistencies in the application of various WARN 
provisions by the courts. We also reviewed articles discussing the 
evolution of WARN and general information regarding the law and its 
regulations.

[End of section]

Appendix II: Tests Applied to Find Liability in Parent/Subsidiary, 
Sister Corporation, and Lender/Borrower Situations:

State law tests: Generally focus on the extent of actual control the 
company has over its own business decisions.

Federal common law test: Also referred to as single employer, 
integrated enterprise or single business enterprise test: (1) common 
ownership; (2) common management; (3) centralized control of labor 
relations; (4) functional integration of operations; focus on whether 
two nominally independent enterprises really constitute one integrated 
enterprise (absence of arms length dealing).

WARN: Department of Labor's regulations (20 C.F.R. 639.3(a)(2)): (1) 
common ownership; (2) common directors and/or officers; (3) de facto 
exercise of control; (4) unity of personnel policies emanating from a 
common source; (5) dependency of operations.

Table 3: Different Tests Used by Courts to Determine Employer 
Liability:

[See PDF for image]

Source: GAO analysis, Westlaw, and Lexis.

[End of table]

[End of section]

Appendix III Reported Court Cases under WARN Act, 1998-2002:

Table 4: Reported Court Cases under WARN Act, 1998-2002:

Case: Air Trans. Local 504, Transp. Workers Union of Am. v. Ogden 
Aviation Servs., No. 96 CV 4506 SJ, 1998 WL 191297 (E.D.N.Y. Apr. 20, 
1998).; State filed: New York; Year: 1998; Outcome: Court found that 
Ogden, seller company, was not responsible for providing WARN notices 
to workers subsequently laid off by buyer company; case proceeded 
toward trial.

Case: Amalgamated Serv. & Allied Indus. Joint Bd. v. Supreme Hand 
Laundry, Inc., 182 F.R.D. 65 (S.D.N.Y. 1998).; State filed: New York; 
Year: 1998; Outcome: Corporation failed to file notice of appearance of 
counsel, and court entered default judgment for plaintiff. Corporation 
was not permitted to subsequently raise a defense of good faith.

Case: Amatuzio v. Gandalf Sys. Corp., 994 F. Supp. 253 (D.N.J. 1998).; 
State filed: New Jersey; Year: 1998; Outcome: Court held that WARN's 
definition of "affected employees" is not limited to those laid off 
after plant shutdown, but includes those expected to experience an 
employment loss. With respect to one group, more facts were needed to 
determine whether layoffs of two groups should be aggregated for 
purposes of determining WARN's applicability.

Case: Breedlove v. Earthgrains Baking Cos., Inc., 140 F.3d 797 (8th 
Cir. 1998).; State filed: Arkansas; Year: 1998; Outcome: Court held 
that back pay liability under WARN is calculated based on working 
days.

Case: Burns v. Stone Forest Indus., Inc., 147 F.3d 1182 (9th Cir. Or. 
1998).; State filed: Oregon; Year: 1998; Outcome: Back pay under WARN 
is limited to the days that would have been worked during the period 
(up to 60 days) for which no notice was given.

Case: Cain v. Inacom Corp., No. ADV. 00-1724, 2001 WL 1819997 (Bankr. 
D. Del. Sept. 26, 2001).; State filed: Delaware; Year: 2001; Outcome: 
Corporation's motion to dismiss was denied because there was a question 
of whether at the time of the layoffs it was a liquidating fiduciary or 
"engaged in business"--if the latter, it would be considered an 
employer under WARN.

Case: Calvert v. Ladish Co. Inc., LR-C-97-577 (E.D. Ark. 1999).[A]; 
State filed: Arkansas; Year: 1999; Outcome: Employers' motion to 
dismiss was denied because seller was not relieved of obligation to 
provide notice where the seller merely transferred assets to a buyer 
and not its employees.

Case: Calvert v. Ladish Co. Inc., LR-C-97-577 (E.D. Ark. Mar. 23, 
1998).[A]; State filed: Arkansas; Year: 1998; Outcome: Employees who 
were laid off as a result of a plant closing and not rehired after sale 
of company suffered an employment loss; those rehired after sale did 
not.

Case: Castro v. Chicago Housing Auth., No. 99 C 6910, 2001 WL 709445 
(N.D. Ill. June 25, 2001).; State filed: Illinois; Year: 2001; Outcome: 
Factual questions to be resolved at trial were whether a single site 
existed for WARN purposes and whether employer, a quasipublic entity, 
is a commercial enterprise and thus subject to WARN requirements.

Case: Castro v. Chicago Housing Auth., No. 99 C 6910, 2002 WL 31324053 
(N.D. Ill. Oct. 17, 2002).; State filed: Illinois; Year: 2002; Outcome: 
Court found that a group of layoffs occurred at a single site.

