The Worker Adjustment and Retraining Notification Act: Revising  
the Act and Educational Materials Could Clarify Employer	 
Responsibilities and Employee Rights (19-SEP-03, GAO-03-1003).	 
                                                                 
In 2001, 1.75 million workers lost jobs through extended mass	 
layoffs. The Worker Adjustment and Retraining Notification (WARN)
Act requires advance notice of plant closures and mass layoffs.  
The report discusses (1) the extent to which plant closures and  
mass layoffs were subject to WARN's requirements, (2) the extent 
to which employers with mass layoffs and plant closures provided 
notice, and (3) what issues employers and employees face when	 
assessing the applicability of WARN to their circumstances.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-1003					        
    ACCNO:   A08517						        
  TITLE:     The Worker Adjustment and Retraining Notification Act:   
Revising the Act and Educational Materials Could Clarify Employer
Responsibilities and Employee Rights				 
     DATE:   09/19/2003 
  SUBJECT:   Employment 					 
	     Employment or training programs			 
	     Program evaluation 				 
	     Program management 				 
	     Reductions in force				 
	     Strategic planning 				 
	     Workfare						 

******************************************************************
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GAO-03-1003

United States General Accounting Office

GAO

                       Report to Congressional Requesters

September 2003

THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT

       Revising the Act and Educational Materials Could Clarify Employer
                      Responsibilities and Employee Rights

GAO-03-1003

Highlights of GAO-03-1003, a report to Congressional Requesters

In 2001, 1.75 million workers lost jobs through extended mass layoffs. The
Worker Adjustment and Retraining Notification (WARN) Act requires advance
notice of plant closures and mass layoffs. The report discusses (1) the
extent to which plant closures and mass layoffs were subject to WARN's
requirements, (2) the extent to which employers with mass layoffs and
plant closures provided notice, and (3) what issues employers and
employees face when assessing the applicability of WARN to their
circumstances.

The Secretary of Labor should make enhanced educational materials widely
available to employers and employees for assistance in understanding the
regulations. Further, Congress may wish to consider amending the WARN act
by simplifying the calculation of thresholds, clarifying the definition of
employer and how damages are calculated, and establishing a uniform
statute of limitations. Labor provided informal comments and technical
clarifications on this report, which we incorporated as appropriate. Labor
informed us about efforts that it has already made to address our
recommendation and chose not to comment formally.

www.gao.gov/cgi-bin/getrpt?GAO-03-1003.

To view the full product, including the scope
and methodology, click on the link above.
For more information, contact
Robert E. Robertson at (202) 512-9889 or
[email protected].

September 2003

THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT

Revising the Act and Educational Materials Could Clarify Employer
Responsibilities and Employee Rights

About one quarter of the 8,350 plant closures and mass layoffs in 2001
appear subject to WARN's advance notice requirements. Mass layoffs were
less likely to be subject to the requirements than plant closures. The
difference between mass layoffs and plant closures stems primarily from a
rule exempting mass layoffs from WARN's requirements if businesses lay off
less than one-third of their workforce (up to 499 workers).

Employers provided notice for approximately one-third of layoffs and
closures that appear subject to WARN requirements. Specifically, employers
provided notices for almost one-half of plant closures, compared with
approximately one-quarter of mass layoffs. The remaining mass layoffs and
plant closures appear subject to WARN requirements, but notices were not
provided. Two-thirds of the notices that employers provided gave the full
sixty days' advance notice required by the law. Employers that did not
provide notice may be engaging in other practices that limit their
liability under the law. In addition, other employers provided notice for
mass layoffs and plant closures that were not subject to WARN's
requirements as encouraged in the law and the regulations.

Employers and employees find WARN's definitions and calculations difficult
to apply to their circumstances. Almost all state dislocated worker units
reported that employers and/or employees contact them with basic questions
on WARN-GAO calculated that states received thousands of communications
from employers, employees, and their representatives per year. The courts
have interpreted some of the provisions in the law in varying ways, which
adds to the confusion and uncertainty when employers and employees apply
WARN to their circumstances. Because of this uncertainty, employers,
employees, and courts incur costs in time and resources in determining the
applicability of WARN to specific circumstances. Finally, the enhanced
educational materials being developed by the Department of Labor to
address some of these issues have not been made widely available and
therefore fail to answer many of the questions asked by employers and
employees. This lack of clarity and guidance could ultimately circumvent
the purpose of advance notice-namely, to assist dislocated workers in
becoming reemployed.

Events Subject to and Not Subject to WARN Requirements in 2001

Total events 8,350

Mass layoffs

Plant closures

0 2,000 4,000 6,000 8,000 10,000

Total number of events

Events subject to WARN requirements

Events not subject to WARN requirements

Source: GAO analysis and BLS, May 2003.

Contents

               Appendix I: Objectives, Scope, and Methodology 22
Letter                                    1 
                  Results in Brief           3 
                     Background              5 
             An Estimated 24 Percent of All    
            Mass Layoffs and Plant Closures    
          Appear Subject to WARN's Advance         Employers Provided Notice 
                 Notice Requirements         7        for about One-Third of 
                                                                 Layoffs and 
                   Closures Subject to WARN    
           Requirements, Most of Which Were    
                       Timely               10  Employers and Employees Find 
                                                   WARN's Definitions and    
            Calculations Difficult to Apply    
          Due to Ambiguities in the Statute    
                and Limited Guidance        13 
                     Conclusions            19 
            Recommendation for Executive    19 
                       Action                  
              Matter for Congressional      20 
                    Consideration              
               Agency Comments and Our      20 
                     Evaluation                

Mass Layoff Statistics Data 23 WARN Notices 26 Interviews 28 Review of
Court Cases 29

Appendix II: Tests Applied to Find Liability in Parent/Subsidiary, Sister
Corporation, and Lender/Borrower Situations

Appendix III: Reported Court Cases under WARN Act, 1998-2002

Appendix IV: GAO Contacts and Staff Acknowledgments 39

GAO Contacts 39 Staff Acknowledgments 39

Related GAO Products

40

  Tables

Table 1: Extended Mass Layoffs and WARN Coverage in 2001 24

Table 2: Required Elements in the Notices 28 Table 3: Different Tests Used
by Courts to Determine Employer

Liability 31 Table 4: Reported Court Cases under WARN Act, 1998-2002 32

Figures

Figure 1: WARN Decision Matrix Figure 2: Events Subject to and Not Subject
to WARN Requirements in 2001 Figure 3: Percentage of Mass Layoffs in 2001
Excluded from WARN Requirements Due to the One-Third Rule Figure 4: Amount
of Employer Advance Notice to State Officials before a Mass Layoff or
Plant Closure Figure 5: WARN-Related Court Cases by Litigation Subject
1998-2002 Figure 6: Overlap between WARN Notices and Events That Appear
Subject to WARN

                                                               6 8 9 12 15 26

Abbreviations

BLS Bureau of Labor Statistics
DWU dislocated worker unit
ETA Employment and Training Administration
MLS Mass Layoff Statistics
WARN Worker Adjustment and Retraining Notification Act

This is a work of the U.S. government and is not subject to copyright
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separately.

United States General Accounting Office Washington, DC 20548

September 19, 2003

The Honorable George Miller
Ranking Minority Member
Committee on Education and the Workforce
House of Representatives

The Honorable Major R. Owens
Ranking Minority Member
Subcommittee on Workforce Protections
Committee on Education and the Workforce
House of Representatives

The Honorable Robert E. Andrews
Ranking Minority Member
Subcommittee on Employer-Employee Relations
Committee on Education and the Workforce
House of Representatives

In 2001, job losses through extended mass layoffs1 reached 1.75 million,
the highest level since 1995. To assist workers who have recently been
laid
off with job training and to facilitate their reemployment, Congress
enacted the Worker Adjustment and Retraining Notification (WARN) Act2
in 1988, which requires employers to provide advance notice to employees
and state and local officials in the event of a mass layoff or plant
closure.
Advance notice allows workers and their families some transition time to
adjust to the prospective loss of employment, to seek and obtain
alternative jobs, and if necessary, to enter skill training that will
allow
these workers to compete successfully in the job market. According to
both business and labor leaders, advance notice allows time for state
officials to provide information about skill training and retraining
services
before the layoff or closure occurs.

1The Bureau of Labor Statistics defines an extended mass layoff as an
employment loss, at a job site, that affects at least 50 people who file a
claim with Unemployment Insurance over a 5-week period and are involved in
a layoff that lasts at least 31 days. The data collected by the Bureau do
not directly measure WARN criteria. (See app. I.)

2Pub. L. No. 100-379 (1988); 29 U.S.C. 2101-2109.

WARN generally requires employers with 100 or more workers to provide
60-days advance notice for both mass layoffs and plant closures involving
50 or more employees. WARN requirements differentiate between mass layoffs
and plant closures by including a provision in the law, called the
"one-third" rule, which only applies to mass layoffs and requires
employers to give advance notice for layoffs of 50-499 employees only if
they are reducing their workforce by at least 33 percent. The employer is
responsible for determining if the layoff or closure meets WARN criteria,
and providing a notice that contains certain information about the mass
layoff or plant closure as outlined in the regulations. The Department of
Labor is not responsible for enforcing WARN; enforcement is done entirely
through the federal courts. However, Labor was required to issue
implementing regulations, which it did in 1989. Labor is also responsible
for providing assistance in understanding these regulations and has
provided educational materials to facilitate employers' and employees'
understanding of WARN.

To identify issues about compliance with and implementation of the WARN
Act, you asked us to provide you with information on (1) the extent to
which mass layoffs and plant closures were subject to WARN's advance
notice requirements, (2) the extent to which employers with mass layoffs
or plant closures that appear subject to WARN's advance notice
requirements provided notice, and (3) what issues employers and employees
face when assessing the applicability of WARN to their circumstances.

To determine the extent to which mass layoffs and plant closures appear
subject to WARN's advance notice requirements, we used the Bureau of Labor
Statistics3 (BLS) Mass Layoff Statistics (MLS) data for 2001 to determine
which events appear subject to WARN according to the criteria included in
the statute and the regulations. To determine the extent to which
employers with mass layoffs and plant closures subject to WARN's advance
notice requirements provided notice, we obtained all WARN notices received
for mass layoffs and plant closures in 2001 from all 50 states and the
District of Columbia.4 BLS then matched its MLS data for

3BLS is an agency within the Department of Labor. The MLS program, run by
BLS, collects data on mass layoff actions that result in workers being
separated from their jobs.

