[Congressional Record Volume 140, Number 35 (Thursday, March 24, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 24, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
WORKER ADJUSTMENT AND RETRAINING NOTIFICATION AMENDMENTS ACT
Mr. CONRAD. Mr. President, I understand that S. 1969, the Worker
Adjustment and Retraining Notification Amendments Act introduced
earlier today by Senator Metzenbaum is at the desk.
The PRESIDING OFFICER. The Senator is correct.
Mr. CONRAD. I ask for its first reading.
The PRESIDING OFFICER. The clerk will read the bill by title.
The legislative clerk read as follows:
A bill (S. 1969) to amend the Worker Adjustment and
Retraining Notification Act to minimize the adverse effects
of employment dislocation, and for other purposes.
Mr. CONRAD. Mr. President, I now ask for its second reading.
Mr. DOMENICI. I object.
The PRESIDING OFFICER. Objection is heard. The bill will lay over and
will receive its second reading on the next legislative day.
the worker adjustment and retraining notification amendments act
Mr. METZENBAUM. Mr. President, today I rise to introduce the Worker
Adjustment and Retraining Notification Amendments Act. This legislation
amends our Federal plant closing notice law--also known as the WARN
Act--to address serious problems in coverage, compliance, and
enforcement.
This legislation is a companion to the Reemployment Act I introduced
on behalf of the Clinton administration earlier this week. Just as WARN
was originally enacted to ensure the success of our current Federal
dislocated worker program, we need to strengthen the WARN Act today to
ensure that the Reemployment Act can successfully serve our workforce
in the years to come.
I authored the original plant closing law and our current dislocated
worker program 6 years ago in an effort to minimize the devastating
impact of job losses on workers, their families, and their communities.
Of course, the best solution to this problem is to keep layoffs and
plant closings from occurring in the first place. We need a strong jobs
policy to keep our manufacturing base healthy, and to create and
preserve American jobs.
But invariably, there will be businesses that are forced to downsize
or shut down altogether, regardless of the state of the economy. We
cannot prevent businesses from making those decisions. But we can
require employers to give workers and communities fair warning of
layoffs, so they can plan for the transition, keep their dignity, and
start new lives. That's just what WARN was intended to do.
The link between an effective advance notice law, and a successful
dislocated worker program, is indisputable. Government agencies,
academics, businesses and workers all agree that when workers and local
communities receive advance notice, dislocated worker programs work
better, participation rates are substantially higher, more workers get
jobs sooner, and unemployment compensation claims are lower. In short,
everybody wins.
For example, the General Accounting Office has reported that:
far more workers seek assistance when help is available before or at
the time of job loss than when it is available only after the workers
have lost their jobs or benefits
Moreover, as the Clinton administration has recognized,
[e]xperience over the years has consistently shown that
early assistance, particularly assistance prior to actual
termination/layoff, reduces the period of unemployment
experienced by the workers.
By getting dislocated workers back to work faster, the Office of
Technology Assessment says, advance notice can save hundreds of
millions of dollars in unemployment compensation benefits each year.
Six years have passed since WARN's enactment, and it is time to see
how well the legislation has worked. First, let's remember what the
Act's opponents predicated during Senate debates in 1987 and 1988.
Senator Hatch repeatedly claimed that WARN would ``stifle job growth
and foster high rates of unemployment.'' He also asserted that it would
damage U.S. competitiveness abroad. In his view, ``mandatory notice
requirements hurt employees far more than they help employees.''
Similarly, Senator Thurmond stated that the Act would ``create
industrial paralysis.'' Senator Gramm asserted that WARN would
``produce fewer jobs, less growth, and lower wages.'' President Reagan
called it a ``ticking time bomb.''
Well, here we are 6 years later. Hundreds of thousands of American
workers have benefited from the WARN Act by receiving 60 days' advance
notice of layoffs. According to the U.S. General Accounting Office,
employers are now about twice as likely to give workers advance notice
of a layoff as they were before WARN was enacted. And guess what--the
Act has had no negative impact at all on employment or our
competitiveness.
The business community claimed that WARN Act compliance would cost
each employer $15,000 per year. In reality, this estimate was wildly
inflated. Last year, the GAO found that:
[d]espite predictions that providing advance notice to
workers would be costly, 61 percent of the employers who
filed notices reported that they experienced little or no
costs ($500 or less [per employer]).
The WARN Act's opponents also claimed that businesses would be denied
credit if they announced an imminent layoff or plant closing. It didn't
happen. They claimed there would be an onslaught of employee sabotage.
It didn't happen. They claimed businesses would lose customers. It
didn't happen. They claimed businesses would be forced into bankruptcy.
It didn't happen.
In short, western civilization has not collapsed, as some in the
business community predicated. The sun still comes up in the morning.
America's employers are still perfectly capable of running their
businesses as they see fit. And most importantly, hundreds of thousands
of workers, as well as their families and communities, have had the
benefit of 60 days' notice of layoffs and plant closings.
