April 23, 2024
Tesla’s Layoffs Bring WARN ACT to Attention
Tesla has recently announced a 10% reduction of its workforce. This decision comes amidst a backdrop of economic challenges and shifting market dynamics for its business. It has been reported that Tesla is offering its laid off employees severance pay and continued healthcare benefits. Employees are generally not entitled to severance pay in a layoff or plant closing. However, Congress has provided some notice protections to employees subjected to a mass layoff under the Worker Adjustment and Retraining Notification (“WARN”) Act.
Does the WARN Act apply to all employers? The WARN Act has limited application and does not apply to every employer. The statute only applies to employers with 100 or more full-time employees. To get to this headcount under the statute, part-time employees who work less than an average of 20 hours per week are excluded. The statute also excludes new-hire employees that have been employed for fewer than 6 of the 12 months preceding date of the mass layoff or plant closing.
What does an employer have to do under the WARN Act? An employer covered by the WARN Act must provide written 60-day notice to affected employees that they will be impacted by a mass layoff or plant closing. An employer must also notify the state and local governments where the mass layoff or plant closing is occurring of its decision. The WARN Act does not require employers to pay any severance or healthcare benefits to employees if proper notice is given.
What is a “mass layoff”? A mass layoff occurs in two situations: (1) the employer lays off 500 or more employees (not counting part-time or new-hire employees) at a single site of employment during a 30-day period; or (2) the employer lays off at least 50 employees (not counting part-time or new-hire employees) at a single site of employment during a 30-day period and the number of employees laid off accounts for at least 33% of the employees at the single site of employment.
What is a “plant closing”? A plant closing occurs when an employer closes a facility or discontinues an operating unit permanently or temporarily, affecting at least 50 employees (not counting part-time or new-hire employees), at a single site of employment.
What happens if an employer fails to give notice? If an employer fails to provide notice, an employee impacted by a mass layoff or plant closing is entitled to back pay and healthcare benefits up to 60 days. An employer is not required to reverse or delay a mass layoff or plant closing if they fail to provide notice.
If my employer fails to give notice, who do I report that to? There is no federal agency that investigates violations of the WARN Act. However, an affected employee has the right to bring a lawsuit for backpay and healthcare benefits. If you believe your employer has failed to provide adequate notice under the WARN Act, you should consult with an attorney.
In the case of plant closings and mass layoffs, affected employees would be well-advised to seek legal counsel to understand their rights and potential entitlements under the WARN Act. The WARN Act remains a critical safeguard for employees, ensuring they are not left adrift in times of significant corporate restructuring and market adjustments.