4We asked the state dislocated worker units to provide us with notices
because they are the only recipient of all WARN notices for the entire
state and because no data are collected on WARN compliance. We use these
notices as a proxy measure for employers notifying all relevant parties.

Results in Brief

2001 with the notices states sent us, which provided an estimate of the
number of events subject to WARN's advance notice requirements where the
employers provided notice.5 To assess the extent to which notices met the
requirements of the WARN Act, we analyzed a random, nationwide sample of
600 WARN notices from 2001 to determine the extent to which the notices
contained the required elements outlined in the law.6 To determine what
issues employers and employees face when assessing the applicability of
WARN to their circumstances, we interviewed dislocated worker officials in
all 50 states7 and the District of Columbia, labor experts, employee and
employer groups, law firms, and selected a random sample of 50 employers
that provided states with a WARN notice in 2001.8 Finally, we reviewed the
WARN Act provisions, WARN Act regulations, Department of Labor's
educational materials, and all reported court cases decided between 1998
and 2002 that discuss or apply WARN provisions to describe the key issues
raised through the courts by laid-off workers and employers. We conducted
our work between October 2002 and July 2003 in accordance with generally
accepted government auditing standards. (See app. I for our scope and
methodology.)

On the basis of 2001 data from BLS, we found that an estimated 24 percent
of all mass layoffs and plant closures appear subject to WARN's advance
notice requirements. However, mass layoffs were less likely to be subject
to WARN's advance notice requirements than plant closures. Specifically,
employers were required to provide advance notice for approximately 13
percent of the 7,097 mass layoffs, while employers were required to
provide advance notice for approximately 82 percent of the 1,253 plant
closures. This difference between mass layoffs and plant closures stems
primarily from the law's "one-third" rule, which applies only to mass
layoffs. In 2001, while approximately 661,000 workers were involved in a
mass layoff or plant closure that met WARN criteria, over 415,000 workers

5These numbers are an estimate from the available data. Like any data set,
these estimates include limitations. See app. I for further explanation.

6Notices sent to the state officials should include the expected date of
first separation, address of employment site, name and contact
information, number of affected workers, and if the notice is sent less
than 60 days in advance, an exception should be listed with a brief
statement of why the exception is applicable.

7We did not formally interview state officials in Nevada, but they
provided all WARN notices and other relevant information.

8From the 50 employers, we interviewed 23. See app. I for further
explanation.

were involved in mass layoffs that did not meet the one-third rule;
therefore, their employers were not required to provide advance
notification.

On the basis of 2001 data from BLS, we found that employers provided
notice for an estimated 36 percent of mass layoffs or plant closures that
appear subject to WARN's advance notice requirements. Specifically,
employers provided notices for almost one-half (46 percent) of plant
closures, compared with approximately one-quarter (26 percent) of mass
layoffs. The remaining mass layoffs and plant closures appear subject to
WARN requirements, but notices were not provided. This discrepancy might
be explained partially by the use of other practices, not precluded by
WARN, that employers and employee representatives reported, such as asking
employees to sign waivers of their rights to advance notice. Of the 36
percent of mass layoffs and plant closures with a WARN notice, about
two-thirds of the notices (an estimated 68 percent) provided at least the
required 60-day advance notice. Almost all of the notices included all
required elements outlined in the regulations. In addition, other
employers provided notice for mass layoffs and plant closures that were
not subject to WARN's requirements as encouraged in the law and
regulations.

On the basis of interviews with interested parties and a legal review of
court cases, we found that certain definitions and requirements of WARN
are difficult to apply when employers and employees assess the
applicability of WARN to their circumstances. In particular, employers,
employee representatives, and others reported it problematic to apply the
statute's provisions when calculating the layoff threshold (i.e., whether
the requisite number of employees have been laid off within prescribed
time frames) that triggers WARN requirements. In addition, the courts have
applied the statute's provisions in varying ways, resulting in decisions
that do not always clarify employer responsibilities and employee rights
under the law. For example, the courts have interpreted the damages for
violating the statute's advance notice provision in two ways; in some
cases the courts have calculated damages using calendar days, while in
other cases they have used work days. The use of one calculation versus
the other either increases or decreases the amount of money the employer
is required to pay for a WARN violation by approximately 30 percent and
affects the amount of money workers receive when they do not receive
60-days advance notice of a layoff or closure. Finally, although the
Department of Labor has taken steps to improve educational materials on
WARN originally developed in 1989, Labor has not made these materials
widely available to employers or employees.

Background

To educate and inform employers and employees about WARN, we recommend
that the Secretary of Labor take immediate action to make revised
educational materials widely available to employers and employees for
assistance in understanding the regulations. In responding to preliminary
findings of this report, Labor officials said that updating the
regulations would not address many of the issues outlined in this report.
Consequently, we include a Matter for Congressional Consideration to
clarify employer responsibilities and employee rights under WARN,
specifically clarifying definitions and layoff thresholds through amending
the statute. Labor provided informal comments and technical clarifications
on this report, which we incorporated as appropriate. Labor informed us
about efforts that it has already made to address our recommendation and
chose not to comment formally.

WARN generally requires that employers with 100 or more full-time workers
give their affected employees or their representatives, the state's
dislocated worker unit, and local government officials 60 days advance
notice of an impending closure or layoff. Employers with 100 or more
full-time workers generally account for less than 2 percent of all
employers. However, these employers employ 64 percent of the labor force.

The purpose of advance notice is twofold. First, advance notice provides
workers and their families with an appropriate amount of time to
transition and adjust to the prospective job loss, to seek and obtain
alternative jobs, and if necessary, to participate in skill training and
retraining so that these workers can re-enter the job market. Second,
advance notice promotes the delivery of rapid response services to the
affected workers through the state's dislocated worker unit (DWU), by
allowing the DWU to go to the employment site and provide information
about job services before workers are laid off and more difficult to
locate.

A number of factors determine whether employers are required to provide
notice under WARN. (See fig. 1.) First, employers must decide if the mass
layoff or plant closure at a single site will affect at least 50
employees, excluding part-time workers. For a mass layoff, employers must
also consider if the layoff will affect at least 33 percent of the
workforce (excluding part-time workers) and will be expected to exceed 6
months.9

9The employer must also determine whether there has been a reduction in
hours of work of more than 50 percent during each month of any 6-month
period.

Alternatively, employers with 100 or more employees who in the aggregate
work at least 4,000 hours per week (excluding overtime) are covered.
Employers must then determine if at least 50 full-time workers will be
laid off during any 30-day period, or for two or more groups, over a
90-day period.10 If the mass layoff or plant closure has met all these
criteria, it would be subject to WARN's requirements and notice must be
provided at least 60 days before the first layoff. Certain layoffs and
closures are exempt from advance notice, including those that involve the
completion of a particular project, certain transfers or reassignments,
and strikes or lockouts.

                         Figure 1: WARN Decision Matrix

Source: GAO data.

10The 90-day period applies unless employers demonstrate in court that the
layoffs are the result of separate and distinct actions and causes and are
not an attempt to evade WARN's requirements.

WARN also lists three exceptions that allow employers to give less than 60
days advance notice. These are (1) "faltering company," which is defined
as those employers involved in a closure who are trying to seek new
business or raise capital at the time that 60-day notice would have been
required; (2) "unforeseeable business circumstances," which applies to
closings and mass layoffs caused by business circumstances that were not
reasonably foreseeable at the time that 60-day notice would have been
required; and (3) a natural disaster. Employers that wish to use these
exceptions must still provide notice in as much time as possible and also
give a brief statement of why the exception is being used in the WARN
notice.

Congress did not assign any agency responsibility for enforcing WARN. The
Department of Labor is responsible for issuing regulations, providing
educational information about the act, and for providing any future
revisions to the regulations as may be necessary. Employees seeking
redress under WARN must pursue their cases through the federal courts.11
The time frames for employees to file under WARN vary by state because the
act does not contain a statute of limitations. Courts can award damages of
up to 60 days back pay and benefits as remedy to workers for WARN
violations.12 The courts must reduce the damages for each day the employer
gave notice, if less than 60 days, or for any wages paid during the
violation period. The courts may also award the winning party reasonable
attorney's fees.

An Estimated 24 Percent of All Mass Layoffs and Plant Closures Appear
Subject to WARN's Advance Notice Requirements

Of the 8,350 mass layoffs and plant closures in 2001, 24 percent appear
subject to WARN advance notice requirements and involved approximately
661,000 workers. Fewer mass layoffs appear subject to these requirements
than plant closures (13 percent vs. 82 percent). This is due primarily to
the one-third rule that only applies to mass layoffs, specifically layoffs
affecting at least 33 percent of the workforce. Figure 2 provides a
summary of events subject and not subject to WARN requirements in 2001.

11Cases are initially filed with one of the U.S. district courts located
in the 50 states, District of Columbia, or the U.S. Territories. Each
state has at least one district court. A decision of the district court
may be appealed to 1 of the 13 U.S. courts of appeal, also referred to as
circuit courts. Parties may request review of circuit court decisions by
the U.S. Supreme Court, but the Supreme Court accepts only a small
percentage of such requests.

12Courts can also award up to $500 per day, for up to 60 days, to local
governments.

Figure 2: Events Subject to and Not Subject to WARN Requirements in 2001

Total events 8,350

Mass layoffs

Plant closures

0 2,000 4,000 6,000 8,000 10,000 Total number of events

Events not subject to WARN requirements Events subject to WARN
requirements Source: GAO analysis and BLS, May 2003.

The 948 mass layoffs that appear subject to WARN involved about 300,000
workers. In comparison, the 6,149 layoffs not subject to WARN's
requirements involved over 1 million workers. Forty-five percent of the
mass layoffs were not subject to WARN because the "single event" did not
affect at least one-third of the employer's workforce. (See fig. 3.) These
layoffs affected approximately 415,000 workers whose employers were not
required to provide notice.

Figure 3: Percentage of Mass Layoffs in 2001 Excluded from WARN
Requirements Due to the One-Third Rule

One-third rule

Other exclusions

Source: BLS, May 2003 and 2001 WARN Notices from state DWUs.

Note: Exclusions do not total 87 percent due to rounding. Other exclusions
include layoffs that affect less than 100 workers and public sector
layoffs. It also includes those workers who are seasonal, involved in
labor disputes, involved in weather-related layoffs, on leave, and
finished with a contract.