Case: Childress v. Darby Lumber, Inc., 126 F. Supp. 2d. 1310 (D. Mont. 
2001).; State filed: Montana; Year: 2001; Outcome: WARN obligations 
applied because parent and wholly owned subsidiary were a single 
business enterprise that employed over 100 employees. Employer did not 
qualify for good faith, unforeseen business circumstance exception, or 
faltering company exception. Employer's notice was inadequate because 
it did not state why the notice was for a shortened time period.

Case: Ciarlante v. Brown & Williamson Tobacco Corp., 143 F.3d 139 (3rd 
Cir. 1998).; State filed: Pennsylvania; Year: 1998; Outcome: Court 
reversed ruling for plaintiffs because it was not clear whether 
plaintiffs, traveling salesmen, were at a "single site of employment." 
The case was remanded to district court.

Case: Corbo v. Tompkins Rubber Co., 146 Lab. Cas. (CCH) P 10071, 2002 
WL 1969653 (E.D. Pa. 2002).; State filed: Pennsylvania; Year: 2002; 
Outcome: District court dismissed plaintiff's case because employer did 
not have more than 100 employees, which is the threshold for WARN 
coverage.

Case: DePalma v. Realty IQ Corp., No. 01 CIV 446 RMB, 2002 WL 461647 
(S.D.N.Y. Mar. 25, 2002).; State filed: New York; Year: 2002; Outcome: 
Defendant's motion to dismiss on the grounds that employees had waived 
their WARN claims was denied; questions remained about the whether 
signed releases were voluntary, and case will proceed toward trial.

Case: Dingle v. Union City Chair Co., 134 F. Supp. 2d 441 (W.D. Pa. 
2000).; State filed: Pennsylvania; Year: 2000; Outcome: Court found 
that fewer than 50 employees suffered an employment loss; thus WARN 
notice requirement was not triggered.

Case: Gomez v. Am. Garment Finishers Corp., No. EP-99-CA-260-DB, 2000 
WL 33348730 (W.D. Tex. Oct. 12, 2000).; State filed: Texas; Year: 2000; 
Outcome: Employees previously laid off could be affected employees 
entitled to notice subsequently if they had a reasonable expectation of 
recall.

Case: Graphic Communs. Int'l Union, Local 31-N v. Quebecor Printing 
Providence Inc., F. Supp. 2d, (D. Md. Apr. 25, 2002).; State filed: 
Maryland; Year: 2002; Outcome: Employer was entitled to use "good 
faith" defense even though it did not initially raise this defense.

Case: Graphic Communs. Int'l Union, Local 31-N v. Quebecor Printing 
(USA) Corp., 252 F.3d 296 (4th Cir. 2001).; State filed: Maryland; 
Year: 2001; Outcome: Notice was required when the plant was shut down 
even though workers were previously laid off and had received notice of 
temporary layoff. When shutdown occurred, employees suffered an 
"employment loss," triggering new notice.

Case: Halkias v. General Dynamics Corp., 137 F.3d 333 (5th Cir. 1998).; 
State filed: Texas; Year: 1998; Outcome: Court found that an unforeseen 
business circumstance relieved the employer from providing notice where 
there was not a foreseeable probability that a significant government 
contract would be cancelled.

Case: Hollowell v. Orleans Regional Hosp. LLC, 217 F.3d 379 (5th Cir. 
2000).; State filed: Louisiana; Year: 2000; Outcome: Court affirmed 
district court's decision in favor of plaintiffs, finding that two 
groups of workers laid-off over a 90 day period were appropriately 
combined for purposes of establishing that at least 50 workers suffered 
an employment loss, thus triggering the WARN notice requirements.

Case: Hotel Emples. and Rest. Emples. Int'l Union Local 54 v. Elsinore 
Shore Associates, 173 F.3d 175 (3rd Cir. 1999).; State filed: New 
Jersey; Year: 1999; Outcome: Court affirmed district court's decision 
in favor of employer--failure to provide notice was excused by 
unforeseeable business circumstance exception where government ordered 
the shutdown of a casino.

Case: Hotel Emples. & Rest. Emples. Int'l Union v. Paroc, Inc., No. 99 
Civ. 3078 MBM, 2000 WL 204537 (S.D.N.Y. Feb. 2, 2000).; State filed: 
New York; Year: 2000; Outcome: Unforeseeable business exception did not 
apply because employer could not show that successful completion of 
negotiations was not reasonably foreseeable as of the date that closure 
notices would have been required.

Case: In re Arrow Transp. Co. of Delaware, 224 B.R. 457 (Bankr. D. 
Or.1998).; State filed: Oregon; Year: 1998; Outcome: Bankruptcy court 
found that the debtor/employer was a "prevailing party" under the WARN 
Act and that it is entitled to an award of attorneys' fees incurred in 
objecting to that claim.

