WARN Act: Overview, definition, and example
What is the WARN Act?
The WARN Act, or Worker Adjustment and Retraining Notification Act, is a U.S. federal law that requires certain employers to provide advance written notice to employees before mass layoffs or plant closings. The law applies to businesses with 100 or more full-time employees and is designed to give affected workers time to prepare for job loss, seek new employment, or pursue retraining opportunities.
Why is the WARN Act important?
The WARN Act is important because it helps protect workers and communities from the sudden economic impact of large-scale job losses. It also provides legal structure and accountability for employers undergoing major operational changes. Employers that fail to provide proper notice may be liable for back pay, benefits, and civil penalties. Many states have their own "mini-WARN" laws that may impose stricter requirements.
Understanding the WARN Act through an example
A manufacturing company decides to close one of its plants, laying off 200 employees. Under the WARN Act, the company must provide at least 60 days' written notice to affected employees, state workforce agencies, and local government officials. If the company fails to give timely notice, it may be required to pay the laid-off employees for the full 60-day period.
Example of how a WARN Act clause may appear in a contract
Here’s how a WARN Act clause may appear in an asset purchase or employment-related agreement:
"Each party agrees to comply with the Worker Adjustment and Retraining Notification Act (WARN Act) and any applicable state laws, including providing all required notices in the event of a plant closing or mass layoff affecting any employees covered by this Agreement."
Conclusion
The WARN Act ensures that employees are given fair notice before large-scale job losses, helping reduce the disruption caused by sudden layoffs or closures. It places a legal obligation on qualifying employers to plan ahead and communicate clearly, with serious consequences for non-compliance. Including a WARN Act clause in contracts helps reinforce awareness and assign responsibility in transactions or restructuring scenarios.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.