Fourth Circuit Provides Guidance on Counting Employees for Purposes of WARN Act Coverage
During the past year, many employers have had to reduce or shut down operations. In some instances, this has triggered an obligation under the federal Worker Adjustment and Retraining Notification Act to provide 60-days’ notice to employees experiencing job loss or reduction in hours. This past month, the U.S. Court of Appeals for the Fourth Circuit provided guidance on which employees must be counted for purposes of determining WARN Act coverage.
The WARN Act requires employers with 100 or more full-time employees to provide at least 60 calendar days advance written notice of a worksite closing affecting 50 or more employees, or a mass layoff affecting at least 50 employees and 1/3 of the worksite’s total workforce or 500 or more employees at the single site of employment during any 90-day period. Workers who have less than 6 months on the job and workers who work fewer than 20 hours per week are not counted towards the 100-employee threshold for triggering WARN Act coverage.
In Schmidt v. FCI Enterprises LLC, the employer abruptly shut down on October 5, 2018, and 130 employees lost their jobs. 22 employees sued for violation of the WARN Act, on the grounds that they did not receive the requisite 60-days’ notice. But, as the Fourth Circuit noted, whether an employer is covered by WARN is determined on the date that the notice should have been given, in this case on August 6, 2018. However, a significant number of employees – 48 – had been hired within the 6-month period prior to that date and should not have been included in the count towards the 100-employee threshold. Consequently, on August 6, 2018, fewer than 100 employees could be counted, and the employer was not covered by WARN.
This case is a good reminder to employers in the 100-employee range that it is worth spending the time to make sure that employees are correctly counted for WARN purposes. It may be beneficial to the employer if WARN Act notices are not required in the current economic circumstances.