Case: In re Beverage Enters., Inc., 225 B.R. 111 (Bankr. E.D. Pa. 
1998).; State filed: Pennsylvania; Year: 1998; Outcome: WARN Act claims 
arising or earned as a result of events, which take place post-petition 
are entitled to administrative claim status under the Bankruptcy Code.

Case: In re Fidelity Bond & Mortgage Co., No. 99-18427 DAS, 2000 WL 
1218358 (Bankr. E.D. Pa. (Aug. 22, 2000)).; State filed: Pennsylvania; 
Year: 2000; Outcome: Layoffs at different sites in Philadelphia did not 
occur at a "single site," and insufficient evidence was presented that 
50 employees were laid off at any one site.

Case: In re Jamesway Corp., 235 B.R. 329 (Bankr. S.D.N.Y. 1999).; State 
filed: New York; Year: 1999; Outcome: Court found a violation of the 
WARN Act, and the reliance on unforeseeable business circumstance, 
faltering company, and good faith exceptions were not applicable; WARN 
claims for back pay do not receive priority in bankruptcy.

Case: In re Jamesway Corp., 242 B.R. 130 (Bankr. S.D.N.Y. 1999).; State 
filed: New York; Year: 1999; Outcome: Claim for attorneys' fees awarded 
to a group of workers who brought successful WARN case were given 
priority in bankruptcy.

Case: In re Kitty Hawk, Inc., 255 B.R. 428 (Bankr. N.D. Tex. 2000).; 
State filed: Texas; Year: 2000; Outcome: WARN claims are not 
administrative claims receiving high priority against a bankrupt 
debtor; WARN claims are treated as wages or salaries--a "third 
priority" claim.

Case: In re United Healthcare Sys., Inc., 200 F.3d 170 (3rd Cir. 
1999).; State filed: New Jersey; Year: 1999; Outcome: Court of appeals 
reversed lower court ruling for plaintiffs; Court held that a bankrupt 
company winding up its affairs was not an "employer" required to give 
WARN notice.

Case: International Assoc. of Machinists and Aerospace Workers v. 
Compania Mexicana de Aviacion, S.A. de C.V., 199 F.3d 796 (5th Cir. 
2000).; State filed: Texas; Year: 2000; Outcome: Appeals court affirmed 
lower court's decision that employees' release of rights constituted a 
waiver, and the court held that the release does not have to 
specifically mention WARN.

Case: International Oil, Chem. & Atomic Workers, Local 7-517 v. The 
Uno-Ven Co., 170 F.3d 779 (7th Cir. 1999).; State filed: Illinois; 
Year: 1999; Outcome: The appeals court affirmed a lower court decision 
that the laid-off workers who were rehired after the sale of a company 
did not suffer an employment loss and thus not entitled to notice.

Case: International Union, Oil, Chem. & Atomic Workers, Local 7-517 v. 
Uno-Ven Co., No. 97 C 2663, 1998 WL 341617 (N.D. Ill. June 23, 1998).; 
State filed: Illinois; Year: 1998; Outcome: The laid-off workers who 
were rehired after sale of company did not suffer an employment loss.

Case: Joe v. First Bank Sys., Inc., 202 F.3d 1067 (8th Cir. 2000).; 
State filed: Nebraska; Year: 2000; Outcome: The appeals court affirmed 
a lower court decision finding that one employee waived his WARN Act 
notice, and another, who did not sign the waiver, received a defective 
notice (no likely date of when the layoff will occur or the date of 
separation).

Case: Johnson v. Telespectrum Worldwide, Inc., 29 Fed. Appx. 76, 2002 
WL 54693 (3rd Cir. 2002) 145 Lab. Cas. (CCH) P 11228 (NO. 01-1985).; 
State filed: Delaware; Year: 2002; Outcome: The court found that the 
plaintiffs failed to establish that at least 50 employees suffered an 
employment loss, noting that employees who quit voluntarily are not 
considered to have suffered an employment loss for meeting the 
threshold.

Case: Johnson v. Telespectrum Worldwide, Inc., 61 F. Supp. 2d 116 (D. 
Del. 1999).; State filed: Delaware; Year: 1999; Outcome: Court declined 
to decide the case without a trial, finding that issues of fact 
remained concerning whether the requisite number of layoffs occurred to 
trigger WARN notice requirements and whether an offer to transfer 
workers relieved the employer of the obligation to provide workers 
notice; case proceeded toward trial.

Case: Kelly v. Sabretech Inc., 106 F. Supp. 2d 1283 (S.D. Fla. 1999).; 
State filed: Florida; Year: 1999; Outcome: Court held that back pay 
damages are to be based on work days, not calendar days.

Case: Kildea v. Electro-Wire Prods., Inc., 144 F.3d 400 (6th Cir. 
1998).; State filed: Michigan; Year: 1998; Outcome: Laid-off employees 
who had a reasonable expectation of recall were "affected employees" 
entitled to notice when the plant announces a permanent shutdown. 
Employer was entitled to good faith defense where it interpreted the 
statute reasonably and otherwise complied with requirements.

