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Employment Law General Counsel and In House Counsel Law Firm Management Legislation Regulation

The 'Faltering Company' and 'Unforeseen Business Circumstances' Exceptions Under The WARN Act

Traps for the Unwary or Lifesavers for the Unlucky?

The WARN Act contains several affirmative defenses that provide employers with a complete defense to liability under the statute when a company's exigent condition forces an immediate cessation of operations. This article identifies the key features (including the benefits and drawbacks) of each.


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As most informed employers and their counsel know, the federal WARN Act requires companies that maintain a facility of 100 or more full-time employees to provide no less than 60 days’ written notice to employees affected by a mass layoff or facility closure. Failure to provide such notice creates significant exposure — back pay and benefits for each employee for each day that the notice is not provided, in addition to possible civil penalties. Moreover, because the statutes necessarily involve a large number of similarly situated employees, judges often find WARN claims suitable for class certification.

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