In contrast to mass layoffs, 82 percent of plant closures appear subject
to WARN's requirements. (See fig. 2.) These 1,026 plant closures affected
about 360,000 workers. In comparison, the 227 plant closures were not
subject to WARN's requirements and involved approximately 20,000 workers.
Plant closures may be excluded from WARN's requirements for a variety of
reasons; for example, plant closures that involve seasonal workers or
workers who have completed a contract. (See app. I for further
explanation.)

Employers Provided Notice for about One-Third of Layoffs and Closures
Subject to WARN Requirements, Most of Which Were Timely

While 1,974 mass layoffs and plant closures appear to be subject to WARN's
advance notice requirements in 2001, BLS estimated that employers provided
notice for only 717 of these events. Most of the notices provided gave at
least the required 60-day advance notice. In addition, almost all notices
included the required elements outlined in the regulations. Other
employers provided notice for mass layoffs and plant closures that were
not subject to WARN's requirements as encouraged in the law and the
regulations.

Employers Provided Notice for about One-Third of WARN-Covered Mass Layoffs
or Closures

Data from BLS indicated that employers provided notices for 717, or 36
percent, of the 1,974 mass layoffs and plant closures that appear subject
to advance notice requirements under WARN in 2001. Employers provided
notices for plant closures at a higher rate than for mass layoffs.
Specifically, they provided notices for almost one-half (46 percent) of
plant closures, compared with approximately one-quarter (26 percent) of
mass layoffs. The remaining two-thirds (64 percent) of mass layoffs and
plant closures appeared to be subject to WARN requirements, but employers
did not provide notices. (See app. I.)

In those cases where notices were not provided, employers may be engaging
in other practices, not precluded by WARN, that limit their liability
under the law. Representatives for both employers and employees told us
about two practices in particular: pay in lieu of notice and waivers. For
the former, employers offer employees money instead of their full 60-days
notice.13 For the latter, employers ask employees to sign a contract
waiving their rights under WARN-sometimes in exchange for a severance
package.14 In both cases, employees might receive payment for foregoing
the advance notice, but the lack of an advance notice means that the state
is less likely to be able to deploy services to facilitate workers'

13The Department of Labor states that neither the act nor the regulations
recognize the concept of pay in lieu of notice and that failure to give
notice does a significant disservice to workers and undermines other
services that are part of the purpose of the WARN Act. However, the
statute does specifically provide that the amount for which the employer
is liable must be reduced by any wages paid during the period of
violation. 29 U.S.C. 2104 (a)(2)(A).

14Neither the act nor the regulations address waivers under WARN; however,
the courts have upheld employees' waiver of WARN Act claims. See Joe v.
First Bank System, Inc., 202 F.3d 1067 (8th Cir. 2000).

reemployment before the plant closure or mass layoff. An employer
representative told us that some employers use these other practices
because they are confused, in general, about the law, and its
applicability to their circumstances. According to employers and their
representatives, employers have difficulty determining when WARN
requirements apply to mass layoffs, in particular, because of the layoff
threshold requirements. In addition, employer representatives told us
about concerns that employers have about providing advance notice, which
might influence an employer's decision to engage in other practices.15
Specifically, some employers fear that providing advance notice will
affect their businesses negatively by causing employees to leave before
the scheduled layoff or commit sabotage. Although 17 of the 23 employers
we interviewed that provided advance notice told us that some employees
resigned after they received advance notice, only 2 employers indicated
that this was a hardship. Two experienced acts of sabotage.

Interestingly, employers provided more notices than there were WARN events
in 2001. Employers provided 5,349 notices, but there were only 1,974 plant
closure and mass layoffs that appeared to meet the WARN criteria for
advance notice. The volume of notices provided suggests that employers
appear to be heeding the portion of the law and regulations that
encourages advance notice in ambiguous situations even if it is not
required by WARN. Providing advance notice when not required may lead to
the delivery of rapid response services for dislocated workers. Some state
officials told us that they provide rapid response services for layoffs
and closures that do not meet WARN requirements if they receive notice.

Of the Notices Provided, On the basis of a sample of WARN notices, we
found that employers with

Two-Thirds Were Timely 	mass layoffs or plant closures that were subject
to WARN requirements and sent a notice to their state officials generally
provided notice on time and almost always included all of the required
elements as outlined in the law. We estimated that two-thirds (68 percent)
of the notices that state officials received were dated 60 or more days
before the mass layoff or

15A previous GAO report found that researchers and opponents of WARN
expressed concerns about the cost of providing notice, but parties we
spoke with did not express this as a concern. See U.S. General Accounting
Office, Dislocated Workers: Worker Adjustment and Retraining Notification
Act Not Meeting Its Goals, GAO/HRD-93-18 (Washington, D.C.: Feb. 23,
1993). Employers' estimates of costs of providing the notice ranged from
$0 to $5,800, with an average cost of less than $1,300. This range
excludes costs from lawsuits related to WARN.

plant closure; the estimated average advance notice was 49 days.16 (See
fig. 4.) We further estimated that 32 percent of employers gave state
officials less than 60 days to prepare for the event.17 Regardless of when
states received notice, approximately 90 percent of all notices included
all of the required elements as outlined in the regulations.

Figure 4: Amount of Employer Advance Notice to State Officials before a
Mass Layoff or Plant Closure

Employers that provided notice after the event

Employers that provided notice less than 60 days before the event

Employers that provided at least 60 days notice before the event

16This estimate includes those employers that provided notice after the
layoff or plant closure and those employers that used exceptions to
account for less than 60 days notice.

17This estimate includes those employers that used exceptions to account
for less than 60 days notice. The most commonly used exception was
unforeseeable business circumstance.

Employers and Employees Find WARN's Definitions and Calculations Difficult
to Apply Due to Ambiguities in the Statute and Limited Guidance

On the basis of our interviews with interested parties and a legal review
of court cases, we found that certain definitions and calculations of WARN
are difficult for employers and employees to apply when assessing the
applicability of WARN to their circumstances. The courts have applied the
statute's provisions in varying ways, resulting in decisions that do not
always clarify employer responsibilities and employee rights under the
law. In addition, Labor has made several efforts to enhance educational
materials on the WARN Act, but these materials are not yet widely
available to employers and employees.

Employers and Employees Find WARN's Definitions and Calculations Difficult
to Apply

A variety of indicators suggest that employers and employees find WARN
definitions and calculations difficult to apply. These include inquiries
made regarding WARN provisions, litigation stemming from the provisions,
and an examination of the steps necessary to decide if and when WARN is
applicable. In our 1993 report,18 we found that the employers had similar
issues with WARN.

The questions employers and employees ask about the application of WARN
provides one indicator of the difficulties they have in applying its
provisions. State DWUs, the Department of Labor, and employer groups all
reported that employers and employees contact them with basic questions
about WARN.19 Of the state DWU's able to provide an estimate, 36 states
reported receiving thousands of inquiries each year on WARN. This number
does not include the additional eight dislocated worker units in states
that reported receiving inquiries but could not estimate the number.
Moreover, the amount of inquiries surpasses the amount of events that
appear to meet WARN criteria and even surpasses the amount of total events
in 2001. According to dislocated worker officials, employers called to ask
whether their circumstances required compliance with WARN and where to
send notices, while employees called to ask whether their layoff was
covered and what their rights were. An Employment and Training
Administration (ETA) official within the Department of Labor reported
receiving

18See U.S. General Accounting Office, Dislocated Workers: Worker
Adjustment and Retraining Notification Act Not Meeting Its Goals,
GAO/HRD-93-18 (Washington, D.C.: Feb. 23, 1993).

19Callers also included unions, legislative staff, and others.

553 inquiries on the WARN Act in 2002. She also reported that employees
were the most frequent callers and most often asked about practices
employers used in lieu of notice or about severance. Additionally,
employer groups reported receiving inquiries about WARN from employers and
their representatives, and one employer representative told us his
organization provides WARN information sessions for employers twice each
year.

In addition to these queries, litigation over certain provisions provides
further evidence of the difficulties experienced by employers and
employees in applying WARN provisions. During our legal review of court
cases from 1998-2002, we found that certain provisions resulted in more
litigation in the courts. (See fig. 5.) In this time frame, we identified
68 reported decisions addressing WARN. (See app. III.) The most commonly
litigated issues in these cases were related to layoff thresholds. Lawyers
who litigated WARN cases told us that layoff threshold issues involved
multiple definitions that were difficult to comprehend. Employers,
employer and employee representatives, and lawyers cited the statute's
definition of calculating the 50 employees who have been laid off, the
one-third rule, and the aggregation of multiple layoffs within a 90-day
period as difficult to apply to their specific circumstances. Lawyers we
spoke with said that neither the statute nor Labor's guidance were
sufficient for helping them understand these definitions. In addition,
because the WARN Act does not have a statute of limitations, the court
must decide for each case whether the case was filed within the
appropriate time period. To do this, the courts look to the most analogous
state statute of limitations as opposed to federal law.20 The applicable
state statute of limitations, however, is not always easy to identify and
often varies from state to state.

20 North Star Steel Co. v. Thomas, 515 U.S. 29 (1995).

Figure 5: WARN-Related Court Cases by Litigation Subject 1998-2002

Issues

Single sitea

Sale of company

Affected employeesb

                                     Employers acting in good faith to comply

Back pay

Employer definitionc

Unforseen business circumstance

Layoff threshold

0 2 4 6 8 1012141618

Number of cases by issues

Source: GAO analysis, Guild Law Center, Lexis, and Westlaw.

Note: Only major issues are represented in the graphic; therefore, they do
not add up to the 68 reported decisions addressing WARN.

aWARN requires that layoffs or closures occur at a single site of
employment in order to calculate the requisite number of workers affected
by a layoff or closure. These cases discuss a "single site" as being
geographically connected. Even where several distinct operations are
performed at a geographically connected site, that building or complex
will be counted as one site. In some limited cases, geographically
separate sites may still be considered a single site of employment because
of other business-related connections; for example, sites that share the
same staff and management and are used for the same purpose.

bWARN notices are required to be provided to all "affected employees."
These court cases have dealt with this issue and found, for example, that
workers who are temporarily laid off prior to a WARN event are entitled to
notice.

cEstablishes who the employer is for purposes of WARN notification. These
cases discuss, for example, the relationship between parent and subsidiary
companies when determining the employer responsible for providing advance
notice.