Case: Kildea v. Electro-Wire Prods., Inc., 60 F. Supp. 2d 710 (E.D. 
Mich. 1999).; State filed: Michigan; Year: 1999; Outcome: Despite a 
finding of a violation of WARN by the circuit court, on remand, the 
district court reduced the amount of damages to zero based on a finding 
of good faith and did not award attorney's fees.

Case: Kirby v. Cyprus AmaxMinerals Co., 203 F. 3d 835 (10[TH] Cir. 
2000); State filed: New Mexico; Year: 2000; Outcome: Plaintiffs sought 
relief for WARN violation from the successor company and not the 
companies that had terminated the employees without notice. Since the 
defendant was not the employer at the time, court found that the 
employer was not liable.

Case: Local 1239, Int'l Bhd. of Boilermakers, Iron Shipbuilders, 
Blacksmiths, Forgers and Helpers v. Allsteel, Inc., 9 F. Supp. 2d 901 
(N.D. Ill. 1998).; State filed: Illinois; Year: 1998; Outcome: 
Following a finding of WARN Act violation, court concluded that 
employer was liable for back pay only for days worked during violation 
period. Alleged knowledge by employees that plant would close did not 
excuse employer from complying with WARN.

Case: Local 1239, Int'l Bhd. of Boilermakers, Iron Shipbuilders, 
Blacksmiths, Forgers and Helpers v. Allsteel, Inc., No. 94 C 3552, 1998 
WL 808981 (N.D. Ill. 1998).; State filed: Illinois; Year: 1998; 
Outcome: Court found that where a layoff for which a WARN notice was 
provided was postponed, employees were entitled to additional notice 
referring back to the earlier notice.

Case: Local 819, Int'l Bhd. of Teamsters v. Textile Deliveries, Inc., 
No. 99CIV. 1726 (JGK), 2000 WL 1357494 (S.D.N.Y. Sept. 20, 2000).; 
State filed: New York; Year: 2000; Outcome: Court found that there was 
a genuine issue for trial as to whether employees, who were terminated 
and offered new employment, suffered a break in employment constituting 
an employment loss.

Case: Local Joint Exec. Bd. of Culinary Bartender Trust Fund v. Las 
Vegas Sands, Inc., 7 Fed. Appx. 753, 2001 WL 366784 (9th Cir. 2001) 
(NO. 98-17065, 98-17322).; State filed: Nevada; Year: 2001; Outcome: 
Back pay under WARN includes tips and holiday pay; this court reversed 
the lower court's denial of class certification as a "damages" class.

Case: Local Union No. 1992, Int'l Bhd. of Elec. Workers v. Okonite Co., 
189 F.3d 339 (3rd. Cir. 1999).; State filed: New Jersey; Year: 1999; 
Outcome: Reversing the district court's decision, Appeals court held 
that plaintiffs' waiver of WARN notice may have been valid because of 
ambiguous provisions of a collective bargaining agreement. The district 
court had found that the plaintiffs' waivers in exchange for severance 
benefits were invalid for lack of consideration because they were 
entitled to those benefits under the agreement without signing the 
waiver. Case was remanded to district court for further proceedings.

Case: Local Union No. 1992, Int'l Bhd. of Elec. Workers v. Okonite Co., 
34 F. Supp. 2d 230 (D.N.J. 1998).; State filed: New Jersey; Year: 1998; 
Outcome: The district court reduced the attorneys' fees awarded to a 
Union, which had brought a successful WARN action.

Case: Michigan Regional Council of Carpenters v. Holcroft L.L.C., 195 
F. Supp. 2d 908 (E.D. Mich. 2002).; State filed: Michigan; Year: 2002; 
Outcome: On motion for reconsideration, the court reversed an earlier 
decision that fewer than 50 employees suffered an employment loss, 
finding several questions of fact, such as whether certain laid off 
employees had a reasonable expectation of recall.

Case: New England Health Care Emples. Union, District 1199 S.E.I.U. v. 
Fall River Nursing Home Inc., 14 I.E.R. Cas. (BNA) 400, 1998 WL 518188 
(D. Mass 1998).; State filed: Massachusetts; Year: 1998; Outcome: Court 
found that issues of fact were present concerning the applicability of 
the WARN Act's strike exemption; shutdown of a health care facility 
resulting from a strike notice would constitute a strike under WARN 
unless the notice were rescinded in a timely way. Case proceeded toward 
trial.

Case: North Star Steel Co. v. Thomas, 515 U.S. 29 (1995).; State filed: 
Pennsylvania; Year: 1995; Outcome: Supreme Court resolved a split in 
the circuits and held that in the absence of a statute of limitations 
in the WARN Act, federal courts should look to analogous state law, not 
federal law, to determine the time period for filing an action under 
WARN.