In fact, the GAO reports that roughly half of the employers that
provided advance notice believed workers were able to find new
employment faster as a result. As a Texas State government official has
explained, ``most employers view the WARN Act as a benefit, because
they are as interested as anyone in seeing their employees put back to
work as soon as possible.'' The Clinton administration has also
recognized that providing advance notice is good for business: ``By
getting laid off workers reemployed sooner, WARN may reduce the
unemployment insurance costs for employers and create community good
will.''
Most importantly, workers have used the 60 days to seek new
employment, enroll in training programs, pay off their bills, and, if
necessary, plan for harder times. For many of these workers, WARN meant
the difference between making a successful transition to new career and
losing everything they had. Take Tamala Thackston, for example.
Thackston worked for the U.S. Shoe Corporation in Ripley, OH for 17
years, until the company told her it would shut down the plant in 60
days. The company also notified the State, which sent a rapid response
team in to help Thackston and the other workers evaluate their
individual job counseling and retraining needs. Thackston helped set up
a labor-management committee and a job fair. After considering her
options, she promptly enrolled in a medical assistant training course,
which began shortly after her termination. Without 60 days' notice, she
could not have signed up for the course in advance, and her
unemployment benefits would have run out before completing the course.
Thackston graduated 6 months later, and began a new job as a medical
assistant in New Richmond, OH the very next day.
Thousands of employers have also provided notice to State and local
governments, allowing rapid response efforts that help workers find new
jobs. Last year, a Texas State official described WARN's ``tremendous
benefit'' to state dislocated worker units:
With adherence to the WARN Act, our State dislocated worker
unit is able to establish a relationship with company
officials and employee representatives, is able to work with
the local service providers to plan budgets, survey those to
be dislocated, gather support from other community service
agencies. . . . Responsiveness is a critical factor; all
[employers giving WARN Act notices] are contacted within 48
hours, with most formal on-site meetings held within 5 to 7
working days. . . . This translates into quicker reentry into
the job market, lessened unemployment insurance claims,
savings in social service programs such as AFDC, and Food
Stamps, and creates an environment where the negative impact
to employees and employers is lessened when possible. Without
[WARN Act] compliance, we open the morning newspaper and
learn of another 1,100 people who have been laid off without notice,
without hope, and without the knowledge to access the title III
(dislocated worker) program.
Clearly, the WARN Act has lived up to its promise in helping workers
and communities cope with the staggering consequences of plant closings
and layoffs, without causing hardship to American businesses. But
unfortunately, all of the news is not so rosy. In its 1993 report on
the WARN Act, the GAO found major problems with the plant closing law
in terms of coverage, compliance, and enforcement.
First, although hundreds of thousands of workers have been well
served by the WARN Act, an even larger number of workers who lost their
jobs in mass layoffs were not protected by WARN because of its
threshold requirements. The GAO found that 64 percent of the mass
layoffs recorded in a 2-year period were not covered by the Act. Even
among layoffs affecting 250 or more workers, 41 percent were exempt
from WARN. In many cases, employers appear to have intentionally
manipulated workforce reductions to evade the WARN Act's requirements.
As one management attorney in Detroit put it to a conference of
employers, the WARN Act's thresholds are so big you could put aircraft
carriers through them.
According to the GAO, WARN's current threshold requirements--which
trigger the Act's advance notice provisions--present a number of
problems. First, they leave millions of vulnerable workers unprotected
from sudden termination. Second, they present too many opportunities
for employers to avoid WARN Act liability by manipulating their
downsizing efforts. Third, the complexity of these requirements makes
it hard for workers to know whether they are covered, particularly at
worksites where the workers are unorganized.
In a 1992 survey by Northeastern University Professor John Portz,
state dislocated worker unit officials recognized these coverage
loopholes as one of the most significant reasons for the limited
effectiveness of the WARN Act. Similarly, in a 1992 report on the EDWAA
dislocated worker program, the Department of Labor noted state
officials' concern that ``important layoffs were not covered by WARN,
including large layoffs of less than one-third of the workforce.'' The
legislation I am introducing today lowers and simplifies the WARN Act's
thresholds to ensure adequate coverage of plant closings and mass
layoffs.
Second, employer compliance with the WARN Act has been extremely low.
According to the GAO, two-thirds of the employers covered by the Act
either failed to provide advance notice (54 percent) or provided less
than 60 days' advance notice (13 percent). Only one-third of the
covered employers were found to have provided 60 days' notice to
workers and communities as required by the Act. Similarly high rates of
noncompliance were reported in the 1992 Portz Survey of State
dislocated worker officials, as well as individually by State officials
in New York, Texas, and Massachusetts.
These compliance problems are closely linked to a third deficiency in
the WARN Act--a weak enforcement mechanism. When Congress enacted WARN
in 1988, it did not assign any Federal or State agency the
responsibility for administering or enforcing the Act. Congress did
give workers the right to sue to enforce their rights, but remedies
were limited to 60 days' back pay. As the Clinton administration has
recognized, ``the enforcement provisions of the law have not been
adequate''.