Some labor law attorneys we spoke with said that applying the layoff
threshold definitions is difficult because doing so involves multiple
steps they characterized as complicated. In determining whether or not the
WARN threshold has been met, employers must first decide if at least 50
employees or one-third of the workforce have suffered an employment loss21
at a single site. Employers must exclude all employees who have worked
fewer than the last 6 out of 12 months or fewer than 20 hours per week.
The layoff threshold calculations are further complicated when a
short-term layoff (i.e., a layoff lasting less than 6 months) that is not
covered under WARN is extended beyond 6 months becoming a long-term layoff
(i.e., a layoff lasting more than 6 months) and thus triggering the WARN
requirements.

In addition, applying the layoff threshold definitions can be further
complicated when multiple layoffs occur across a 90-day period. If there
are waves of layoffs within a 90-day period that result in an employment
loss for at least 50 workers and one-third of the workforce, then these
combined events may be subject to WARN. For example, if a company employs
150 employees and has three layoff events involving 20 workers during each
event over 90 days, then these events in aggregate would be subject to
WARN's requirements. Waves of layoffs are not always aggregated for
purposes of determining whether WARN is triggered; however, if the issue
is challenged, the employer must demonstrate that the employment losses
were the result of separate and distinct causes and not an attempt to
evade WARN's requirements. Moreover, if there are multiple layoffs within
a 90-day period and one of them alone triggers WARN, the rest are not
subject to WARN's requirements unless they otherwise meet WARN's
requirements. For example, if a company employs 150 employees and has
three layoffs within a 90-day period involving 20 workers for the first
and second events but 60 employees in the third, then this last event
alone would be subject to WARN's requirements, while the other two would
not be subject to WARN's requirements even though they all took place
within a 90-day period.

Lawyers also told us that the difficulties in applying the layoff
thresholds allow some employers to manipulate numbers to qualify under the
one-third rule or lay off workers in waves over a period of time so that
WARN

21Employment loss is an employment termination, other than a discharge for
cause, voluntary departure, or retirement, a layoff exceeding 6 months, or
a reduction in hours of work for individual employees of more than 50
percent during each month of any 6-month period.

thresholds do not apply during a 90-day period. According to lawyers
representing employers and employees, some employers have a difficult time
applying these standards while other employers are so savvy at
manipulating the numbers that it is difficult for employees to know if and
when their rights have been violated.

Court Decisions Interpret Certain WARN Provisions Inconsistently

Areas of inconsistency among the courts' interpretations of certain WARN
Act provisions have caused difficulties for employers, employees, and
their lawyers when assessing the applicability of WARN to their
circumstances. Depending upon the circuit,22 the courts interpret two WARN
provisions differently: (1) the calculation of damages and (2) the
definition of "employer" when two companies are closely related-an issue
that is associated with determining the employer responsible for giving
notice.

When calculating damages, the law states that employees are entitled to up
to 60 days back pay for a violation of WARN. However, the law does not
state if the 60 days should be interpreted as calendar days or as
workdays. The difference between the calendar day versus workday approach
would be the difference between 60 and 42 days pay, which decreases or
increases the amount an employer must pay for a WARN violation by
approximately 30 percent. The courts have different interpretations of the
law, and the regulations do not address the calculation of damages.

Because of this uncertainty, much litigation surrounds the calculation of
back pay and whether the law intended workers to receive 60 or 42 days of
pay for a WARN violation. The third circuit alone has found that back
wages should be calculated as calendar days-1 day of wages multiplied by
60. The other circuit courts that have addressed the calculation of WARN
damages have all upheld the workday interpretation and use the rationale
that the back pay was meant to describe the wages that would have been
earned on average during a 60-day time period.

22 District court judges are required to follow decisions of the circuit
court for the region in which the district court sits. For example, a
district court Judge in Maryland is bound by the decisions of the Court of
Appeals for the 4th Circuit, which is located in Richmond, Virginia, but
includes all the districts in Maryland, Virginia, North Carolina, South
Carolina, and West Virginia. District courts may look to other circuit
courts for guidance if their regional circuit court has not addressed a
particular issue. District court judges are not bound by other district
court decisions.

Lawyers representing both employers and employees would like the law to be
clarified, regardless of whom the outcome favors. For example, if the
calendar day approach were decided as the mandatory way to calculate
damages, then employers would be paying more money in damages, but
employers wishing to settle a WARN violation could better estimate pay
because they would know exactly how much they were liable for if the case
went to court.

The courts also have taken various approaches in determining who the
"employer" is for purposes of complying with WARN. Different courts have
chosen to use varying tests as outlined in several laws to determine the
employer responsible for providing WARN notice. Specifically, there is no
uniformity among the courts around the issue of identifying the
responsible employer when there are two closely related companies (e.g.,
the parent of a subsidiary), and it is unclear as to who is responsible
for sending the notice prior to a layoff. The WARN statute defines an
employer as a business enterprise but does not further define the term to
address parent and subsidiary companies.

To give employers, employees, and the courts guidance on determining who
the employer is, WARN's regulations outline a five-factor employer test.
However, this test differs from other federal and state employer tests,
which results in the application of various tests when making
determinations regarding the employer and inconsistent outcomes for
employers and employees in court. As a result, the tests the courts have
applied have varied from case to case. (See app. II.) Each test examines a
number of factors meant to determine which of the two closely related
companies can be identified as the employer. For some cases, the courts
have used the five-factor test established in the WARN regulations. In
others, they have used a slightly different four-factor test called
"federal common law" in combination with the five-factor test. And in
still other cases, courts have looked to state law in addition to the
other laws. In most cases, the courts have used some combination of these
three. According to ETA officials, in promulgating regulations and the
five-factor test they contain, Labor did not intend to create a new
employer test that could be used instead of existing federal common law.

The Department of Labor's Organizations representing both employers and
employees indicated that Enhanced Educational confusion over WARN
definitions and calculations may stem, in part, from Materials Are Not
Widely a lack of guidance. The implementing regulations that the
Department of Available Labor published in 1989 tasked Labor with
providing assistance in

understanding the regulations. In the same year, Labor produced an

eight-page informational brochure on the WARN Act for employers and later
made the regulations available over the Internet. However, the inquiries
about WARN discussed earlier indicate that employers and employees still
have basic questions about WARN and find its definitions and calculations
difficult to apply to their circumstances. Further, the brochure published
in 1989 does not address case law established since the act passed in
1988.

The Department of Labor has made several efforts to enhance educational
materials on the WARN Act, but these materials are not yet widely
available to employers and employees. These efforts have taken place over
the past 3 years and include taking steps to revise the brochure for
employers and developing an additional brochure for employees. In
addition, ETA officials told us that they have made some efforts to put
explanatory information about WARN regulations on the Internet. Labor has
also taken the initial steps to develop an interactive flow chart that
employers could use to determine if WARN is applicable. Labor's enhanced
educational materials can be made widely available independent of any
changes to the law and will begin to address the need for additional
educational materials on WARN.

Conclusions
The assessment of the applicability of WARN is important, because for
every potential mass layoff or plant closure employers are responsible for
determining if their circumstances require compliance with WARN, and
employees are responsible for determining if their rights have been
violated. Although the Department of Labor has issued implementing
regulations and educational materials on WARN, these efforts have not been
sufficient to clarify employer responsibilities and employee rights under
the WARN Act. The lack of clarity stems, in part, from the statute that
contains provisions the courts, employers, and employees find difficult to
apply to specific situations. Because of this uncertainty, employers,
employees, and courts incur costs in time and resources in determining the
applicability of WARN to individual circumstances. This lack of clarity
could ultimately circumvent the purpose of advance notice-namely, allowing
states to prepare for workforce reductions and quickly return dislocated
workers to the workforce.

Recommendation for
To educate and inform employers and employees about WARN, we recommend
that the Secretary of Labor take immediate action to make

Executive Action
revised educational materials widely available to employers and employees
for assistance in understanding the regulations.

Matter for Congressional Consideration

Agency Comments and Our Evaluation

To clarify employer responsibilities and employee rights under WARN and to
address varying court decisions, the Congress may wish to consider
amending WARN by simplifying the calculation of layoff thresholds,
clarifying how damages are calculated, defining the term "employer" to
address closely related corporations, and establishing a uniform statute
of limitations.

We provided the U.S. Department of Labor with a draft of this report for
review and comment. Labor generally concurred with our conclusions about
the difficulties in WARN implementation and provided informal comments and
technical clarifications, which we incorporated as appropriate. Labor
informed us that it has already made efforts to address our recommendation
and thus chose not to comment formally. Furthermore, officials have
indicated that they will continue to work towards making enhanced
educational materials widely available. In July 2003, the department
published new WARN educational brochures for employers and employees.
However, distribution of the brochures is currently limited to individuals
inquiring about WARN through the department, and the brochures have not
yet been posted on ETA's Web site. Additionally, Labor is developing a
WARN e-law advisor program to help employers and employees understand
their rights and responsibilities under federal employment laws. However,
department officials were unable to provide an estimate on when the e-law
advisor program would be finished.

As agreed with your offices, unless you publicly announce the contents of
the report earlier, we plan no further distribution until 30 days from the
report date. At that time, we will send copies of this report to the
Secretary of Labor, appropriate congressional committees, and other
interested parties. In addition, the report will be made available at no
charge on GAO's Web site at http://www.gao.gov.

If you or your staf have any questions about this report, please contact
me at (202) 512-9889. Other contacts and staff acknowledgments are listed
in appendix IV.

Robert E. Robertson Director, Education, Workforce, and Income Security
Issues

Appendix I: Objectives, Scope, and Methodology

We were asked to provide information on (1) the extent to which mass
layoffs and plant closures appear subject to the Worker Adjustment and
Retraining Notification (WARN) Act's advance notice requirements, (2) the
extent to which employers with mass layoffs or plant closures that appear
to meet WARN criteria provided notice, and (3) what issues employers and
employees face when assessing the applicability of WARN to their
circumstances.1 To attain the objectives for this engagement, we began by
reviewing the WARN Act provisions, the U.S. Department of Labor's
regulations, and the preamble to the regulations. We also reviewed Labor's
explanatory brochure on WARN for employers, as well as the draft brochures
for employers and employees.