Case: Oil, Chem. and Atomic Workers v. RMI Titanium, 199 F.3d 881 (6th 
Cir. 2000).; State filed: Ohio; Year: 2000; Outcome: Three employees 
who were working on a special project and terminated could not be 
aggregated for purposes of meeting threshold number of layoffs in 90-
day period, since they were laid off for separate and distinct reasons. 
No reduction in force occurred when temporarily laid-off employees were 
again laid off, but replaced by employees returning from voluntary 
layoff status, and thus not counted toward the threshold criteria.

Case: Paper, Allied-Indus., Chem. & Energy Workers, Int'l Union et al. 
v. Sherman Lumber Co., 2000 U.S. Dist. LEXIS 10450 (D. Me. July 11, 
2000).; State filed: Maine; Year: 2000; Outcome: Magistrate 
recommendation that WARN claim be denied because employer had fewer 
than 100 employees during the 12-month period preceding the snapshot 
date (the date that notice was to be given).

Case: Pearson v. Component Tech. Corp., 247 F.3d 471 (3d. Cir. 2001).; 
State filed: Pennsylvania; Year: 2001; Outcome: Court affirmed lower 
court finding that that employer's creditor was not liable for 
employer's failure to provide notice using the test contained in 
regulations for determining the employer.

Case: Pearson v. Component Tech. Corp., 80 F. Supp. 2d 510 (W.D. Pa. 
1999).; State filed: Pennsylvania; Year: 1999; Outcome: The creditor 
was not liable for employer's failure to provide notice.

Case: Pena v. Crowley Am. Transp., Inc., 172 F. Supp. 2d 321 (D. P.R. 
2001).; State filed: Puerto Rico; Year: 2001; Outcome: Plaintiff raised 
multiple claims, including one WARN allegation. Court found that only 
14 employees were laid off; therefore, the notice requirement was not 
triggered.

Case: Ramos Pena v. New P.R. Marine Mgmt., Inc., 84 F. Supp. 2d 239 (D. 
P.R. 1999).; State filed: Puerto Rico; Year: 1999; Outcome: Multiple 
count case, including WARN allegation; court found that layoffs did not 
occur at a single site (Ponce and San Juan); therefore, the threshold 
requirement was not met.

Case: Reyes v. Greater Texas Finishing Corp., 19 F. Supp. 2d 709 (W.D. 
Tex. 1998).; State filed: Texas; Year: 1998; Outcome: Court found that 
a factual issue remained about whether 50 employees suffered an 
employment loss. Thus, case could proceed toward trial.

Case: Roquet v. Arthur Anderson, LLP, No. 02 C 2689, 2002 WL 1900768 
(N.D. Ill. Aug. 16, 2002).; State filed: Illinois; Year: 2002; Outcome: 
Court held that part-time employees can experience an employment loss 
and may bring suit against employer for failing to provide 60 day's 
notice of mass layoff.

Case: Snider v. Commer. Fin. Servs., Inc., 288 B.R. 890 (N.D. Okla. 
2002).; State filed: Oklahoma; Year: 2002; Outcome: Court held that 
employer did not establish unforeseen business circumstance defense for 
failing to provide timely notice, but that the notice given for the 
shortened time period contained the required information.

Case: Teamsters Local 838 v. Laidlaw Transit, Inc., 156 F.3d 854 (8th 
Cir. 1998).; State filed: Montana; Year: 1998; Outcome: Court held that 
seasonal employees did not suffer an employment loss because they were 
laid off every year at the time of plant closing and had sufficient 
notice that they would not be recalled.

Case: Teamsters Nat'l Auto. Transporters Indus. Negotiating Comm. v. 
Hook Up, Inc., No. Civ. A. 7:02CV00035, 2002 WL 1066954 (W.D. Va. May 
23, 2002).; State filed: Virginia; Year: 2002; Outcome: Court dismissed 
plaintiff's claim for civil penalties ($500 per day, available only to 
local government).

Case: United Auto., Aerospace & Agric. Implement Workers of Am. Local 
157 v. OEM/Erie Westland, LLC, 203 F. Supp. 2d 825 (E.D. Mich. 2002).; 
State filed: Michigan; Year: 2002; Outcome: Employer's motion for 
summary judgment was denied because court found issue of fact--whether 
company exercised the requisite degree of control over the plant's 
operations to qualify as a "single employer.".

Case: United Food and Commer. Workers Union Local 751 v. Brown Group, 
Inc., 517 U.S. 544 (1996).; State filed: Montana; Year: 1996; Outcome: 
Unions have standing (legal authority) to sue on behalf of its members 
under WARN.