In the 1992 Portz Survey, State officials agreed that private actions
were inadequate as the sole mechanism for enforcement, and that the
existing remedy--60 days' back pay--was too weak. Similarly, the 1991
Massachusetts Conference Report on WARN explained that
Enforcement through the courts by workers being required to
bring suit is not adequate. Workers do not have the means to
sue in many cases; damages are inadequate; judgment takes too
long and compensation comes long after the time it is
needed--when the person is laid off.
The GAO's data suggest that there have been over 10,000 violations of
the WARN Act since its enactment, but the vast majority of these
violations have gone unenforced. Since 1988, only about 100 lawsuits
have been filed under the Act, representing a staggeringly low
enforcement rate of about 1 percent.
Those evaluating the effectiveness of the WARN Act--the GAO, the 1992
Portz Survey of state officials, the 1991 Massachusetts Conference on
WARN--have all concluded that Congress should give the Department of
Labor authority to enforce the WARN Act. Thus, the legislation I am
introducing today authorizes DOL to investigate complaints of WARN Act
violations, and to file lawsuits on behalf of workers. This enforcement
mechanism will serve as a strong complement to the existing private
right of action: it will increase awareness of the Act's requirements
among employers and workers, assist workers in determining whether
their rights have been violated, and serve workers who are unable to
find or afford an attorney to enforce their rights.
The GAO, State officials and commentators have also pointed to the
Act's limited remedies as a significant cause of the WARN Act's
compliance and enforcement problems. The problems are two-fold. First,
for many employers, the remedy of 60 days' back pay is an insufficient
deterrent to violating the Act; all the employer risks is having to pay
the same wages it would have paid anyway if it had given adequate
notice. Second, experience has shown that this remedy is an
insufficient incentive for workers to bring suit to enforce the Act.
State officials--in the 1992 Portz Survey, the 1991 Massachusetts
Conference Report, and congressional testimony--have uniformly
recommended that Congress strengthen the remedies available for WARN
Act violations, to provide a stronger deterrent to employer violations,
and to encourage workers to enforce the Act through private lawsuits.
The bill thus allows prevailing plaintiffs to recover, in addition to
the existing remedies, interest and liquidated damages in an amount
equal to the back pay award. These additional remedies have been
available for decades under a host of comparable Federal labor laws,
such as the Fair Labor Standards Act, the Family and Medical Leave Act,
and the Age Discrimination in Employment Act. Under the Fair Labor
Standards Act, for example, employers found guilty of minimum wage or
overtime violations are liable for liquidated damages equal to the
amount of back pay owed, unless good faith and reasonableness are
shown.
The legislation I am introducing today includes a number of
additional modifications to strengthen the Act. These changes include a
longer notice period of 90 days for larger layoffs of 100 or more
workers, clarification of the Act's ``good faith'' defense, a notice
posting requirement to inform workers of their WARN rights, and a 2-
year statute of limitations.
These various modifications address the current deficiencies in the
WARN Act, and fulfill the Act's original promise of ensuring that
workers and communities receive advance notice of plant closings and
layoffs. Of course, employers cannot provide advance notice in every
instance. Even with these modifications, however, an employer may still
be exempt from the WARN Act if (1) the layoff lasts less than 6 months,
(2) the layoff results from the termination of a time-specific contract
or project, (3) the employer was seeking capital or new business to
avert the layoff, (4) the layoff results from unforeseen business
circumstances, or (5) the layoff is caused by a natural disaster. These
provisions guarantee employers the flexibility to respond to changing
circumstances, while meeting the needs of workers and communities for
advance notice where feasible.
In sum, the WARN Act's fundamental premise--that workers and local
communities benefit substantially from reasonable advance notice of
plant closings and layoffs--is just as sound today as it was 6 years
ago. In fact, American workers need the WARN Act's protections even
more today than they did then.
According to the Bureau of Labor Statistics, over 15 million workers
lost their jobs between 1987 and 1992 due to plant closings, business
failures, layoffs and production slow-downs. In a 1992 survey of
businesses by the American Management Association, 25 percent of the
respondents planned to cut their work forces further. And relocation of
U.S. factories overseas--spurred on by the passage of NAFTA--could mean
the elimination of hundreds of thousands of additional U.S. jobs in the
near future.
We must move swiftly to enact these modest reforms, to provide
American workers fair notice of layoffs and plant closings, and to
ensure the success of the administration's Reemployment Act. I urge my
colleagues to cosponsor the Worker Adjustment and Retraining
Notification Amendments Act. I ask unanimous consent that a summary and
explanation of the bill's provisions appear in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The Worker Adjustment and Retraining Notification Amendments Act
Summary and Explanation of Provisions
The WARN Amendments Act strengthens the original WARN Act
based on, and consistent with, the findings and
recommendations of the General Accounting Office (1993
Report); the Bureau of Labor Statistics; Northeastern
University's State Dislocated Worker Unit Survey (1992); the
Massachusetts Conference Report on WARN (1991); the Sugar Law
Center for Economic and Social Justice; and congressional
testimony from state officials and worker representatives.
i. summary of provisions
A. Coverage
1. Drop ``employer'' threshold from 100 workers to 50.
2. Drop ``plant closing'' threshold from 50 to 25; drop
``layoff'' threshold from 50/one-third of workforce, or 500,
to flat 25.