To determine the extent to which mass layoffs and plant closures appear
subject to WARN's advance notice requirements, we asked the Bureau of
Labor Statistics (BLS)2 to determine which events in its Mass Layoff
Statistics (MLS) data for 2001 appear subject to WARN according to the
criteria included in the statute and the regulations. To determine the
extent to which employers with mass layoffs and plant closures that appear
subject to WARN's advance notice requirements provided notice, we asked
all 50 states and the District of Columbia to provide us with all WARN
notices received for mass layoffs and plant closures in 2001.3 BLS then
matched its MLS data for 2001 with the WARN notices states sent us, which
provided an estimate of the number of events subject to WARN's advance
notice requirements where the employers provided notice.4 To assess the
extent to which notices met the requirements of the WARN Act, we conducted
analysis on the content of a random, nationwide sample of 600 WARN notices
to determine the extent to which the notices contained

1Because these questions were similar to those answered in our 1993 report
on WARN, we replicated much of the methodology from the earlier report.
See U.S. General Accounting Office, Dislocated Workers: Worker Adjustment
and Retraining Notification Act Not Meeting Its Goals, GAO/HRD-93-18
(Washington, D.C.: Feb. 23, 1993).

2BLS is an agency within the Department of Labor. The MLS program, run by
BLS, collects data on mass layoff actions that result in workers being
separated from their jobs.

3We asked the state dislocated worker units to provide us with notices
because they are the only recipient of all WARN notices for the entire
state. We used these notices as a proxy measure for employers notifying
all relevant parties.

4These numbers are only an estimate from the available data. Like any data
set, they include sampling errors and other data limitations.

Appendix I: Objectives, Scope, and Methodology

Mass Layoff Statistics Data

all of the required elements outlined in the law.5 To determine what
issues employers and employees face when assessing the applicability of
WARN to their circumstances, we talked to dislocated worker officials in
all 50 states and the District of Columbia, labor experts, employee and
employer groups, law firms, and 23 employers from a random sample of 50
employers that provided WARN notices to states in 2001. Finally, we
reviewed all reported court cases decided between 1998-2002 that discuss
or apply WARN provisions to describe the key issues raised through the
courts by laid-off workers and employers.

In order to determine the extent to which mass layoffs and plant closures
appear subject to WARN's advance notice requirements, we asked BLS to
perform some work utilizing its MLS data. There are no data collected on
the WARN Act, and although the type of information obtained by MLS and the
information required by the WARN provisions differ slightly (see next
paragraph),6 the MLS data are the best available for measuring WARN
layoffs and closures. Due to the differing criteria, BLS could only assess
whether mass layoffs and plant closures in the analysis "appear" to meet
WARN requirements. Because MLS does not generate sufficiently detailed
information about all the circumstances involved in each event and BLS's
confidentiality pledge to employers prevented us from contacting the
employers directly, we could not conclusively determine whether every
closure that appeared to meet the WARN criteria actually met each
provision of the law. With these caveats in mind, we asked BLS to provide
us with information on the total number of extended mass layoffs in 2001
and to subtract from that total the mass layoffs and plant closures that
did

5Notices sent to the state officials should include: the date of first
separation, address of employment site, name and contact information,
number of affected workers, and if the notice is sent less than 60 days in
advance, an exception should be listed with a brief statement of why the
exception is applicable.

6An example of the difference between WARN and MLS would be events that
affected at least 50 workers during a 90-day period (appearing subject to
WARN requirements) that prompted fewer than 50 dislocated workers to
submit claims for Unemployment Insurance during a 5-week period. This
event would not meet MLS criteria but appears subject to WARN. Another
example of the difference would be an employer that mistakenly reported
the reason for the extended mass layoff as one that was covered by WARN
when the correct reason would not have been covered by WARN. This event
would meet MLS criteria and would appear subject to WARN but should not be
counted as subject to WARN.

Appendix I: Objectives, Scope, and Methodology

not appear to meet the WARN criteria due to exclusions7 and exemptions8
that are provided in the law. BLS provided us with a list of 1,974
extended mass layoffs9 from its MLS data that appear to meet WARN
criteria. Table 1 shows the process by which BLS arrived at its list of
events that appeared to meet WARN criteria.

Table 1: Extended Mass Layoffs and WARN Coverage in 2001

             Extended mass layoff events, 2001  Layoffs    Closures     Total 
                                        Events      7,097    1,253      8,350 
                              Less exclusions:      4,611     210       4,821 
                Employment level not provideda      1,070     50        1,120 
                Employment level less than 100        206     159         365 
                         Ownership not private        125           1     126 

Events with 50-499 separations not

b

                   meeting the one-third criteria 3,210 3,210

                   Subtotal, less exclusions   2,486      1,043         3,529 
                            Less exemptions:   1,538        17          1,555 
                               Seasonal work   1,254        10          1,264 
                              Labor disputes         17     1      
                          Employees on leave         75     0      
                             Weather-related         25     0      
                            Natural disaster          2     0      
                          Contract completed        165     6             171 
                Appear to meet WARN criteria        948   1,026         1,974 

Source: BLS.

aFor closures, includes those events for which no employment was provided
and between 50-99 workers were separated.

bNot applicable.

7BLS deleted events from its list when factors of the extended mass layoff
were outside the scope of WARN. These included layoffs at establishments
where (1) the employment level was not provided, (2) the employment level
was less than 100, (3) the ownership was not private, or (4) the layoff
did not affect at least one-third of the workforce.

8BLS deleted events from its list when the reason for the extended mass
layoff was outside the scope of WARN. These included events due to (1)
seasonal layoffs, (2) labor disputes, (3) leave, (4) weather, (5) natural
disasters, or (6) completed contracts.

9BLS defines an extended mass layoff as an employment loss at a job site
of at least 50 people who file claims with Unemployment Insurance over a
5-week period and the employer indicates that the layoff of at least 50
people would last at least 31 days.

Appendix I: Objectives, Scope, and Methodology

WARN provisions do not match exactly with the data collected in MLS. WARN
requires that notice be provided for plant closures and mass layoffs
affecting at least 50 workers during a 30- or 90-day period, with some
exclusions and exemptions. MLS uses reports of layoffs involving at least
50 workers and lasting more than 30 days. Information on extended mass
layoffs is developed initially from each state's Unemployment Insurance
database using a standardized automated approach for identifying
establishments that have at least 50 initial claims filed against them
during a consecutive 5-week period (the "extended mass layoff"). The state
agency then contacts these establishments by telephone to determine if a
"permanent" layoff or plant closing has occurred. A permanent layoff is
one that lasts more than 30 days. An establishment is considered closed
if, at the time of contact, the employer plans to close, is closing, or
has already closed the work site. The telephone survey obtains specific
information on the nature of the extended mass layoff, including the
number of separations, the reason for and the duration of the extended
mass layoff, and whether the establishment is remaining open.

To determine the extent to which employers with mass layoffs and plant
closures that appear to meet WARN criteria provided notice to their state
DWU, we asked BLS to link its MLS data with WARN notices we collected from
states. First, we asked the DWUs from all 50 states and the District of
Columbia to provide us with a list of all WARN notices that they received
for mass layoffs and plant closures in 2001 (n = 5,349).10 Then BLS

10We asked the states to send us records of notices that they determined
to be WARN notices provided for layoffs and closures that occurred during
calendar year 2001. However, the following caveats apply:

Arizona, Georgia, and Tennessee provided both WARN and non-WARN notices
that they received because their data systems did not distinguish between
the two; we included all the notices these three states sent to us for
both the matching procedure and the content analysis. The inclusion of
some potentially non-WARN notices does not affect the matching procedure
result, which focuses on compliance, because these notices would be
counted as "overcompliance" (encouraged by the law) and not noncompliance
(prohibited).

Kentucky, Michigan, Minnesota, New Mexico, New York, and North Carolina
provided records of notices received between July 2000 and December 2001
because their data systems record the date of the notice, not the layoff
or closure. The inclusion of some notices for events in 2000 does not
affect the matching procedure result, which focuses on compliance, because
these notices would be counted as "overcompliance" (encouraged by the law)
not noncompliance (prohibited).

Pennsylvania reported that it was unable to provide us with data for
layoffs and closures occurring in July 2001 due to data systems
conversion.

                 Appendix I: Objectives, Scope, and Methodology

matched the mass layoffs and plant closures that appear subject to WARN's
advance notice requirements with the list of WARN notices. This match was
conducted using employer name and state to determine if there was a match;
it also provided us with an estimate of the number of events that appear
to be covered by WARN where the employers also provided notice to the
state dislocated worker unit. The number of notices, mass layoffs and
plant closures, and the overlap are in figure 6.

Figure 6: Overlap between WARN Notices and Events That Appear Subject to
WARN

Source: State dislocated worker units and Bureau of Labor Statistics, May 2003.

                                 WARN Notices 	

To determine the extent to which WARN notices were timely and complete, we
performed a content analysis on a random, national sample of notices we
collected. From the list provided by the dislocated worker units, we
selected a random sample of 600 notices and asked states to provide us
with copies of those notices. We performed a content analysis

Washington, D.C. could not provide us with any notices for 2001, but
according to BLS, there were no WARN events in D.C. for the year 2001.

Appendix I: Objectives, Scope, and Methodology

to determine the extent to which notices provided the amount of advance
notice required in the law and contained required elements (see table 2.)
Specifically, we evaluated the extent to which employers included the name
and address of the employment site, the date of first separation, a
contact person for the company, the number of affected workers, and, if
applicable, exemptions and a brief statement of the exemption. 11 After
reviewing copies of the notices provided by the state DWUs, we eliminated
five WARN notices from the sample because they occurred in 2000 or 2002.
We also eliminated 40 notices because states told us they were not able to
provide those missing notices because either the employer did not provide
a notice (the DWU learned of the event through other means, such as a
newspaper article), the DWU lost the notice after it was received or the
DWU destroyed the notice after it was archived. The final sample of 555
WARN notices represents about 10 percent of the adjusted universe of WARN
notices for layoffs and closures in 2001.

11 Sampling errors of estimated percentages from this sample were 4
percent or less. The sampling error for the estimated average advance
notice is between 3 and 4 days.

Appendix I: Objectives, Scope, and Methodology

                   Table 2: Required Elements in the Notices

                                    Dislocated worker                
                                    units and chief       Worker     
                       Information elected officialsa representative Workersb 
               Name and address of                                   
                   employment site         X                X        
                Name and telephone                                   
                 number of company                                   
                          official                                   
                        to contact         X                X           X     
            Expected date of first                                   
                        separation         X                Xc          Xc    
                Number of affected         X                         
                           workers                                   
              Statement of type of                          X           X     
                            layoff                                   

Titles of positions to be
affected and names of the
workers currently holding
these jobs X

Existence of bumping rightsd X

Source: Department of Labor's regulations.

aThe following information is not required to be included in the notices
to dislocated worker units and local officials, but must be made available
upon request by the dislocated worker unit or elected officials: (1) job
titles of positions to be affected, (2) statement of type of layoff, (3)
existences of bumping rights, (4) name of union representative, and (5)
name and address of chief elected officer of each union.

bIf no representative.

cMust also include schedule of separations.

d"Bumping rights" include displacing the least senior person in the
affected employee's job classification. For example, a carpenter with
seniority could bump the least senior carpenter in order to remain
employed.