Case: United Mine Workers of Am. Int'l Union v. Martinka Coal Co., 
C.A., #1:96-CV-156 (Filed Jan. 5, 1998) (N.D. W.Va.).[A]; State filed: 
West Virginia; Year: 1998; Outcome: Court found that workers laid off 
in advance of plant closing were entitled to WARN notice.

Case: United Mine Workers of Am. Int'l Union v. Martinka Coal Co., 45 
F. Supp. 2d 521 (D. W.Va. 1999).; State filed: West Virginia; Year: 
1999; Outcome: The court found that the coal company had violated WARN 
with respect to 89 employees; the court addressed the issue of damages-
-overtime, benefits, and inactive employees.

Case: United Mine Workers of Am. v. Martinka Coal Co., 202 F.3d 717 
(4th Cir. 2000).; State filed: West Virginia; Year: 2000; Outcome: The 
appeals court affirmed a lower court decision in favor of the 
plaintiffs: When an affected employee's layoff date is earlier than the 
date of the plant shutdown, the affected employee is entitled to notice 
of the closing 60 days before the date of that employee's layoff.

Case: Watson et al. v. Michigan Indus. Holdings, et al., Civil No. 97-
76034-DT (E.D. Mich. October 13, 2000).[A]; State filed: Michigan; 
Year: 2000; Outcome: Court found that the unforeseeable business 
circumstances exception applied where the employer discontinued its 
operations due to unexpected failure of a customer to pay a bill.

Case: Watson v. Michigan Indus. Holdings, Inc., 311 F.3d 760 (6th Cir. 
2002).; State filed: Michigan; Year: 2002; Outcome: Appeals court 
affirmed district court's decision in favor of defendant based on 
unforeseeable business circumstances exception.

Case: Watts v. Marco Holdings, L.P., 13 I.E.R. Cas. (BNA) 1552, 1998 WL 
211770 (N.D. Miss. 1998).; State filed: Mississippi; Year: 1998; 
Outcome: Court found that the employer violated the WARN act, noting 
that unforeseen business circumstance exception could have reduced 
notice, but employer failed to give any notice and a brief statement of 
the basis for the reduction of the period. Court reduced liability by 
50 percent based on good faith exception.

Case: Wilson et al. v. Airtherm Prods., Inc., U.S. District Court 
#2:01-CV-00055-WRW, (unpublished opinion, September 10, 2001) (E.D. 
Ark. 2001).[A]; State filed: Arkansas; Year: 2001; Outcome: Court found 
WARN Act violation where workers were not transferred after sale of 
company but had to submit application for new employment.

[SOURCE: GUILD LAW CENTER, LEXIS, WESTLAW.]

Notes:

This table includes only WARN cases containing a detailed discussion of 
the WARN act provisions and does not include cases focused solely on 
procedural issues.

This table also includes the two cases decided by the U.S. Supreme 
Court which address the WARN Act, even though they were decided prior 
to 1998: North Star Steel Co. v. Thomas, 515 U.S. 29 (1995); United 
Food and Commercial Workers Union Local 751 v. Brown Group, Inc., 517 
U.S. 544 (1996).

[A] Most of the cases in this table are reported decisions or available 
through the Westlaw or Lexis legal databases; however, we have included 
some decisions that we became aware of through the Sugar Law Center 
Practitioner's Guide to Litigating the WARN Act.

[End of table]

[End of section]

Appendix IV: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Joan Mahagan (617) 788-0521 Kara Kramer (202) 512-5434:

Staff Acknowledgments:

Katharine Leavitt made significant contributions to this report, in all 
aspects of the work throughout the assignment. In addition, H. Brandon 
Haller, Christopher Moriarity, and Jerry Sandau assisted with the 
methodology, Richard Burkard provided legal support, and Patrick 
Dibattista assisted in the message and report development.

[End of section]

Related GAO Products:

Workforce Investment Act: Issues Related to Allocation Formulas for 
Youth, Adults, and Dislocated Workers. GAO-03-636. Washington, D.C.: 
April 25, 2003.

Workforce Investment Act: Better Guidance and Revised Funding Formula 
Would Enhance Dislocated Worker Program. GAO-02-274. Washington, D.C.: 
February 11, 2002.

Trade Adjustment Assistance: Trends, Outcomes, and Management Issues in 
Dislocated Worker Programs. GAO-01-59. Washington, D.C.: October 13, 
2000.

Dislocated Workers: Worker Adjustment and Retraining Notification Act 
Not Meeting Its Goals. GAO/HRD-93-18. Washington, D.C.: February 23, 
1993.

Advance Notice: Public and Private Sector Policy and Practice. GAO/T-
HRD-91-19. Washington, D.C.: April 18, 1991.

Dislocated Workers: Labor-Management Committees Enhance Reemployment 
Assistance. GAO/HRD-90-3. Washington, D.C.: November 21, 1989.

Plant Closings: Evaluation of Cost Estimate of Proposed Advance Notice 
Requirement. GAO/HRD-88-71. Washington, D.C.: March 3, 1988.

