WARN notices provide a heads up that staff will soon be unemployed, but the act that mandates them has some nuances. An attorney explains how the law works, common misconceptions about it and how it helps those about to lose their jobs.
As biopharma companies slash their workforces, some affected employees are learning about mass layoffs and plant closures from Worker Adjustment and Retraining Notification Act notices. But while these WARN notifications offer critical advance communication to those losing their jobs, there are some misconceptions about how the law works, an attorney told BioSpace.
One of the biggest misconceptions is that every layoff requires 60 days’ notice, said Stuart Miller, a partner at Lankenau & Miller LLP. The New York–based law firm specializes in protecting the rights of employees under the WARN Act.
“In reality, the WARN Act only applies to certain employers—generally those with 100 or more full-time employees—and only in specific situations, like a plant closing or a ‘mass layoff’ affecting a large percentage of the workforce,” Miller told BioSpace via email. “Smaller layoffs or those caused by sudden, unforeseeable circumstances may be exempt.”
Another big misconception, he noted, is that a WARN notice guarantees severance pay.
“It doesn’t,” Miller said. “The law requires advance notice (typically 60 days), but it doesn’t require severance unless it’s part of a union contract or company policy.”
Yet another significant misconception, according to Miller, is that if a business files for bankruptcy, former employees can’t recover what they’re owed under the WARN Act. If an employer doesn’t follow the law, workers may be entitled to up to 60 days of backpay and benefits, he noted.
“In fact, employees may still be able to recover wages and benefits from their former employer even in bankruptcy and these claims are generally given wage priority in the bankruptcy process,” Miller said. “This means that the WARN claim is paid prior to general unsecured claims.”
As an example, Miller noted that his firm recovered about $9 million from Akorn Pharmaceuticals on behalf of several former Akorn employees. In a February 2023 letter to staff, Akorn’s CEO said the business was filing for Chapter 7 bankruptcy and, effective immediately, laying off its entire workforce. The layoffs affected about 400 people, and state officials called for action against the company for violating Illinois’ WARN Act, which required 60 days’ advance notice, reported News Channel 20.
What Triggers WARN Notices—and 3 Notable Exceptions
The federal WARN Act applies to companies that employ either 1) at least 100 full-time employees who’ve worked at their job for six months or more or 2) at least 100 employees who work at least 4,000 combined hours per week.
For mass layoffs, a WARN notice is triggered if the layoff results in job loss at a single employment site during any 30-day period for either 1) at least 500 full-time employees or 2) 50–499 employees when they represent at least 33% of the active full-time workforce. For plant closures, a WARN notice is required for the permanent or temporary shutdown of a single employment site, or one or more facilities or operating units within a site, resulting in job loss for at least 50 full-time workers during any 30-day period.
Some states have stricter criteria. For example, California’s mini WARN law applies to companies that employed at least 75 employees in the preceding 12 months who worked for six or more of those 12 months. That represents a lower bar than the federal WARN law.
The federal law has three exceptions to its 60-day notice requirement. However, it also stipulates that in all cases, notification must be provided “as soon as it is practicable.” The exceptions are for:
- A “faltering company” that, before a plant closing, is actively seeking capital or business that, if obtained, would avoid or postpone the layoff or closure. It also must “reasonably” believe advance notification would hurt its ability to find the capital or business it needs to continue operating.
- An organization that couldn’t reasonably foresee business circumstances that led to a layoff or closing at the time the notice would have been required. For example, there may have been conditions outside of the company’s control, such as the unexpected cancellation of a major order.
- A layoff or plant closing that’s the direct result of a natural disaster such as a hurricane, flood or tornado.
How Companies Avoid WARN Notices
Some companies deliberately structure layoffs to avoid triggering WARN notice requirements, according to Miller.
“The WARN Act applies only when certain thresholds are met—like the number of employees laid off or the size of the employer—so by staging layoffs in smaller groups or spreading them out over time, companies can try to stay under those limits and avoid the 60-day notice obligation,” he explained. “This tactic helps employers reduce legal risk and limit potential financial exposure from having to pay back wages if they fail to give proper notice.”
Some states make this tactic more challenging. For example, Miller noted that in New Jersey, the state’s mini WARN law allows aggregated layoffs to trigger a WARN notice. According to that law, if multiple terminations at one establishment within a 90-day period are added together and the total number of affected employees exceeds what would trigger a notification, a notice is required. The only exception is if the company can show that the cause of each group’s layoffs is separate and distinct from the causes for the other group or groups.
The Importance of WARN Notices
While not all employees receive a WARN notice ahead of layoffs, there’s value for those who do and downsides for those who don’t, according to Miller. He said he’s met with thousands of laid-off workers who said such notification would have provided them the opportunity to prepare for job loss, whether by looking for another position or rearranging their finances. It also would have given them continued pay and benefits prior to their end date that would have helped them cover bills, rent and healthcare before unemployment started, Miller noted.
“Importantly,” he added, “many employees have told me that they actually turned down other employment because they were totally unaware that their jobs were at risk. Still others told me that they purchased a home near the facility, unaware that it was about to be shut down.
“In short: a WARN notice isn’t just a courtesy—it’s a legal safeguard designed to give workers time, money and resources to navigate an unexpected job loss.”
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