Interviews
To determine what issues employers and employees face when potentially
affected by WARN, we conducted semistructured interviews with (1) state
DWUs or rapid response officials from all 50 states and the District of
Columbia;12 (2) academic and professional experts on the WARN Act,
including officials from the Guild Law Center; (3) employer groups, such
as Labor Policy Association and Small Business Administration; (4)
employee groups, such as the AFL-CIO and United Auto Workers; and (5)
lawyers with experience litigating WARN cases, from both the

12We did not formally interview state officials in Nevada, but they
provided all WARN notices and other relevant information.

                 Appendix I: Objectives, Scope, and Methodology

employer and employee sides. These groups provided us with a multifaceted
look from the employer and employee perspective at the issues faced when
potentially affected by WARN. In our interviews with the state dislocated
worker units in all 50 states and the District of Columbia, we asked the
officials to estimate the number of inquiries they receive per year.
Thirty-six states were able to provide estimates.

To collect information on employer perspectives and experiences regarding
the clarity of provisions and the consequences associated with filing a
WARN notice, we conducted structured interviews13 with a small, randomly
selected set of employers who provided a WARN notice to their state
dislocated worker unit for a mass layoff or plant closure in 2001. We
attempted to contact 50 employers. Of those, 18 had closed entirely and/or
we were unable to locate any current contact information for them. From
the remaining 32 employers, 9 declined to participate in the interview for
a variety of reasons. We interviewed 23 employers. With these data, among
other sources, we were able to assess which WARN provisions were unclear
to the employers, other practices used to limit potential WARN liability,
and costs associated with providing notice.

Review of Court Cases

To determine what issues employers and employees face when potentially
affected by WARN, we reviewed court cases from 1998-2002 that were
substantively about the WARN Act. In order to find all of the relevant
court cases that dealt with the WARN Act, we used Lexis, Westlaw, and the
Guild Law Center's Plant Closing (WARN Act) Project.14 The Department of
Labor's ETA also provided us with a list of cases that we checked against
our own research and the Guild Law Center's Plant Closing Project to
establish a list of cases addressing WARN during the past 5 years.

From our list of all reported court cases that discuss or apply WARN
provisions, we summarized the outcomes of each case and then coded each
case according to the issues addressed. (See app. III and fig. 5.) We
reviewed the cases to identify patterns between the interviews and court
cases where employers and employees seem to be confused with the law

13The structured interview questions were based on the survey of employers
conducted for the 1993 report.

14Through the Plant Closing Project, the Guild Law Center publishes a WARN
Act Practitioner's Guide and WARN Act Case Law Updates and Summaries.

Appendix I: Objectives, Scope, and Methodology

and its regulations. In addition, we reviewed law review articles
discussing the inconsistencies in the application of various WARN
provisions by the courts. We also reviewed articles discussing the
evolution of WARN and general information regarding the law and its
regulations.

Appendix II: Tests Applied to Find Liability in Parent/Subsidiary, Sister
Corporation, and Lender/Borrower Situations

State law tests: Generally focus on the extent of actual control the
company has over its own business decisions.

Federal common law test: Also referred to as single employer, integrated
enterprise or single business enterprise test: (1) common ownership; (2)
common management; (3) centralized control of labor relations; (4)
functional integration of operations; focus on whether two nominally
independent enterprises really constitute one integrated enterprise
(absence of arms length dealing).

WARN: Department of Labor's regulations (20 C.F.R. 639.3(a)(2)): (1)
common ownership; (2) common directors and/or officers; (3) de facto
exercise of control; (4) unity of personnel policies emanating from a
common source; (5) dependency of operations.

    Table 3: Different Tests Used by Courts to Determine Employer Liability

Tripartite
(state law, federal common
law, WARN) WARN only

Test(s)
applied State law and WARN

WARN and federal common law

    Cases Wholesale & Retail Food United Mine-workers of Am. Watts v. Marco
                    Holdings, L.P., Local 217 Hotel & Rest.

Distribution Local 63 v. Santa Fe Terminal Servs., Inc., 826 F. Supp. 326
(C.D. Cal. 1993) v. Florence Mining Co., 855 F. Supp. 1466 (W.D. Pa. 1994)
1997 WL 578783 (N.D. Miss. 1997) Employees Union v. MHM, Inc., 976 F.2d
805 (2nd Cir. 1992) Hollowell v. Orleans Reg'l Int'l Bd. of Teamsters
Local United Paperworkers Int'l Pearson v. Component Hosp., 217 F.3d 379
(5th Cir. 952 v. Am. Delivery Serv. Union v. Alden Corrugated Tech. Corp.,
247 F.3d 2000) Co.,50 F.3d 770 (9th Cir. Container Corp., 901 F. Supp. 471
(3rd Cir. 2001)

                           1995) 426 (D. Mass. 1995).

Childress v. Darby Lumber Local 397, Int'l Union of Elec., United Auto.,
Inc., 126 F.Supp.2d 1310 Elec., Salaried Mach. & Aerospace & Agric.
(D. Mont. 2001) Furniture Workers v. Midwest Implement Workers of

Fasteners, Inc., 779 F. Supp. Am. Local 157 v.

788 (D. N.J. 1992) 	OEM/Erie Westland, LLC., 203 F.Supp.2d 825 (E.D. Mich.
2002) Bledsoe v. Emery Worldwide Airlines, 2003 WL 1907798 (S.D. Ohio
2003)

                   Source: GAO analysis, Westlaw, and Lexis.

Appendix III: Reported Court Cases under WARN Act, 1998-2002

Table 4: Reported Court Cases under WARN Act, 1998-2002

                         Case State filed Year Outcome

      Air Trans. Local 504,    New York 1998  Court found that Ogden, seller  
    Transp. Workers Union of                         company, was not         
      Am. v. Ogden Aviation                   responsible for providing WARN  
     Servs., No. 96 CV 4506                         notices to workers        
       SJ, 1998 WL 191297                      subsequently laid off by buyer 
    (E.D.N.Y. Apr. 20, 1998).                         company; case proceeded 
                                                      toward trial.           
Amalgamated Serv. & Allied  New York 1998       Corporation failed to file 
       Indus. Joint Bd. v.                   notice of appearance of counsel, 
Supreme Hand Laundry, Inc.,                  and court entered default     
          182 F.R.D. 65                          judgment for plaintiff.      
                                             Corporation was not permitted to 
        (S.D.N.Y. 1998).                           subsequently raise a       

defense of good faith.

Amatuzio v. Gandalf Sys. Corp., 994 F. Supp. New Jersey 1998 Court held
that WARN's definition of "affected employees" 253 (D.N.J. 1998). is not
limited to those laid off after plant shutdown, but

includes those expected to experience an employment loss. With respect to
one group, more facts were needed to determine whether layoffs of two
groups should be aggregated for purposes of determining WARN's
applicability.

Breedlove v. Earthgrains Baking Cos., Inc., 140 F.3d 797 (8th Cir. 1998).

Arkansas 1998 	Court held that back pay liability under WARN is calculated
based on working days.

Burns v. Stone Forest Indus., Inc., 147 F.3d Oregon 1998 Back pay under WARN is
            limited to the days that would 1182 (9th Cir. Or. 1998).

have been worked during the period (up to 60 days) for which no notice was
given.

Cain v. Inacom Corp., No. ADV. 00-1724, 2001 Delaware 2001 Corporation's
motion to dismiss was denied because

WL 1819997 (Bankr. D. Del. Sept. 26, 2001). 	there was a question of
whether at the time of the layoffs it was a liquidating fiduciary or
"engaged in business"-if the latter, it would be considered an employer
under WARN.

Calvert v. Ladish Co. Inc., Arkansas 1999 Employers' motion to dismiss was 
        LR-C-97-577 (E.D.                               denied because seller 
          Ark. 1999).a                         was not relieved of obligation 
                                                  to provide notice where the 
                                             seller merely transferred assets 
                                                  to a buyer and not its      
                                                        employees.            

Calvert v. Ladish Co. Inc., LR-C-97-577 (E.D. Arkansas 1998 Employees who
were laid off as a result of a plant closing Ark. Mar. 23, 1998).a and not
rehired after sale of company suffered an employment loss; those rehired
after sale did not.

Castro v. Chicago Housing Auth., No. 99 C 6910, Illinois 2001 Factual
questions to be resolved at trial were whether a

2001 WL 709445 (N.D. Ill. June 25, 2001). 	single site existed for WARN
purposes and whether employer, a quasipublic entity, is a commercial
enterprise and thus subject to WARN requirements.

Castro v. Chicago Housing Auth., No. 99 C 6910, Illinois 2002 Court found
that a group of layoffs occurred at a single 2002 WL 31324053 (N.D. Ill.
Oct. 17, 2002). site.

Childress v. Darby Lumber, Montana 2001 WARN obligations applied because   
       Inc., 126 F. Supp.                  parent and wholly                  
2d. 1310 (D. Mont. 2001).                   owned subsidiary were a single 
                                                     business enterprise that 
                                                 employed over 100 employees. 
                                                     Employer did not qualify 
                                               for good faith, unforeseen     
                                                 business circumstance        
                                           exception, or faltering company    
                                           exception. Employer's              
                                           notice was inadequate because it   
                                           did not state why the              
                                            notice was for a shortened time   
                                                        period.               

Appendix III: Reported Court Cases under WARN Act, 1998-2002

                         Case State filed Year Outcome

Ciarlante v. Brown & Williamson Tobacco Corp., 143 F.3d 139 (3rd Cir.
1998).

Pennsylvania 1998 	Court reversed ruling for plaintiffs because it was not
clear whether plaintiffs, traveling salesmen, were at a "single site of
employment." The case was remanded to district court.

  Corbo v. Tompkins Rubber Co., 146 Lab. Cas. Pennsylvania 2002 District court
                  dismissed plaintiff's case because employer

(CCH) P 10071, 2002 WL 1969653 (E.D. Pa. 2002).

did not have more than 100 employees, which is the threshold for WARN
coverage.

