If your organization is weighing a plant closing or employee layoff, determine early whether you're required to give employees notice under the Worker Adjustment and Retraining Notification (WARN) Act. Courts won't be swayed by your organization's claim that it didn't know its obligations. And they won't hesitate to slap your firm with liability for back pay to employees.
One less-noticed point: Check your state law for more stringent rules. Some states' laws, as in this case, require smaller organizations to give layoff notices.
Recent case: A lumber and construction company laid off about 90 percent of its workers with only one day's notice. Several weeks later, it dismissed the remaining employees and shut down operations completely. Employees sued, alleging the company violated the WARN Act. They sought pay and benefits owed them during the notice period.
The company argued that it qualified for the WARN Act's "good-faith" exception: An employer must prove that it intended to comply, and reasonably believed that it did comply. But the only evidence the company offered to support the exception was that it was unfamiliar with WARN Act requirements and did not want to close the business.
A lower court awarded employees more than $60,000 for lost wages and benefits plus more than $123,000 in attorney fees. A federal appeals court upheld the ruling, saying ignorance of the law does not meet the "good-faith" exception. (Childress v. Darby Lumber Inc., No. 01-35764, 9th Cir., 2004)