July 18, 20269 min readLayoffs and restructuring

Before You Announce the Layoff: What the WARN Act and the OWBPA Actually Require

A restructuring or reduction in force is one of the most consequential decisions an employer can make. It is also one of the most legally exposed, not because the decision itself is the problem, but because the steps around it are where employers consistently fall short. Two separate federal frameworks govern what an employer must do when a significant layoff or plant closing is on the table: the WARN Act and the Older Workers Benefit Protection Act. Each operates independently. Missing one does not excuse the other. And the one most employers have never heard of is often the one that creates the most exposure.

The federal WARN Act: what it requires

The Worker Adjustment and Retraining Notification Act has been federal law since 1988. Its core requirement is straightforward: covered employers must provide 60 calendar days of advance written notice before a qualifying layoff or plant closing.

Who it covers

The WARN Act applies to employers with 100 or more full-time employees, or 100 or more employees (full-time or part-time) who collectively work at least 4,000 hours per week, not counting overtime.

Employees who have worked fewer than six of the last twelve months, or work less than 20 hours per week, do not count toward the threshold and are generally not entitled to notice, though they should be reviewed individually to ensure that collectively they do not breach the 4,000 hours per week threshold mentioned above.

What triggers it

The WARN Act is triggered by two main events:

A plant closing is the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a site, that results in employment loss for 50 or more employees at that site during any 30-day period.

A mass layoff is a reduction in force that is not a plant closing but results in employment loss at a single site of employment for either 500 or more employees, or 50 to 499 employees if they represent at least 33% of the active workforce at that site, during any 30-day period.

The 90-day aggregation rule is worth knowing: if an employer conducts separate layoffs within a 90-day window that would not individually trigger WARN but would together, the employer must provide notice unless it can demonstrate each layoff was caused by separate and distinct circumstances.

Employees who have been with the company for less than 6 months, or who work less than 20 hours per week, are not included in the calculations used to determine whether a mass layoff has occurred.

Who receives the notice

Notice must go to each affected employee (or their representative, if covered by a collective bargaining agreement), the state's rapid response dislocated worker unit, and the chief elected official of the local government where the facility is located. In Florida, the relevant state agency is the Department of Commerce.

What counts as employment loss

This is where employers sometimes miss the mark. Under the WARN Act, employment loss includes:

Termination other than for cause, resignation, or retirement
A layoff exceeding six months
A reduction in hours of more than 51% in each month of any six-month period

For temporary plant closings, the 60-day notice requirement applies when 50 or more employees will experience one of the above. It also applies if any employee at the closing facility is being relocated to another location.

The exceptions

The WARN Act does include exceptions, but they are narrow and the burden is on the employer to establish them. The three most recognized are:

Faltering company: the employer was actively seeking capital or business that could have avoided the layoff, and giving notice would have undermined that effort. This applies only to plant closings, not mass layoffs.
Unforeseeable business circumstances: the layoff was caused by a sudden, dramatic, and unexpected circumstance outside the employer's control. This is not a catch-all for any unexpected business event.
Natural disaster: the layoff directly results from a flood, earthquake, drought, storm, tidal wave, or similar natural disaster.

When an exception applies, the employer must still give as much notice as practicable and include the reason for the shortened notice in the written notification.

The consequences of getting it wrong

Employers who violate the WARN Act are liable to each affected employee for back pay and benefits for each day of the violation, up to 60 days. Employers may also face civil penalties of up to $500 per day of violation for failure to notify local government. There is no federal agency that enforces the WARN Act; employees must bring a civil action in federal district court.

Florida employers and the federal WARN Act

Florida does not have its own state-level WARN Act. Florida employers are covered solely by the federal law, with the same 100-employee threshold and the same triggering events described above.

This is worth stating plainly because a number of other states, including New York, California, New Jersey, and Illinois, have enacted their own mini-WARN laws with lower employee thresholds and sometimes longer notice periods. Florida is not among them. An employer operating only in Florida does not face a separate state notice obligation layered on top of the federal one.

What Florida employers do need to confirm is the correct state routing for notice. WARN notices directed to the state go to Florida's rapid response unit within the Department of Commerce, and the chief elected official of the affected local government must also receive notice.

The OWBPA: the layer most employers miss

The Older Workers Benefit Protection Act of 1990 amended the Age Discrimination in Employment Act. Its purpose is to ensure that employees aged 40 and over who are asked to waive their right to sue for age discrimination actually do so knowingly and voluntarily.

This matters in a layoff context because employers frequently ask departing employees to sign a separation agreement and release of claims in exchange for severance. When those employees are 40 or older, the OWBPA imposes specific requirements on that waiver that most standard severance templates do not include.

What the OWBPA requires for individual waivers

For any employee age 40 or older signing a release of age discrimination claims, the waiver must:

Be written in plain language the employee can understand
Specifically reference the Age Discrimination in Employment Act
Not waive rights or claims that arise after the date of signing
Be in exchange for something of value beyond what the employee is already entitled to
Advise the employee in writing to consult with an attorney before signing
Provide the employee at least 21 days to consider the agreement
Allow the employee to revoke the agreement within 7 days of signing, during which time it is not effective

What changes in a group termination program

When a reduction in force involves severance offered to more than one employee age 40 or older, the OWBPA imposes an additional requirement that is frequently overlooked. The employer must provide each affected employee with written disclosure of the following:

The decisional unit: the group of employees who were considered for the layoff
Eligibility factors and selection criteria used to make selections
Job titles and ages of all individuals in the decisional unit, both those selected and those not selected
Notification date and termination date for the layoff

This disclosure exists so that older employees can assess whether age played a role in the selection. Without it, even a facially compliant waiver may be unenforceable.

The consideration period also extends from 21 to 45 days when a group program is involved.

Why this matters in practice

The OWBPA is not triggered only by large layoffs. A company with 60 employees that lays off five people, three of whom are over 40 and receive severance in exchange for a release, is in OWBPA territory. If the severance agreement does not include the ADEA reference, the 45-day consideration period, the 7-day revocation window, and the group disclosure, the waivers are legally deficient.

A deficient waiver does not automatically void the severance. But it means the employee retains the right to bring an age discrimination claim as if no release had been signed, while the employer may have already paid out the severance. The waiver was worth nothing.

Putting it together

When a restructuring is being planned, the compliance analysis should run in parallel with the business planning, not after the announcement is drafted.

The questions to work through before the decision is finalized:

What is the total headcount at the affected site or business unit, and does it meet the federal WARN threshold of 100 employees?
Does the employer operate in a state with a mini-WARN law that carries a lower threshold?
How many employees will lose their jobs in the relevant time window, and does the number and percentage reach a triggering event?
Is the timeline feasible for 60 days of notice, or does the employer believe an exception applies, and is there documentation to support that position?
Of the employees being separated, how many are age 40 or older, and will any of them receive severance conditioned on a release of claims?
If group OWBPA requirements apply, has the decisional unit been defined, and is the disclosure ready?

The WARN Act and OWBPA operate independently of each other. A company can be WARN-compliant and still deliver an unenforceable severance waiver to every employee over 40. Both analyses need to run on their own track.

This post is general HR and compliance information, not legal advice. Requirements vary based on employer size, location, and circumstances. Consult qualified legal counsel when structuring a reduction in force.

References

WARN Act

Older Workers Benefit Protection Act

Join the list

Get the next update in your inbox.

Monthly federal and state HR & compliance notes, plus early access to Groundwork.