As an employment lawyer, I see many workplace trends. Sometimes it’s a need to hire workers quickly to staff recently-awarded contracts, sometimes hot-button political issues divide workers, and other times it involves reducing the workforce due to a pivot in strategy. If you have been following the news lately, there is also considerable discussion of the toll the recession is taking and economists are forecasting layoffs in the future.
Having to plan a Reduction in Force (RIF) is always painful. Making decisions knowing about the personal lives of employees and how this will impact them and their families creates hesitation and major guilt. In addition to the layoff criteria that has to be established, employers can easily overlook state and federal laws under the Worker Adjustment and Retraining Notification (WARN) Act. Failing to factor in these important Acts can be costly.
In 2014, Jos. A. Bank, a well-known clothier of formalwear, had 775,000 square feet and over 800 employees working in Hampstead, MD. The clothier is one of the latest employers to be impacted by the economy and reported its lay off of 51 employees and closure of its Hampstead location. Such circumstances fall squarely under the Maryland WARN Act.
Effective October 1, 2020, Maryland employers with 50 or more employees operating industrial, commercial, or business enterprises in the state must provide 60 days’ advance written notice before initiating a “reduction in operations.” A “reduction in operations” is defined as:
- the relocation of a part of an employer’s operation from one workplace to another existing or proposed site; or
- the shutdown of either a workplace or a portion of the operations of a workplace that reduces the number of employees by the greater of (i) at least 25 percent or (ii) at least 15 employees, over any 3-month period.
Written notice must be provided to the affected parties 60 days before initiating a reduction in operations. Notice must be given to:
- all employees at the workplace subject to the reduction;
- any exclusive representative or union of the affected employees;
- state agencies (such as the Maryland Department of Labor’s Division of Workforce Development and Adult Learning’s Dislocated Worker Unit); and
- all elected local officials in the area of the affected workplace.
The notice must include:
- the name and address of the workplace where the reduction will occur;
- a supervisor’s contact information (name, telephone number, and email address) for those seeking further information;
- a statement explaining whether the reduction is permanent or temporary and whether the workplace is expected to shut down; and
- the date when the reduction in operations is expected to begin.
The cost of ignoring Maryland’s WARN acts is high. Civil penalties of up to $10,000 per day, can be assessed by the Maryland Secretary of Labor for failure to provide the required notices to all parties.
Larger employers with 100 or more employees should be mindful of the federal WARN Act as well. The federal WARN Act has penalties of $500 per day triggered only by a failure to provide notice to the chief elected official, but not by a failure to provide notice to the impacted employees or their union.
Like Jos. A. Bank, if your business is considering a major staffing reduction or location closure, reach out to experienced employment counsel to make sure you’re considering all factors. Otherwise, consider yourself WARNed!