3. Limit ``single site'' requirement to layoffs of under
100.
4. Clarify ``ninety-day rule'' to allow aggregation of
layoffs and plant closings which are part of single reduction
in force.
5. Cover part-time workers.
B. Notice
1. Modify 60-day notice requirement as follows: 25-49
workers affected, 30 days. 50-99 workers affected, 60 days.
100 or more workers affected, 90 days.
2. Provide for notice to each affected employee regardless
of whether worksite is organized.
C. Enforcement
1. Authorize DOL to investigate complaints and bring
enforcement suits.
2. Expand remedies from 60 days' back pay to include
liquidated damages (comparable to FLSA/Family Leave/ADEA
remedies).
3. Clarify Congress' intent that ``good faith'' exception
arises only at remedy state after a finding of liability.
D. Housekeeping
1. Provide for posting of notice of WARN rights in
workplace.
2. Add 2-year statute of limitations.
ii. explanation of provisions
A. Coverage
When Congress enacted WARN in 1988, it established a
federal labor policy that workers affected by mass layoffs
and plant closings should receive advance notice that they
are going to lose their jobs. Balancing this federal policy
with employers' need for flexibility, Congress limited the
scope of the Act to layoffs and plant closings affecting 50
or more workers. A number of additional threshold
requirements were also included in the legislation.
Although hundreds of thousands of workers have been well
served by the WARN Act, an even larger number of workers who
lost their jobs in mass layoffs were not protected by WARN
because of these threshold requirements. In a study released
last year, the U.S. General Accounting Office found that 64
percent of the mass layoffs recorded in a two-year period
were not covered by the Act. Even among layoffs affecting 250
or more workers, 41% were exempt from WARN. In many cases,
employers appear to have intentionally manipulated workforce
reductions to evade the WARN Act's advance notice provisions.
According to the GAO, the Act's current threshold
requirements present a number of problems. First, they leave
millions of vulnerable workers unprotected from sudden
termination. Second, they present too many opportunities for
employers to avoid their WARN Act obligations by manipulating
their downsizing efforts. Third, the complexity of these
requirements makes it hard for workers to know whether they
are covered, particularly at worksites where the workers are
unorganized.
In a 1992 Survey by Northeastern University Professor John
Portz, state dislocated worker unit officials recognized
these coverage loopholes as one of the most significant
reasons for the limited effectiveness of the WARN Act.
Similarly, in a 1992 report on the EDWAA dislocated worker
program, the Department of Labor noted state officials'
concern that ``important layoffs were not covered by WARN,
including large layoffs of less than one-third of the
workforce.'' The bill lowers and simplifies the WARN Act's
thresholds to ensure adequate coverage of plant closings and
mass layoffs.
1. Employer Threshold. Currently, WARN exempts employers
with fewer than 100 employees--a threshold which exempts
about 98% of American businesses. Whole industries are
exempted under this 100-employee threshold--the apparel
industry, for example, averages just 52 workers at each
factory.
In the 1992 Portz Survey, state dislocated worker unit
officials were asked how the Act's effectiveness might be
improved. Among the four most frequent responses was
expanding the employer threshold to cover businesses with 50
or more employees.
In congressional testimony last year, dislocated worker
program officials in Texas also expressed support for
expanding coverage to companies with 50 or more employees.
Similarly, in a 1991 Massachusetts Conference Report on WARN,
ninety-seven percent of the conferees reported that the 100-
employees threshold should be reduced.
The bill lowers the employer threshold to 50 employees.
2. Plant Closing and Layoff Thresholds. The WARN Act
currently covers plant closings that effect 50 or more
workers. Mass layoffs are covered if either (1) 50 or more
workers are affected, comprising at least one-third of the
workforce at that site, or (2) 500 or more workers are
affected.
These thresholds have, in practice, proved both unfair and
overly complicated. Thousands of workers have lost their jobs
with little or no notice despite being part of a corporate
reduction in force planned months in advance. In many cases,
employers have manipulated layoffs to make sure they fell
below these thresholds. According to GAO, employers have
found it relatively easy to evade their WARN Act obligations.
The ``one-third rule'' is responsible for much of the
problem. In GAO's study, thousands of mass layoffs were not
covered by WARN, and three quarters of these were exempt
under the one-third rule. Many employers have structured
layoffs so that they comprise less than one-third of the
workforce. In addition, because of the one-third rule workers
are often uncertain about the Act's applicability, and unable
to determine (short of filing a lawsuit) whether they were in
fact protected by the Act.
Moreover, while the WARN Act's other threshold requirements
provide relief to smaller businesses, the ``one-third rule''
has in practice served a contrary function: the bigger an
employer is, the more likely it is that a layoff of between
50 and 499 workers will not constitute one-third of the
workforce.
For example, Smith Corona terminated one thousand workers
at its Cortland, New York typewriter assembly plant, in
groups ranging between 100 and 350 workers. Supervisors knew
of the layoffs ahead of time, but were told to keep quiet, so
they repeatedly told the workers their jobs were safe. By
spreading these layoffs over several months, and ensuring
that each layoff did not represent one-third or more of the
plant's workforce, Smith Corona was able to avoid its WARN
Act obligations.