Plant Closings: Limited Advance Notice and Assistance Provided 
Dislocated Workers. GAO/HRD-87-105. Washington, D.C.: July 17, 1987.

Plant Closings: Information on Advance Notice and Assistance to 
Dislocated Workers. GAO/HRD-87-86BR. Washington, D.C.: April 17, 1987.

Dislocated Workers: Exemplary Local Projects Under the Job Training 
Partnership Act. GAO/HRD-87-70BR. Washington, D.C.: April 8, 1987.

Dislocated Workers: Local Programs and Outcomes Under the Job Training 
Partnership Act. GAO/HRD-87-41. Washington, D.C.: March 5, 1987.

Dislocated Workers: Extent of Business Closures, Layoffs, and the 
Public and Private Response. GAO/HRD-86-11BR. Washington, D.C.: July 1, 
1986.

FOOTNOTES

[1] The Bureau of Labor Statistics defines an extended mass layoff as 
an employment loss, at a job site, that affects at least 50 people who 
file a claim with Unemployment Insurance over a 5-week period and are 
involved in a layoff that lasts at least 31 days. The data collected by 
the Bureau do not directly measure WARN criteria. (See app. I.)

[2] Pub. L. No. 100-379 (1988); 29 U.S.C. 2101-2109.

[3] BLS is an agency within the Department of Labor. The MLS program, 
run by BLS, collects data on mass layoff actions that result in workers 
being separated from their jobs.

[4] We asked the state dislocated worker units to provide us with 
notices because they are the only recipient of all WARN notices for the 
entire state and because no data are collected on WARN compliance. We 
use these notices as a proxy measure for employers notifying all 
relevant parties. 

[5] These numbers are an estimate from the available data. Like any 
data set, these estimates include limitations. See app. I for further 
explanation.

[6] Notices sent to the state officials should include the expected 
date of first separation, address of employment site, name and contact 
information, number of affected workers, and if the notice is sent less 
than 60 days in advance, an exception should be listed with a brief 
statement of why the exception is applicable.

[7] We did not formally interview state officials in Nevada, but they 
provided all WARN notices and other relevant information.

[8] From the 50 employers, we interviewed 23. See app. I for further 
explanation.

[9] The employer must also determine whether there has been a reduction 
in hours of work of more than 50 percent during each month of any 6-
month period.

[10] The 90-day period applies unless employers demonstrate in court 
that the layoffs are the result of separate and distinct actions and 
causes and are not an attempt to evade WARN's requirements.

[11] Cases are initially filed with one of the U.S. district courts 
located in the 50 states, District of Columbia, or the U.S. 
Territories. Each state has at least one district court. A decision of 
the district court may be appealed to 1 of the 13 U.S. courts of 
appeal, also referred to as circuit courts. Parties may request review 
of circuit court decisions by the U.S. Supreme Court, but the Supreme 
Court accepts only a small percentage of such requests.

[12] Courts can also award up to $500 per day, for up to 60 days, to 
local governments.

[13] The Department of Labor states that neither the act nor the 
regulations recognize the concept of pay in lieu of notice and that 
failure to give notice does a significant disservice to workers and 
undermines other services that are part of the purpose of the WARN Act. 
However, the statute does specifically provide that the amount for 
which the employer is liable must be reduced by any wages paid during 
the period of violation. 29 U.S.C. 2104 (a)(2)(A). 

[14] Neither the act nor the regulations address waivers under WARN; 
however, the courts have upheld employees' waiver of WARN Act claims. 
See Joe v. First Bank System, Inc., 202 F.3d 1067 (8th Cir. 2000). 

[15] A previous GAO report found that researchers and opponents of WARN 
expressed concerns about the cost of providing notice, but parties we 
spoke with did not express this as a concern. See U.S. General 
Accounting Office, Dislocated Workers: Worker Adjustment and Retraining 
Notification Act Not Meeting Its Goals, GAO/HRD-93-18 (Washington, 
D.C.: Feb. 23, 1993). Employers' estimates of costs of providing the 
notice ranged from $0 to $5,800, with an average cost of less than 
$1,300. This range excludes costs from lawsuits related to WARN.

[16] This estimate includes those employers that provided notice after 
the layoff or plant closure and those employers that used exceptions to 
account for less than 60 days notice.

[17] This estimate includes those employers that used exceptions to 
account for less than 60 days notice. The most commonly used exception 
was unforeseeable business circumstance.

[18] See U.S. General Accounting Office, Dislocated Workers: Worker 
Adjustment and Retraining Notification Act Not Meeting Its Goals, GAO/
HRD-93-18 (Washington, D.C.: Feb. 23, 1993).

[19] Callers also included unions, legislative staff, and others.

[20] North Star Steel Co. v. Thomas, 515 U.S. 29 (1995).

