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WARN Act - Home


See: DOL Regulations / Exceptions /  WARN & Bankruptcy  / WARN & Business Transactions /  Controlled Group Issues


2017.12  California Mini-WARN and Mass Layoffs.  For federal WARN Act protections to attach, a mass layoff must exceed six months. Not in California! See Boilermakers Local 1998 v. Nassco Holdings, holding that 60 days advance notice is required under California's mini-WARN Act before an employer lays off 50 or more employees within a 30-day period.


2017.08.04  Likelihood of Mass Layoff as a Trigger Event.  The Third Circuit ruled in Varela v. AE Liquidation, Inc. (In re AE Liquidation, Inc.), 2017 U.S. App. LEXIS 14359 (3d Cir. 2017), that WARN Act protections are triggered when a mass layoff becomes probable – “that is, when the objective facts reflect that the layoff was more likely than not.” The Third Circuit joined the Fifth, Sixth, Seventh, Eighth and Tenth Circuits, which have ruled likewise.


2016.07. Personal Liability for WARN Violation.  In Stanziale v. MILK072011, a Delaware District Court recognized that "directors - or in the case of a limited liability company, its controlling owner, manager, and President - owe a fiduciary duty to the company they serve," and accordingly rejected a motion to dismiss because it was alleged that they "ignored their responsibility to give [appropriate WARN notices] and thereby exposed Debtor to the WARN Act claim." 


2016.Jan.06  Paid Leave Delays "Termination Date"(Morton v. Vanderbilt, 6th Cir).  Per Law 360.

  • WARN Notice Is Not End Of Employment, 6th Circ. Says​, By Kelly Knaub 
  • Law360, New York (January 5, 2016, 10:47 PM ET) -- The Sixth Circuit Tuesday held that a district court erred in ruling that the employment of a group of former Vanderbilt University Medical Center workers ended once they received a termination notice, holding that an employment relationship has not ended until employees no longer receive wages and accrue benefits.
  •  In a precedential opinion, the three-judge panel said that Tennessee’s Middle District mistakenly ruled that a group of 279 Vanderbilt employees were terminated when they received notice of their layoffs in September 2013, saying the workers remained on paid leave until that November, when they stopped receiving wages and accruing benefits.


2013.Mar.26  Asset Purchaser Held Liable for Seller's Employment Liabilities (7th Cir).  The 7th Circuit decision reported below provides a good reminder about the federal common law of successor liability for employment-related liabilities, and its potential in asset purchase transactions to surprise buyers – and those who lend to them. Below are two notable quotes from the court’s decision. The case does not relate to WARN claims, but the analysis is worth considering: 

  • "We suggest that successor liability is appropriate in suits to enforce federal labor or employment laws—even when the successor disclaimed liability when it acquired the assets in question—unless there are good reasons to withhold such liability. Lack of notice of potential liability— the first criterion in the federal standard as usually articulated—is an example of such a reason.”  . . .
  • “As a result the bank’s secured claim would in effect become junior to the workers’ unsecured claim by the amount by which that claim depressed the price that the successor would pay for Packard. . . . That is a good reason not to apply successor liability after an insolvent debtor’s default, whether its assets were sold in bankruptcy or outside (by a receiver, for example, as in this case): to apply the doctrine in such a case might upend the priorities of competing creditors. See In re Trans World Airlines, 322 F.3d 283, 290, 292-93 (3d Cir. 2003); Douglas G. Baird, The Elements of Bankruptcy 227-28 (5th ed. 2010). It’s an example of a good reason not mentioned in conventional formulations of the federal standard for not imposing successor liability. But it doesn’t figure in this appeal. Thomas & Betts has not urged it. It says that it didn’t discount its bid for Packard because of the workers’ claims; this both suggests that it didn’t anticipate successor liability and may explain why the bank has not complained about the imposition of that liability.”2013.Feb.11  


Duty to Warn Excused due to Lender Shut-off of Funding (5th Cir.)  The 5th Circuit found a "convincing example of an event that meets the unforeseeable business circumstance exception" from giving a WARN notice where the record showed a "possible" termination of outside funding rather than evidence that the employer "probably knew . . . that it would be stripped of funding, causing an immediate shutdown." Although the court noted that the employer's financial condition was "perilous," the court further noted that it took simultaneous action by two lenders to cut off funding, and they did so without warning. See Angles v. Flexible Flyer Liquidating Trust (5th Cir.).