When San Francisco-based law firm Thelen abruptly shut its doors in December 2008, the legal world was shocked. The firm was more than 80 years old and employed about 400 lawyers in offices in Washington, D.C., Shanghai, New York and other cities around the world.
But no one was more shocked than the newly out-of-work associates at the firm, who allege they had little notice before Thelen shut down. A group of lawyers and staff sued, alleging that the firm violated the Worker Adjustment and Retraining Notification Act, commonly known as WARN.
Most significantly, the Forewarn Act would encompass smaller employers and would be triggered by smaller layoffs. Currently, WARN applies only to companies with at least 100 employees. Forewarn would take that down to 75. Under current law, WARN's notice obligations are only triggered by a facility closing affecting at least 50 full-time employees, or a "mass layoff" impacting 33 percent of the work force or more than 500 employees. Forewarn's trigger is 25 terminations within a three-month period.
"It will be very difficult for employers to anticipate when they will trigger WARN notice requirements," says Philip Miscimarra, a partner at Morgan Lewis who represented the Business Roundtable during the development of the original WARN regulations. "A 'mass layoff' is defined such that the statute is triggered even if a plant stays open and only a few people are terminated at a time."
Forewarn would also change the enforcement scheme for violations of the statute. WARN is currently enforced only through private rights of action in federal court. Forewarn would authorize the Department of Labor to investigate alleged violations of WARN and bring lawsuits on aggrieved workers' behalf, similar to the manner in which the EEOC currently enforces anti-discrimination laws. By the same token, the Forewarn statute would require employers to notify the DOL when it undertakes a RIF that triggers WARN.