[21] Employment loss is an employment termination, other than a 
discharge for cause, voluntary departure, or retirement, a layoff 
exceeding 6 months, or a reduction in hours of work for individual 
employees of more than 50 percent during each month of any 6-month 
period.

[22] District court judges are required to follow decisions of the 
circuit court for the region in which the district court sits. For 
example, a district court Judge in Maryland is bound by the decisions 
of the Court of Appeals for the 4TH Circuit, which is located in 
Richmond, Virginia, but includes all the districts in Maryland, 
Virginia, North Carolina, South Carolina, and West Virginia. District 
courts may look to other circuit courts for guidance if their regional 
circuit court has not addressed a particular issue. District court 
judges are not bound by other district court decisions.

[23] Because these questions were similar to those answered in our 1993 
report on WARN, we replicated much of the methodology from the earlier 
report. See U.S. General Accounting Office, Dislocated Workers: Worker 
Adjustment and Retraining Notification Act Not Meeting Its Goals, GAO/
HRD-93-18 (Washington, D.C.: Feb. 23, 1993).

[24] BLS is an agency within the Department of Labor. The MLS program, 
run by BLS, collects data on mass layoff actions that result in workers 
being separated from their jobs.

[25] We asked the state dislocated worker units to provide us with 
notices because they are the only recipient of all WARN notices for the 
entire state. We used these notices as a proxy measure for employers 
notifying all relevant parties. 

[26] These numbers are only an estimate from the available data. Like 
any data set, they include sampling errors and other data limitations. 

[27] Notices sent to the state officials should include: the date of 
first separation, address of employment site, name and contact 
information, number of affected workers, and if the notice is sent less 
than 60 days in advance, an exception should be listed with a brief 
statement of why the exception is applicable.

[28] An example of the difference between WARN and MLS would be events 
that affected at least 50 workers during a 90-day period (appearing 
subject to WARN requirements) that prompted fewer than 50 dislocated 
workers to submit claims for Unemployment Insurance during a 5-week 
period. This event would not meet MLS criteria but appears subject to 
WARN. Another example of the difference would be an employer that 
mistakenly reported the reason for the extended mass layoff as one that 
was covered by WARN when the correct reason would not have been covered 
by WARN. This event would meet MLS criteria and would appear subject to 
WARN but should not be counted as subject to WARN. 

[29] BLS deleted events from its list when factors of the extended mass 
layoff were outside the scope of WARN. These included layoffs at 
establishments where (1) the employment level was not provided, (2) the 
employment level was less than 100, (3) the ownership was not private, 
or (4) the layoff did not affect at least one-third of the workforce.

[30] BLS deleted events from its list when the reason for the extended 
mass layoff was outside the scope of WARN. These included events due to 
(1) seasonal layoffs, (2) labor disputes, (3) leave, (4) weather, (5) 
natural disasters, or (6) completed contracts.

[31] BLS defines an extended mass layoff as an employment loss at a job 
site of at least 50 people who file claims with Unemployment Insurance 
over a 5-week period and the employer indicates that the layoff of at 
least 50 people would last at least 31 days.

[32] We asked the states to send us records of notices that they 
determined to be WARN notices provided for layoffs and closures that 
occurred during calendar year 2001. However, the following caveats 
apply:

Arizona, Georgia, and Tennessee provided both WARN and non-WARN notices 
that they received because their data systems did not distinguish 
between the two; we included all the notices these three states sent to 
us for both the matching procedure and the content analysis. The 
inclusion of some potentially non-WARN notices does not affect the 
matching procedure result, which focuses on compliance, because these 
notices would be counted as "overcompliance" (encouraged by the law) 
and not noncompliance (prohibited). 

Kentucky, Michigan, Minnesota, New Mexico, New York, and North Carolina 
provided records of notices received between July 2000 and December 
2001 because their data systems record the date of the notice, not the 
layoff or closure. The inclusion of some notices for events in 2000 
does not affect the matching procedure result, which focuses on 
compliance, because these notices would be counted as "overcompliance" 
(encouraged by the law) not noncompliance (prohibited). 

Pennsylvania reported that it was unable to provide us with data for 
layoffs and closures occurring in July 2001 due to data systems 
conversion. 

Washington, D.C. could not provide us with any notices for 2001, but 
according to BLS, there were no WARN events in D.C. for the year 2001.

[33] Sampling errors of estimated percentages from this sample were 4 
percent or less. The sampling error for the estimated average advance 
notice is between 3 and 4 days.

[34] We did not formally interview state officials in Nevada, but they 
provided all WARN notices and other relevant information.

[35] The structured interview questions were based on the survey of 
employers conducted for the 1993 report.

[36] Through the Plant Closing Project, the Guild Law Center publishes 
a WARN Act Practitioner's Guide and WARN Act Case Law Updates and 
Summaries.

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General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.

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