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No time for WARN notice? You can continue paying instead

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in Employment Law,Human Resources

Congress passed the Worker Adjustment and Retraining Notification Act (WARN) to give employees time to adjust to an imminent plant shutdown and prepare for unemployment. Covered employers are required to give employees 60 days’ notice before shutting down operations. If there’s no notice, employees can sue to recover unpaid wages and other benefits for each day short of 60 that the company delayed the notification.

Of course, there are times an employer might want to delay notification because it doesn’t want the news to interfere with other aspects of its business. For example, companies negotiating for the best terms on a new location might want to keep the present location if the deal falls through.

Good news: The 4th Circuit Court of Appeals has ruled that not giving WARN notice is fine—as long as the company continues to pay the affected employees for the duration of the 60-day period or until they get new jobs.

Recent case: Dunlop Sports Group Americas operated a golf ball factory employing 350 people until it ceased operations abruptly on Oct. 31. It gave employees absolutely no notice before the shutdown.

The company did, however, inform all employees in writing that it would continue to pay them full wages and provide benefits, just as though they were still working full time. The payments would continue for either 60 days or until employees “quit” and took other jobs.

Several employees sued, alleging that Dunlop violated the WARN Act by not giving them 60 days’ notice. But the 4th Circuit Court of Appeals rejected their claim. It reasoned that the employees got exactly what WARN entitled them to—namely, 60 days to adjust to the change and look for other employment while still receiving regular compensation. In fact, they got more, given that they didn’t actually have to work for those 60 days. (Long, et al., v. Dunlop Sports Group Americas, No. 06-2143, 4th Cir., 2007)

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