Gary and Evelyn Allen were among those hard hit by the
sudden announcements. Both had worked for Smith Corona for
almost five years. With no notice, the Allens' sudden job
loss was, in their words, ``like getting hit with a ton of
bricks.'' The Allens had no savings, and were forced to take
low-paying custodial jobs with no health benefits to make
ends meet. Many of their co-workers were less fortunate;
some families were devastated by the sudden layoffs,
losing their homes, cars, and health insurance. Some
marriages fell apart because of financial stress.
The bill eliminates the ``one-third rule'' and establishes
a flat threshold of twenty-five workers for both plant
closings and layoffs. this provision simplifies WARN, makes
manipulation of layoffs to avoid the Act more difficult, and
ensures that advance notice is provided to workers affected
by corporate reductions in force.
3. Single Site Requirement. Under the existing WARN Act,
plant closing and layoff thresholds are determined on a
worksite-by-worksite basis. This ``single site'' requirement
allows employers to lay off thousands of workers without
notice, if they are dispersed among numerous sites and fewer
than 50 workers are laid off at each site.
Bill Tomko's experience is illustrative. Tomko had worked
for Emery Worldwide Delivery for ten years when he and his
co-workers at the company's Pittsburgh terminal were fired on
the spot and given 20 minutes to leave the premises. They
collected their belongings and were escorted out by security
guards. As it turned out, Emery had gradually reduced
staffing at its many terminals to 49 workers or less, to take
advantage of the Act's ``single site'' requirement and evade
its WARN Act obligations. For their years of loyalty to the
company, these workers got no notice and no severance. Even
worse, independent contractors were brought in the next day
to work for lower wages and no benefits.
With no advance notice of his layoff, Tomko lost his health
benefits, and his apartment, and had only 3 months'
continuous employment in the ensuing two years. Other
affected workers suffered similar difficulties. As Tomko
explained in congressional testimony last year, the toughest
thing about losing their jobs was the lack of notice-- ``it
was like someone had taken a gun to our heads.''
Other companies have taken similar advantage of the
``single site'' requirement. For example, Jim Walter
Resources laid off 640 people in its western Alabama mines in
April, 1992, but escaped its WARN Act obligations because
each of the mines was deemed to be a separate worksite. The
bill amends the Act to eliminate the ``single site''
requirement for major plant closings and layoffs affecting
100 or more workers.
4. 90-Day Aggregation Rule. Although the ``mass layoff''
threshold (50 workers/one-third of workforce, or 500 workers)
is normally calculated based on a 30-day period, the Act also
contains a provision allowing the aggregation of multiple
layoffs within a 90-day period to reach the mass layoff
threshold. Under Section 3(d), a ``mass layoff'' has
occurred if two layoffs under the threshold occur within a
90-day period, and the total laid off during that period
meets the threshold, unless the layoffs were unrelated.
But because of a drafting oversight in the law, if one of
the groups meets the threshold by itself, only that group
is protected and the smaller group is not.
Many employers have taken advantage of this drafting
oversight to evade their WARN Act obligations. For example,
Maxim, Inc. laid off 24 workers on November 1, 1989 and 64
more workers on December 15. A federal court held that the 64
workers were protected by the Act, but in the absence of two
layoffs below the 50-worker threshold, it refused to apply
the 90-day aggregation rule to protect the other 24 workers.
Similarly, Kayser-Roth Hosiery summarily laid off 159
workers (less than one-third of its workforce) in May, 1989,
and 340 workers (more than one-third) 39 days later. The
Sixth Circuit Court of Appeals held that the group of 340 was
entitled to 60 days' notice. But the court refused to apply
the 90-day aggregation rule to the earlier layoff of 159
workers, because only one of the two layoffs fell under the
threshold.
The 1991 Massachusetts Conference Report on WARN
recommended that Congress clarify the 90-day aggregation rule
to serve its intended purpose. The bill makes clear that all
layoffs within a 90-day period (whether above or below
threshold levels) may be aggregated to establish a total
number of layoffs above the appropriate threshold.
5. Part-Time Workers. The Act currently excludes part-time
employees from its protections. However, these workers are no
less deserving of advance notice of a layoff than full-time
employees. In fact, part-time workers typically need advance
notice even more than full-time workers.
According to the Bureau of Labor Statistics, the part-time
workforce is 22 million strong today and growing. On average,
part-time workers earn 62 cents for every dollar earned by
full-time workers, leaving many of their families below the
poverty line. Sixty-five percent of full-time workers have
employer-provided health care benefits, as compared to only
fifteen percent of part-time workers. Nearly half of all
full-time workers get pension benefits from their employer,
as compared to only ten percent of part-time workers.
In addition, part-time workers typically have little
savings and few assets to get them through a period of
unemployment. Nor can they look to their government for
financial assistance: the majority of states do not provide
unemployment benefits to part-time workers.
