WITHOUT WARNING: Effects and reform of the WARN Act

Numerous states try to address plant closings

Ohio lacks WARN-type law, but its attorney general says he would back efforts to enact one

7/18/2007

COLUMBUS -- Marc Dann had a question when a client in his private legal practice asked him in 2002 to pursue a lawsuit alleging a violation of the federal plant-closing notification law.

"Does that still exist?" asked Mr. Dann, who was then a state senator from the Youngstown area and now is Ohio's attorney general. "It's such a little-used tool because it's clearly not working well for the workers."

Mr. Dann represented former workers of AJAX Magnethermic in Warren, Ohio, suing their former employer for failing to provide proper notice under the Worker Adjustment and Retraining Notification Act, or the WARN Act, before they were laid off in May, 2002.

The lawsuit ended in a settlement, but while litigating the case, Mr. Dann witnessed the shortcomings of the federal law.

"The idea of the WARN Act was to force companies to ... give the workers a dignified amount of time to find another job," Mr. Dann said. "And when it fails, they don't have that opportunity to go and find another job. People end up in bankruptcy and foreclosure. These are generally people who have worked hard and played by the rules."

READ MORE: Effects and reform of the WARN Act

Recognizing the inadequacies of the WARN Act, at least nine states have passed their own versions to supplement the federal law, according to the National Conference of State Legislatures and attorneys involved in labor employment law.

But most of those state laws have provided little relief to workers, said Julie Hurwitz, the former executive director of the Maurice and Jane Sugar Law Center for Economic and Social Justice, a nonprofit organization in Detroit that has focused on enforcing the WARN Act for the last 16 years.

"The problem with the state laws is most of them were advisory and not mandatory, without any penalties," Ms. Hurwitz said.

Ohio doesn't have its own WARN Act, but Mr. Dann said he would support one to provide more protection to workers.

Most recently, lawmakers in New Jersey passed a bill designed to combat so-called "take-the-money-and-run" plant closings.

The bill would require all companies with at least 100 employees to give a 90-day notice before a plant closing or massive layoff, an increase from the federal law, which requires a 60-day notice.

In addition, New Jersey would require WARN Act offenders to pay displaced employees one week of severance pay for each year they were employed with the company. Under the federal law, workers are entitled to up to 60 days of back pay if their employers fail to provide proper notice.

Gov. Jon Corzine, a Democrat, is reviewing the bill, said Brendan Gilfillan, a spokesman for the governor.

"The governor believes it is important to add teeth to notification requirements, which the bill does, but he also has some concerns about extending the notice period requirements, in terms of what that might do to our competitiveness with states around us," Mr. Gilfillan said.

If Mr. Corzine signs off on New Jersey's WARN Act, the state would join states, such as California and Illinois, which have laws that are models for efforts to overhaul the federal law, workers' advocates say.

The California law, which took effect in 2003, requires employers with at least 75 employees to provide a 60-day notice if a major layoff or plant closing affects 50 or more workers.

The federal WARN Act requires that if a company lays off from 50 to 499 workers, the number must be at least one-third of the full-time work force.

California's version of the law does not include the one-third requirement, and it makes the parent company liable if a subsidiary violates the law, said Stuart J. Miller, a New York City attorney who specializes in representing workers in WARN Act lawsuits.

Under the federal law, companies can avoid liability by saying they were "actively seeking capital" and business and claiming that notice would hurt their efforts - a provision referred to as "faltering company," which critics say often is used as an excuse to skirt the law.

Under California law, a company must prove to state government that it is "faltering" by disclosing records that show it was pursuing capital and signing an affidavit verifying the contents of those records.

Illinois' version of the WARN Act, which took effect in 2005, covers employers with 75 or more full-time workers. By contrast, the federal law applies to employers with 100 or more full-time employees.

State government in Illinois also has the power to "examine the books and records of an employer" to determine if a violation has occurred. "It has provided workers with additional protections," said Michael Kleinik, manager of the conciliation and mediation division of the Illinois Department of Labor.

Contact James Drew at: jdrew@theblade.com or 419-351-2004.