Does the WARN Act Apply to Termination of Remote Workers?

Does the WARN Act Apply to Termination of Remote Workers

COVID-19 has presented countless challenges and changes for employers, and among the biggest has been the shift to remote work arrangements. With a newly remote workforce, employers have had to make changes to the way they hire, manage, and in some cases, discharge their employees.

Even before the pandemic, remote work had been growing in popularity, with a 159% increase in remote workers in the twelve years leading up to the start of the pandemic. Now it is estimated by some studies that as many as 36.2 million Americans may work from home by 2025. Though employers have already been scrambling to consider new issues that have arisen from tracking pay and hours worked to tax issues from out-of-state workers, another issue they may need to consider has arisen, and that is the Worker Adjustment and Retraining Notification (WARN) Act.

The WARN Act is something employers rarely enjoy thinking about before it becomes necessary because it concerns a situation where a significant reduction in force is to take place. However, remote work poses unique considerations that are worthy of considering whenever such arrangements are to take place.

The WARN act requires employers to provide workers with at least 60 days of notice prior to a covered facilities closing. A covered facility’s closing is regarded as occurring when a single site of employment is shut down or when one or more operating units within a site are shut down if the shut down will result in a “mass layoff.”

For the purposes of the WARN Act, this criterion is met when at least 50 workers amounting to at least 33% of active employees, excluding part-time workers, will be unemployed during any 30 day period. For any situation in which 500 or more employees (excluding part-time workers) will be affected, the 33% criteria will not apply. However, this leaves the question, what is a single site of employment where remote workers are concerned?

Fortunately, the U.S. Department of Labor provides some guidance in its frequently asked questions (FAQ). Here the FAQ states that for workers whose primary duties involve work outside of the employer’s regular employment sites for WARN Act purposes, “the single site of employment to which they are assigned as their home base, from which their work is assigned, or to which they report will be the single site in which they are covered for WARN purposes.”

What this means for employers with a significant number of remote employees and few workers headquartered in a central location, the WARN Act could relatively easily be activated by layoffs. For example, imagine an employer of only 30 workers in a central headquarters in New York City, who employs 300 remote employees across the country. If this company were to lay off 100 of its remote employees, the WARN Act would theoretically be triggered.

Though this is not what the WARN Act was intended to address, which was to give local and state governments time to prepare when a large number of employees might be left unemployed. However, given that, in theory, at least the WARN Act would apply, employers should be aware of the issue and ensure their policies are ready to comply with this rule.

In theory, this is not what the WARN Act was intended to do.

Pre-employ offers free resources to help you stay compliant in your hiring practices. Check out our guide on 5 Tips To Avoid FCRA Non-Compliance to keep your company up-to-date.