By excluding part-time workers, the WARN Act fails
to protect some of our most vulnerable workers from the
indignities and economic hardships that accompany the
sudden loss of a job. As more and more employers eliminate
full-time jobs and hire part-timers at low wages with no
benefits, fewer and fewer workers will be protected by the
WARN Act. The bill amends the Act to cover part-time
workers.
6. Remaining Exceptions. These various modifications close
the coverage gaps in the existing WARN Act. and fulfill the
Act's original promise of ensuring that workers and
communities receive advance notice of plant closings and mass
layoffs. Of course, employers cannot provide advance notice
in every instance. Even with these modifications, however, an
employer may still be exempt from the WARN Act if (1) the
layoff lasts less than six months, (2) the layoff results
from the termination of a time-specific contract or project,
(3) the employer was seeking capital or new business to avert
the layoff, (4) the layoff results from unforeseen business
circumstances, or (5) the layoff is caused by a natural
disaster. These provisions guarantee employers the
flexibility to respond to changing circumstances, while
meeting the needs of workers and communities for advance
notice where feasible.
B. Notice
Notice Period. In 1992, the Department of Labor released a
report on dislocated worker programs established under the
Economic Dislocation and Worker Adjustment Assistance Act of
1988 (EDWAA). In its report, DOL discussed the importance of
advance notice to the success of EDWAA programs. According to
the Department of Labor, ``virtually all states indicated
that 60 days' notice of a closing or layoff was not
sufficient'' to allow workers to find new jobs. The
Department also noted that states cited ``the relatively
short 60-day advance warning required by WARN'' as a major
problem in establishing labor-management committees provided
for under the EDWAA program.
The Department of Labor's findings were consistent with the
1991 Massachusetts Conference Report on WARN; over eighty
percent of the conferees reported that 60 days' notice was
insufficient, and that WARN should require 90 days or more.
Similarly, a study conducted by the U.S. Office of Technology
Assessment concluded that two to four months' advance notice
is necessary to provide full adjustment assistance to
dislocated workers.
The bill lengthens the required notice period from 60 to 90
days for plant closings and layoffs affecting 100 or more
workers. Recognizing employers' need for flexibility, the
bill retains the current 60-day notice period for plant
closings and layoffs which affect between 50 and 99 workers,
and provides for 30 days' notice where between 25 and 49
workers are affected. Of course, the existing exceptions for
unforeseeable business circumstances, faltering businesses,
terminations of contracts or projects, layoffs of less than
six months, and natural disasters will continue to relieve
employers from providing such notice where it is not
feasible.
2. Notice to Individual Workers. Under current law,
employers subject to WARN's notice requirements must provide
notice to each individual employee affected by the planned
plant closing or layoff. If the affected workers are
organized, however, notice must only be provided to the
organization representing employees.
When an employer intends to close a plant or lay off
workers, the affected employees should receive advance notice
from the employer itself. Organized workers should not be
deprived of this basic right under the Act simply by virtue
of their exercise of rights protected by the National Labor
Relations Act.
In addition, where notice is given only to a labor
organization, part of the required notice period is lost in
the process of notifying individual workers. As a
consequence, the affected workers receive less advance notice
than the statutory period of 60 days. The bill provides for
employer notice to all affected workers regardless of their
status as organized or unorganized.
C. Enforcement
Employer compliance with the WARN Act has been low.
According to GAO, two-thirds of the employers covered by the
Act either failed to provide advance notice (54%) or provided
less than 60 days' advance notice (13%). Only one-third of
the covered employers were found to have provided 60 days'
notice to workers and communities as required by the Act.
Similarly, Northeastern University Professor John Portz
estimates that only 50-60% of covered employers are complying
with the Act. In his 1992 Survey, state officials also
reported that one-third of the WARN notices they received
gave less than 60 days' notice. In conferences and
congressional testimony, officials in New York, Texas, and
Massachusetts have also reported substantial rates of
employer noncompliance.
1. Enforcement Mechanism. The compliance rate is low in
part because of the Act's weak enforcement mechanism. When
Congress enacted the WARN Act in 1988, it did not assign any
federal or state agency the responsibility for administering
or enforcing the Act. Congress did give workers the right to
sue to enforce their rights, but remedies were limited to 60
days' back pay and benefits.
According to the data provided by the GAO and the Bureau of
Labor Statistics, there have been over 10,000 violations of
the WARN Act since its enactment. But with only about 100
WARN Act lawsuits on record, the vast majority of these
violations have gone unenforced. In short, the enforcement
rate for WARN Act violations is a staggering low 1%--
meaning that the remaining 99% of employers have violated
the Act with no consequences. As the Clinton
Administration has recognized, ``the enforcement
provisions of the law have not been adequate''.
State officials agree, based on Professor Portz' 1992
survey of 36 state dislocated worker units. When asked about
the limited effectiveness of the WARN Act, the three most
frequent explanations offered by state officials were: (1)--
private actions are a weak mechanism for enforcement; (2)
loopholes in the law allow too many employers engaging in
mass layoffs to avoid the Act's requirements; and (3) the
remedy available under the Act (60 days' back pay) is too
weak. As one respondent observed, ``the enforcement mechanism
in effect makes no one responsible for this law.''