DePalma v. Realty IQ Corp., New York 2002 Defendant's motion to dismiss on 
         No. 01 CIV 446                              the grounds that         
       RMB, 2002 WL 461647                    employees had waived their WARN 
       (S.D.N.Y. Mar. 25,                                  claims was denied; 
             2002).                              questions remained about the 
                                                      whether signed releases 
                                              were voluntary, and case will   
                                                  proceed toward trial.       

Dingle v. Union City Chair Co., 134 F. Supp. 2d Pennsylvania 2000 Court
found that fewer than 50 employees suffered an

441 (W.D. Pa. 2000). 	employment loss; thus WARN notice requirement was
not triggered.

Gomez v. Am. Garment Finishers Corp., No. EP-Texas 2000 Employees
previously laid off could be affected 99-CA-260-DB, 2000 WL 33348730 (W.D.
Tex. employees entitled to notice subsequently if they had a Oct. 12,
2000). reasonable expectation of recall.

Graphic Communs. Int'l Union, Local 31-N v. Maryland 2002 Employer was
entitled to use "good faith" defense even
Quebecor Printing Providence Inc., F. Supp. 2d, though it did not
initially raise this defense.
(D. Md. Apr. 25, 2002).

Graphic Communs. Int'l  Maryland 2001 Notice was required when the plant   
    Union, Local 31-N v.                 was shut down even                   
Quebecor Printing (USA)                though workers were previously laid 
     Corp., 252 F.3d 296                                 off and had received 
      (4th Cir. 2001).                     notice of temporary layoff. When   
                                                  shutdown occurred,          
                                            employees suffered an "employment 
                                                        loss," triggering new 
                                                       notice.                

Halkias v. General Dynamics Texas 1998 Court found that an unforeseen      
         Corp., 137 F.3d                  business circumstance               
      333 (5th Cir. 1998).                         relieved the employer from 
                                                 providing notice where there 
                                           was not a foreseeable probability  
                                                  that a significant          
                                             government contract would be     
                                                      cancelled.              

     Hollowell v. Orleans    Louisiana 2000   Court affirmed district court's 
    Regional Hosp. LLC, 217                  decision in favor of plaintiffs, 
F.3d 379 (5th Cir. 2000).                finding that two groups of        
                                            workers laid-off over a 90 day    
                                                period were appropriately     
                                                combined for purposes of      
                                              establishing that at least 50   
                                                   workers suffered an        
                                            employment loss, thus triggering  
                                                     the WARN notice          
                                                      requirements.           

Hotel Emples. and Rest. Emples. Int'l Union New Jersey 1999 Court affirmed
district court's decision in favor of
Local 54 v. Elsinore Shore Associates, 173 F.3d employer-failure to
provide notice was excused by
175 (3rd Cir. 1999). unforeseeable business circumstance exception where

government ordered the shutdown of a casino.

    Hotel Emples. & Rest.   New York 2000    Unforeseeable business exception 
    Emples. Int'l Union v.                              did not apply because 
Paroc, Inc., No. 99 Civ.               employer could not show that        
      3078 MBM, 2000 WL                   successful completion of            
204537 (S.D.N.Y. Feb. 2,                 negotiations was not reasonably   
            2000).                               foreseeable as of the        
                                            date that closure notices would   
                                                  have been required.         

In re Arrow Transp. Co. of Oregon 1998     Bankruptcy court found that the 
       Delaware, 224 B.R.                               debtor/employer was a 
    457 (Bankr. D. Or.1998).               "prevailing party" under the WARN  
                                                  Act and that it is          
                                          entitled to an award of attorneys'  
                                                   fees incurred in           
                                               objecting to that claim.       

Appendix III: Reported Court Cases under WARN Act, 1998-2002

                         Case State filed Year Outcome

In re Beverage Enters., Inc., 225 B.R. 111 (Bankr. E.D. Pa. 1998).

Pennsylvania 1998 	WARN Act claims arising or earned as a result of
events, which take place post-petition are entitled to administrative
claim status under the Bankruptcy Code.

    In re Fidelity Bond & Mortgage Co., No. 99-Pennsylvania 2000 Layoffs at
               different sites in Philadelphia did not occur at a

18427 DAS, 2000 WL 1218358 (Bankr. E.D. Pa. (Aug. 22, 2000)).

"single site," and insufficient evidence was presented that 50 employees
were laid off at any one site.

In re Jamesway Corp., 235 New York 1999     Court found a violation of the 
       B.R. 329 (Bankr.                            WARN Act, and the reliance 
        S.D.N.Y. 1999).                        on unforeseeable business      
                                                circumstance, faltering       
                                           company, and good faith exceptions 
                                           were not applicable;               
                                            WARN claims for back pay do not   
                                                  receive priority in         
                                                      bankruptcy.             

In re Jamesway Corp., 242 B.R. 130 (Bankr. New York 1999 Claim for
attorneys' fees awarded to a group of workers

S.D.N.Y. 1999). 	who brought successful WARN case were given priority in
bankruptcy.

In re Kitty Hawk, Inc., 255 B.R. 428 (Bankr. N.D. Tex. 2000).

Texas 2000 	WARN claims are not administrative claims receiving high
priority against a bankrupt debtor; WARN claims are treated as wages or
salaries-a "third priority" claim.

In re United Healthcare Sys., Inc., 200 F.3d 170 New Jersey 1999 Court of
              appeals reversed lower court ruling for plaintiffs;

(3rd Cir. 1999).

Court held that a bankrupt company winding up its affairs was not an
"employer" required to give WARN notice.

      International Assoc. of    Texas 2000   Appeals court affirmed lower    
          Machinists and                          court's decision that       
Aerospace Workers v. Compania                 employees' release of rights 
            Mexicana de                         constituted a waiver, and the 
    Aviacion, S.A. de C.V., 199             court held that the release does  
        F.3d 796 (5th Cir.                  not have to specifically          
              2000).                                  mention WARN.           

International Oil, Chem. & Atomic Workers, Local Illinois 1999 The appeals
court affirmed a lower court decision that the 7-517 v. The Uno-Ven Co.,
170 F.3d 779 (7th laid-off workers who were rehired after the sale of a
Cir. 1999). company did not suffer an employment loss and thus not

entitled to notice.

International Union, Oil, Chem. & Atomic Illinois 1998 The laid-off
workers who were rehired after sale of Workers, Local 7-517 v. Uno-Ven
Co., No. 97 C company did not suffer an employment loss. 2663, 1998 WL
341617 (N.D. Ill. June 23, 1998).

    Joe v. First Bank Sys.,  Nebraska 2000 The appeals court affirmed a lower 
Inc., 202 F.3d 1067 (8th                court decision finding             
          Cir. 2000).                      that one employee waived his WARN  
                                                    Act notice, and           
                                                another, who did not sign the 
                                                 waiver, received a defective 
                                           notice (no likely date of when the 
                                           layoff will occur or the           
                                                  date of separation).        

     Johnson v. Telespectrum                         The court found that the 
       Worldwide, Inc., 29      Delaware 2002  plaintiffs failed to establish 
                                                                      that at 
Fed. Appx. 76, 2002 WL 54693               least 50 employees suffered an  
         (3rd Cir. 2002)                      employment loss, noting         
145 Lab. Cas. (CCH) P 11228                that employees who quit         
          (NO. 01-1985).                      voluntarily are not considered  
                                              to                              
                                                have suffered an employment   
                                                   loss for meeting the       
                                                        threshold.            

Johnson v. Telespectrum Worldwide, Inc., 61 F. Delaware 1999 Court
declined to decide the case without a trial, finding

Supp. 2d 116 (D. Del. 1999). 	that issues of fact remained concerning
whether the requisite number of layoffs occurred to trigger WARN notice
requirements and whether an offer to transfer workers relieved the
employer of the obligation to provide workers notice; case proceeded
toward trial.

Appendix III: Reported Court Cases under WARN Act, 1998-2002

                         Case State filed Year Outcome

Kelly v. Sabretech Inc., 106 F. Supp. 2d 1283 (S.D. Fla. 1999).

Florida 1999 	Court held that back pay damages are to be based on work
days, not calendar days.

    Kildea v. Electro-Wire Prods., Inc., 144 F.3d 400 Michigan 1998 Laid-off
                 employees who had a reasonable expectation of

(6th Cir. 1998).

recall were "affected employees" entitled to notice when the plant
announces a permanent shutdown. Employer was entitled to good faith
defense where it interpreted the statute reasonably and otherwise complied
with requirements.

Kildea v. Electro-Wire Prods.,                  Despite a finding of a     
         Inc., 60 F. Supp.        Michigan 1999   violation of WARN by the    
                                                           circuit            
                                                        court, on remand, the 
     2d 710 (E.D. Mich. 1999).                     district court reduced the 
                                                                    amount of 
                                                   damages to zero based on a 
                                                finding of good faith and did 
                                                 not award attorney's fees.   

Kirby v. Cyprus AmaxMinerals New Mexico 2000 Plaintiffs sought relief for  
          Co., 203 F. 3d                           WARN violation from the    
       835 (10th Cir. 2000)                     successor company and not the 
                                                     companies that had       
                                                  terminated the employees    
                                                  without notice. Since the   
                                                        defendant was not the 
                                                  employer at the time, court 
                                                                        found 
                                                  that the employer was not   
                                                           liable.            

Local 1239, Int'l Bhd. of Boilermakers, Iron Illinois 1998 Following a
finding of WARN Act violation, court Shipbuilders, Blacksmiths, Forgers
and Helpers concluded that employer was liable for back pay only for

v. Allsteel, Inc., 9 F. Supp. 2d 901 (N.D. Ill. days worked during
violation period. Alleged knowledge

1998). by employees that plant would close did not excuse employer from
complying with WARN.

Local 1239, Int'l Bhd. of Boilermakers, Iron Illinois 1998 Court found
that where a layoff for which a WARN notice Shipbuilders, Blacksmiths,
Forgers and Helpers was provided was postponed, employees were entitled to

v. Allsteel, Inc., No. 94 C 3552, 1998 WL 808981 additional notice
referring back to the earlier notice. (N.D. Ill. 1998).

Local 819, Int'l Bhd. of Teamsters v. Textile New York 2000 Court found
that there was a genuine issue for trial as to Deliveries, Inc., No.
99CIV. 1726 (JGK), 2000 whether employees, who were terminated and offered
WL 1357494 (S.D.N.Y. Sept. 20, 2000). new employment, suffered a break in
employment

constituting an employment loss.

