WARN Act falls short as jobs vanish

Lawmakers hope reform is high priority for Obama

12/22/2008

As the realities of the economic downturn set in, droves of companies are shedding employees: Sometimes offering them notice required under federal law, sometimes not.

The Sugar Law Center, a nonprofit organization based in Detroit that assists workers in WARN Act lawsuits, said its call volume has more than doubled since September, when the recent wave of layoffs and business closings started.

Concerned workers are increasingly phoning that agency to find out if their former employers followed the 20-year-old federal law, which requires many employers to notify employees 60 days before a massive layoff or plant closing.

"Businesses are asserting that because of the economic conditions that have come to a head in the past two months, that alone allows them to not give notice to workers," said John Philo, Sugar Law Center's legal director. "That defeats the purpose of the law."

Mr. Philo, like others who believe that the federal Worker Adjustment Retraining Notification Act, known as the WARN Act, is long overdue to be strengthened, are hopeful that President-elect Barack Obama will sign legislation to overhaul the law soon after he takes office next month.

Since Sept. 1, more than 60 businesses in Ohio have filed WARN Act notices with the state, notifying workers and the government that at least 13,500 workers would lose their jobs.

But what's of concern to some lawmakers and labor activists is the companies that lay off large numbers of workers, but fail to provide notice or aren't required to provide notice because of shortcomings in the federal law.

READ MORE: Effects and reform of the WARN Act

In 2007, a Blade investigation showed that the WARN Act, because of the difficulty enforcing it, is routinely skirted by employers, much to the frustration of displaced workers.

The series identified several weaknesses with the WARN Act, including the fact that recently laid-off workers are responsible for enforcing its provisions against their former employers, making it difficult to collect damages.

Earlier this month, workers in Illinois staged a six-day sit-in that gained national attention when their employer, Republic Windows and Doors, closed with just three days' notice and without paying employees severance or accrued vacation pay. Eventually, after national attention focused on the plight of the workers, a settlement was reached giving workers about $7,000 each.

Advocates are hopeful the national attention will trigger reform in Washington to add new protections for workers on the brink of losing their jobs.

After The Blade's series on the WARN Act ran last year, U.S. Sen. Sherrod Brown, a Democrat from Ohio, along with U.S. Sens. Hillary Clinton and Barack Obama, introduced legislation to overhaul the law.

Their proposal, called the "FOREWARN Act," included a longer layoff-notice period and increased penalties for companies that violate the law. It also proposed that the WARN Act apply to smaller groups of displaced workers and it empowered the Department of Labor and state attorneys general to bring claims on behalf of workers.

A similar bill passed the U.S. House last year and was the subject of a hearing in the U.S. Senate this spring, but it never became law after it was blocked by Republican opposition.

WARN Act reforms have been opposed by business groups like the U.S. Chamber of Commerce because of concerns that the new regulations would put more constraints on business owners.

Senator Brown is hopeful that WARN Act reforms will be on Mr. Obama's agenda when he takes office.

"There has been so little attention paid to manufacturing under the Bush Administration," Mr. Brown said. "I'm very hopeful that we can do more than that, and that we can deliver a manufacturing package - and the WARN Act will be part of that."

Some, like Tom Kummerer, who was among about 500 employees at National Machinery in Tiffin, who lost their jobs without notice in 2001, fear that it is already too late for the thousands of workers laid off this fall.

"I'm very disenchanted," said Mr. Kummerer, who along with fellow National Machinery workers received a court settlement paying workers a small percentage of what they felt they were owed.

"I've seen factories continue to close and people continue to get hurt, but no one in Washington listens."

Mr. Kummerer said the WARN Act would be strengthened if the lawmakers made it applicable to more businesses by lowering the thresholds that trigger notices. He also said workers' WARN Act claims deserve higher priority in cases where businesses are being liquidated or assets are sold.

"The people out here in the streets are suffering," Mr. Kummerer said. "The politicians are sitting here and saying they are going to worry about it next year. To the people who lost jobs six years ago, that doesn't mean [anything]."

Contact Steve Eder at: seder@theblade.com or 419-304-1680