Why has the Act's enforcement mechanism failed? In 1993,
Congress heard this explanation in testimony by the Sugar Law
Center for Economic and Social Justice, which has served as a
clearinghouse for information on WARN Act litigation: ``many
working people are deterred by: (a) the scarcity of lawyers
who are willing to take these cases on . . .; (b) by the
costs involved with litigation; (c) by the limited relief
afforded under the Act; and (d) by the fact that it takes
upwards of two years, or longer, to litigate a case in
court.''
The state officials surveyed by Portz reported similar
reasons for the limited enforcement activity. As a 1991
Massachusetts Conference Report on WARN explained,
Enforcement through the courts by workers being required to
bring suit is not adequate. Workers do not have the means to
sue in many cases; damages are inadequate; judgment takes too
long and compensation comes long after the time it is
needed--when the person is laid off.
With no government agency responsible for WARN, both
workers and employees have been slow to learn of their rights
and responsibilities under the Act. First, as the Sugar Law
Center explained in congressional testimony, the Department
of Labor's lack of enforcement authority ``has substantially
impeded the ability of former employees in many situations to
even find out the necessary information to know whether or
not they have a WARN Act claim.''
Second, many employers are uncertain about their
obligations under the law. Although the Department of Labor
has issued WARN Act regulations, in the absence of any
enforcement role the Department does little to educate the
employer community about the law. Thus, for example, the GAO
study found that ``many employers were unclear about or
unaware of some of the provisions in the law.'' Even among
those employers who provided advance notice, one-third
reported that they were unclear about or unaware of at
least one relevant provision of the law.
Ultimately, these problems seriously undermine the WARN
Act's promise of giving workers and local communities fair
notice of plant closings and mass layoffs. Not surprisingly,
those evaluating WARN's effectiveness have universally agreed
that governmental enforcement of WARN is an essential reform.
The principal recommendation of the GAO's 1993 report, for
example, was that Congress consider giving the Department of
Labor authority to enforce the WARN Act.
In the 1992 Portz Survey, state dislocated worker unit
officials were asked how the Act's effectiveness might be
improved. Among the two most frequent responses was amending
WARN to provide Department of Labor enforcement authority.
Similarly, dislocated worker program officials in Texas
testified before Congress in 1993, expressing support for DOL
enforcement: ``we strongly recommend, based upon State and
national trends of non-compliance, that enforcement of the
WARN Act be handled by an appropriate Federal enforcement
entity.'' The 1991 Massachusetts Conference Report on WARN
also concluded that the Department of Labor ``should be given
enforcement powers.''
The bill authorizes the Department of Labor to investigate
complaints of WARN Act violations, and to file lawsuits on
behalf of workers. This enforcement mechanism will serve as a
strong complement to the existing private right of action: it
will increase awareness of the Act's requirements among
employers and workers, assist workers in determining whether
their rights have been violated, and enforce the rights of
those workers who are unable to find or afford an attorney to
bring a private action.
2. Remedies. The GAO, state officials and commentators have
also pointed to WARN's limited remedies as a significant
cause of the Act's compliance and enforcement problems. The
problems are two-fold. First, for many employers, the remedy
of 60 days' back pay and benefits is an insufficient
deterrent to violating the Act; all the employer risks is
having to pay the same wages and benefits it would have paid
anyway if it had given adequate notice. Second, experience
has shown that this remedy is often an insufficient incentive
for workers to bring suit to enforce the Act.
In the 1992 Portz survey, when asked how WARN's
effectiveness might be improved, state officials' most
frequent response was that Congress should expand available
remedies. The 1991 Massachusetts Conference Report likewise
recommended that Congress increase the remedies available
under the Act because the current back pay remedy ``does not
deter the employer from breaking the law.'' Officials from
the Texas dislocated worker program made similar
recommendations in congressional testimony.
The bill allows prevailing plaintiffs to recover,
in addition to the existing remedies, liquidated damages
in an amount equal to the back pay award. This additional
remedy is provided under a host of comparable federal
labor laws, such as the Fair Labor Standards Act, the
Family and Medical Leave Act, and the Age Discrimination
in Employment Act. Under the Fair Labor Standards Act, for
example, employers guilty of minimum wage or overtime
violations are liable for liquidated damages equal to the
amount of back pay owed, unless good faith is shown.
The bill also makes clear that prevailing plaintiffs should
receive an award of interest to make them whole for their
losses. The WARN Act specifically provides that its remedies
are ``in addition to, and not in lieu of'' other statutory
rights. Thus, WARN Act plaintiffs may recover interest under
section 1961 of the judicial code, 29 U.S.C. 1961, which
provides for such an award ``on any money judgment in a civil
case recovered in a district court.'' Nevertheless, numerous
courts have failed to award interest to prevailing plaintiffs
in WARN Act suits. The bill expressly provides that
prevailing plaintiffs in WARN Act suits should receive
interest on the amount of back pay awarded.
Strengthening the available remedies will improve the Act
in two respects. First, there will be a stronger deterrent to
violations of the Act. Second, workers will be much more
likely to enforce the Act through private lawsuits.