Local Joint Exec. Bd. of Culinary Bartender Trust Nevada 2001 Back pay
under WARN includes tips and holiday pay; this
Fund v. Las Vegas Sands, Inc., 7 Fed. Appx. court reversed the lower
court's denial of class
753, 2001 WL 366784 (9th Cir. 2001) (NO. 98-certification as a "damages"
class.
17065, 98-17322).

Local Union No. 1992, Int'l Bhd. of Elec. Workers New Jersey 1999
Reversing the district court's decision, Appeals court held

v. Okonite Co., 189 F.3d 339 (3rd. Cir. 1999). that plaintiffs' waiver of
WARN notice may have been valid because of ambiguous provisions of a
collective bargaining agreement. The district court had found that the
plaintiffs' waivers in exchange for severance benefits were invalid for
lack of consideration because they were entitled to those benefits under
the agreement without signing the waiver. Case was remanded to district
court for further proceedings.

Local Union No. 1992, Int'l Bhd. of Elec. Workers New Jersey 1998 The
district court reduced the attorneys' fees awarded to

v. Okonite Co., 34 F. Supp. 2d 230 (D.N.J. a Union, which had brought a
successful WARN action. 1998).

Appendix III: Reported Court Cases under WARN Act, 1998-2002

                         Case State filed Year Outcome

Michigan Regional Council of Carpenters v. Michigan 2002 On motion for
reconsideration, the court reversed an Holcroft L.L.C., 195 F. Supp. 2d
908 (E.D. Mich. earlier decision that fewer than 50 employees suffered an
2002). employment loss, finding several questions of fact, such

as whether certain laid off employees had a reasonable

expectation of recall.

New England Health Care Emples. Union, Massachusetts 1998 Court found that
issues of fact were present concerning District 1199 S.E.I.U. v. Fall
River Nursing Home the applicability of the WARN Act's strike exemption;
Inc., 14 I.E.R. Cas. (BNA) 400, 1998 WL 518188 shutdown of a health care
facility resulting from a strike (D. Mass 1998). notice would constitute a
strike under WARN unless the

notice were rescinded in a timely way. Case proceeded

toward trial.

North Star Steel Co. v. Pennsylvania 1995  Supreme Court resolved a split  
     Thomas, 515 U.S. 29                         in the circuits and held     
           (1995).                           that in the absence of a statute 
                                                   of limitations in the WARN 
                                              Act, federal courts should look 
                                                  to analogous state law, not 
                                              federal law, to determine the   
                                                time period for filing an     
                                                    action under WARN.        

Oil, Chem. and Atomic Workers v. RMI Titanium, Ohio 2000 Three employees
who were working on a special project

199 F.3d 881 (6th Cir. 2000). 	and terminated could not be aggregated for
purposes of meeting threshold number of layoffs in 90-day period, since
they were laid off for separate and distinct reasons. No reduction in
force occurred when temporarily laid-off employees were again laid off,
but replaced by employees returning from voluntary layoff status, and thus
not counted toward the threshold criteria.

Paper, Allied-Indus., Chem.    Maine     2000    Magistrate recommendation 
        & Energy Workers,                           that WARN claim be denied 
      Int'l Union et al. v.                        because employer had fewer 
    Sherman Lumber Co., 2000                        than 100 employees during 
U.S. Dist. LEXIS 10450 (D.                        the 12-month period      
       Me. July 11, 2000).                       preceding the snapshot date  
                                                             (the             
                                                  date that notice was to be  
                                                           given).            
Pearson v. Component Tech.               2001  Court affirmed lower court  
         Corp., 247 F.3d       Pennsylvania      finding that that employer's 
                                                 creditor was not liable for  
      471 (3d. Cir. 2001).                          employer's failure to     
                                                           provide            
                                                    notice using the test     
                                                 contained in regulations for 
                                                  determining the employer.   

Pearson v. Component Tech. Corp., 80 F. Supp. Pennsylvania 1999 The
creditor was not liable for employer's failure to 2d 510 (W.D. Pa. 1999).
provide notice.

Pena v. Crowley Am. Transp., Inc., 172 F. Supp. Puerto Rico 2001 Plaintiff
raised multiple claims, including one WARN

2d 321 (D. P.R. 2001). 	allegation. Court found that only 14 employees
were laid off; therefore, the notice requirement was not triggered.

Ramos Pena v. New P.R. Marine Mgmt., Inc., 84 Puerto Rico 1999 Multiple
count case, including WARN allegation; court

F. Supp. 2d 239 (D. P.R. 1999). 	found that layoffs did not occur at a
single site (Ponce and San Juan); therefore, the threshold requirement was
not met.

Reyes v. Greater Texas Finishing Corp., 19 F. Texas 1998 Court found that
a factual issue remained about whether

Supp. 2d 709 (W.D. Tex. 1998). 	50 employees suffered an employment loss.
Thus, case could proceed toward trial.

Roquet v. Arthur Anderson, LLP, No. 02 C 2689, Illinois 2002 Court held
that part-time employees can experience an

2002 WL 1900768 (N.D. Ill. Aug. 16, 2002). 	employment loss and may bring
suit against employer for failing to provide 60 day's notice of mass
layoff.

          Appendix III: Reported Court Cases under WARN Act, 1998-2002

            Case           State filed Year              Outcome              
Snider v. Commer. Fin.   Oklahoma   2002 Court held that employer did not  
Servs., Inc., 288 B.R.                   establish unforeseen              
890 (N.D. Okla. 2002).                   business circumstance defense for 
                                                   failing to provide         
                                                  timely notice, but that the 
                                               notice given for the shortened 
                                                time period contained the     
                                                  required information.       

Teamsters Local 838 v. Laidlaw Transit, Inc., 156 Montana 1998 Court held
that seasonal employees did not suffer an

F.3d 854 (8th Cir. 1998). 	employment loss because they were laid off
every year at the time of plant closing and had sufficient notice that
they would not be recalled.

Teamsters Nat'l Auto. Transporters Indus. Virginia 2002 Court dismissed
plaintiff's claim for civil penalties ($500
Negotiating Comm. v. Hook Up, Inc., No. Civ. A. per day, available only to
local government).
7:02CV00035, 2002 WL 1066954 (W.D. Va. May
23, 2002).

United Auto., Aerospace & Agric. Implement Michigan 2002 Employer's motion
for summary judgment was denied Workers of Am. Local 157 v. OEM/Erie
because court found issue of fact-whether company Westland, LLC, 203 F.
Supp. 2d 825 (E.D. Mich. exercised the requisite degree of control over
the plant's 2002). operations to qualify as a "single employer."

United Food and Commer. Workers Union Local Montana 1996 Unions have
standing (legal authority) to sue on behalf of 751 v. Brown Group, Inc.,
517 U.S. 544 (1996). its members under WARN.

United Mine Workers of Am. Int'l Union v. West Virginia 1998 Court found
that workers laid off in advance of plant
Martinka Coal Co., C.A., #1:96-CV-156 (Filed closing were entitled to WARN
notice.
Jan. 5, 1998) (N.D. W.Va.).a

United Mine Workers of Am. Int'l Union v. West Virginia 1999 The court
found that the coal company had violated Martinka Coal Co., 45 F. Supp. 2d
521 (D. W.Va. WARN with respect to 89 employees; the court 1999).
addressed the issue of damages-overtime, benefits, and

inactive employees.

United Mine Workers of West Virginia 2000     The appeals court affirmed a 
    Am. v. Martinka Coal                        lower court decision in favor 
Co., 202 F.3d 717 (4th                    of the plaintiffs: When an       
        Cir. 2000).                          affected employee's layoff date  
                                              is earlier than the date of the 
                                                 plant shutdown, the affected 
                                              employee is entitled to notice  
                                                  of the closing 60 days      
                                                 before the date of that      
                                                    employee's layoff.        

Watson et al. v. Michigan Indus. Holdings, et al., Michigan 2000 Court
found that the unforeseeable business
Civil No. 97-76034-DT (E.D. Mich. October 13, circumstances exception
applied where the employer
2000).a discontinued its operations due to unexpected failure of a

customer to pay a bill.

Watson v. Michigan Indus. Holdings, Inc., 311 Michigan 2002 Appeals court
affirmed district court's decision in favor of

F.3d 760 (6th Cir. 2002). 	defendant based on unforeseeable business
circumstances exception.

Watts v. Marco Holdings, L.P., 13 I.E.R. Cas. (BNA) 1552, 1998 WL 211770
(N.D. Miss. 1998).

Mississippi 1998 	Court found that the employer violated the WARN act,
noting that unforeseen business circumstance exception could have reduced
notice, but employer failed to give any notice and a brief statement of
the basis for the reduction of the period. Court reduced liability by 50
percent based on good faith exception.

Wilson et al. v. Airtherm Prods., Inc., U.S. District Arkansas 2001 Court found
                   WARN Act violation where workers were not

Court #2:01-CV-00055-WRW, (unpublished opinion, September 10, 2001) (E.D.
Ark. 2001).a

transferred after sale of company but had to submit application for new
employment.

Source: Guild Law Center, Lexis, Westlaw.

Appendix III: Reported Court Cases under WARN Act, 1998-2002

Notes:

This table includes only WARN cases containing a detailed discussion of
the WARN act provisions and does not include cases focused solely on
procedural issues.

This table also includes the two cases decided by the U.S. Supreme Court
which address the WARN Act, even though they were decided prior to 1998:
North Star Steel Co. v. Thomas, 515 U.S. 29 (1995); United Food and
Commercial Workers Union Local 751 v. Brown Group, Inc., 517 U.S. 544
(1996).

aMost of the cases in this table are reported decisions or available
through the Westlaw or Lexis legal databases; however, we have included
some decisions that we became aware of through the Sugar Law Center
Practitioner's Guide to Litigating the WARN Act.

Appendix IV: GAO Contacts and Staff Acknowledgments

GAO Contacts 	Joan Mahagan (617) 788-0521 Kara Kramer (202) 512-5434

Staff 	Katharine Leavitt made significant contributions to this report, in
all aspects of the work throughout the assignment. In addition,

Acknowledgments 	H. Brandon Haller, Christopher Moriarity, and Jerry
Sandau assisted with the methodology, Richard Burkard provided legal
support, and Patrick Dibattista assisted in the message and report
development.

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Dislocated Workers: Extent of Business Closures, Layoffs, and the Public
and Private Response. GAO/HRD-86-11BR. Washington, D.C.: July 1, 1986.

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