3.Good Faith Defense. Section 5(a)(4) of the WARN Act
provides that where an employer has violated the Act, a court
may ``reduce the amount of the [employer's] liability'' if
the employer establishes (1) that the violation was in good
faith and (2) that the employer had reasonable grounds for
believing that its conduct was not a violation of the Act. As
drafted, this defense clearly arises at the remedy stage of a
WARN Act case, only after a violation has been established.
As such, it serves as a basis for reducing damages, but not
as a defense to liability.
Legislative history confirms congressional intent
underlying the Act's good faith provision. According to the
Senate Committee Report on the plant closing legislation, the
provision was ``modelled after'' a similar provision in the
Portal-to-Portal Act, 29 U.S.C. 260, and was to be
interpreted ``in accordance with the prevailing law under
that section.'' See S. Rep. No. 62, 100th Cong., 1st Sess.
(June 2, 1987) at 24-25, Legislative History, 742-43. Under
the Portal-to-Portal Act, the good faith defense arises only
as a basis for reducing liquidated damages, after a finding
of liability has already been made.
Nevertheless, the good faith exception has been
misinterpreted by some courts as a complete defense to
liability. That was the result, for example, in UAW Local
1077 v. Shadyside Stamping Corp. (Ohio 1991), and Oil Workers
v. American Home Products Corp. (Indiana 1992). As a
consequence of these decisions, plaintiffs who had
established employer violations of the Act were nevertheless
deprived of a finding of liability, an award of costs and
fees, or any back pay or other monetary relief.
This misinterpretation of the good faith defense in effect
rewards employers for violating the law, where they show that
they had ``reasonable grounds'' for believing they were in
compliance. It sends a chilling message to workers: even if
you are terminated without notice, seek to enforce your
federal rights, find an attorney willing to take your case,
and actually succeed in proving a violation of the Act months
or years later, you may still be deprived of even the costs
of bringing suit. It also discourages lawyers like Martin
Farrell from taking WARN cases--he took a WARN case on behalf
of over 100 unemployed forest mill workers, incurred
thousands of dollars in court costs and other expenses,
established a WARN violation, but was deprived of any
recovery of fees and costs because the court found that the
employer had acted in good faith. If workers are to be
encouraged to enforce their rights, and attorneys are to be
encouraged to represent them, they must at a minimum be
assured of recovering lost back pay and the costs of the suit
if they establish a violation of the Act.
The bill makes clear that the good faith defense arises
only after a liability determination, and only as a basis for
reducing an award of liquidated damages. This clarification
is fully consistent with the parallel good faith provision of
the Portal-to-Portal Act. It is also consistent with the
remedial scheme of the Fair Labor Standards Act. Notably,
minor or inadvertent employer errors will continue to be
exempt under WARN Act regulations. See 20 C.F.R. 639.7(a)(4).
D. Housekeeping
1. Notice Posting. One of the reasons for the limited
number of WARN Act lawsuits in workers' lack of familiarity
with the Act's protections. In testimony before Congress, the
Sugar Law Center reported that ``[t]he overwhelming majority
of the thousands of dislocated workers with whom the Center
has had contact had never even heard of the WARN Act before
they lost their jobs.'' In the 1992 Portz survey, state
dislocated worker units included ``lack of public knowledge
about WARN'' as one of the five frequent explanations for the
Act's limited effectiveness. Similarly, a 1991 Massachusetts
Conference on WARN concluded that ``[w]orkers are being
denied their rights due to lack of information,''
recommending that a notice-posting requirement be added to
WARN.
Many federal laws include posting requirements to ensure
that workers are adequately informed of their rights. The
bill includes a posting requirement similar to that currently
provided under federal employment laws such as Title VII of
the Civil Rights Act of 1964, 42 U.S.C. 2000e-10, the Family
and Medical Leave Act, P.L. 103-3, and the Employee Polygraph
Protection Act of 1988, 29 U.S.C. 2003. This requirement
imposes little cost on employers and will ensure that
employees are aware of their rights.
2. Statute of Limitations. As enacted, WARN did not include
a statute of limitations to provide a time limit on the
filing of worker lawsuits. As a consequence, confusion has
prevailed among workers, employers and federal courts as to
an appropriate limitations period for WARN Act claims.
In the absence of a clear statutory mandate, federal courts
have faced unnecessary and time-consuming litigation over the
issue of the appropriate limitations period for WARN Act
suits. Several courts have adopted limitations periods based
on analogous federal or state laws. Under these rulings, WARN
Act limitations periods have ranged from six months to six
years. Clearly, a uniform limitations period is needed to
address these conflicting decisions.
The bill would establish a two-year limitations period for
the filing of WARN Act claims. This period would be
sufficient to enable workers to investigate possible
violations, seek government assistance if necessary to
determine whether a violation has occurred, seek and retain
an attorney, and prepare and file a lawsuit. This two-year
provision is comparable to the limitations period provided
under numerous other federal labor laws, such as the Fair
Labor Standards Act and the Family and Medical Leave Act.
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