Have You Given Fair WARNing For Closings and Layoffs?
1 Mar, 2004
By: Rhonda C. ProctorAlthough the U.S. economic recovery is well under way, and there is substantive evidence that our economy is not only recovering, but also growing, there remains tremendous personal, professional and political friction about recent and continued job losses in this country. In the call center industry, this issue is of particular concern as nearly every week there are reports of call center closings and announcements of more offshore outsourcing partnerships. Without taking a stance on economic theory, it becomes important for executives, managers and agents in call centers to know how U.S. law protects them in the unfortunate event that their site must close.
WARN
WARN is the acronym for the Worker Adjustment and Retraining Notification Act, which mandates that companies provide advance notification to their employees when an operational site is expected to close, or when mass layoffs are planned. “It’s a very misunderstood act,” says employment law attorney Larry Bridgesmith of Waller Lansden Dortch & Davis in Nashville, Tenn. “WARN has often been referred to as the ‘plant closing’ law, but in reality no industry is excluded. Call centers, too, are required to be in compliance.”
The premise of the WARN legislation is that workers would be less likely to be permanently displaced if they had additional time to find alternative employment. Further, governmental agencies would have time to provide assistance if needed and potential buyers could see the site in full operation.
If planning a site closure, the provisions of WARN are fairly straightforward, as reported by the U.S. Department of Labor:
• Employers must provide 60 calendar days’ written notice in advance of closings and mass layoffs (except when the closing results from a faltering company, unforeseeable business circumstances or a natural disaster) to employees (or their representative), the state dislocated worker unit and the chief elected official of a unit of local government.
• A closing refers to a full shutdown of a facility or operating unit for more than six months or when 50 or more employees lose their jobs during any 30-day period at a single employment site.
• A mass layoff refers to a designated number of total workers laid off during a 30-day (or, in the case of a series of layoffs, a 90-day) period and occurs when the layoff is six months or longer and affects 500 or more workers or when it is at 50 employees and 33 percent of the employer’s workforce of 100 or more workers.
What is less clearly stated is how the law affects non-traditional employment arrangements, which have become so prevalent in the contact center today. However, Bridgesmith reminds employers that, “The issue of employee status under WARN is measured by traditional common law principles. True independent contractors are not employees under WARN. However, not every individual labeled an independent contractor is one under the law. The measure of independence is the key to determining employee vs. independent contractor status.”
He continues, “One who works for another is probably an employee if he is not able to set his own working schedule, does not own his equipment, provide his own materials or is not able to work for another. Most dedicated agents or for-hire workers are employees are subject to the protections of WARN if they work in an affected establishment and (are) subject to the same supervision.”
Agents working for an outsourcer who takes dedicated calls for a company announcing a closure are excluded, because these agents are employed by the outsourcer. However, the outsourcer may be covered separately. WARN applies to all companies (domestic or foreign) with operational units in the United States, but does not pre-empt any other federal, state, local law or employee arrangement with other notification requirements.
Call Center Closings
While the scope of the law is straightforward, the reality is that neither traditional nor non-traditional work arrangements in the call center business have been aggressively contested in court. In fact, says Bridgesmith, “There was one reported case in 1999—Johnson v. Telespectrum Worldwide—in which it was questioned if the employer had met an exception related to assisting a displaced worker find employment opportunities. However, the case was dismissed by the court because the plaintiffs could not meet the WARN requirements of proving that 50 full-time employees at a single establishment had lost employment due to displacement.” More recently, a Pompano Beach, Fla., telemarketing firm that solicited donations for non-profit organizations, ceased operations overnight on Oct. 1, 2003, closing down several of its centers and displacing 450 employees. A representative informed The Associated Press that the company owed employees “several weeks’ pay”, presumably associated with the penalty of non-compliance with WARN.
Bridgesmith suggests that the implications of this case are instructive, because it questions whether a call center that offers displaced workers alternative employment can be exempted from the 60-day notification. Another key issue in WARN cases is the employer’s “guarantee of employment.” For example, what happens when a center that operates in geographically dispersed locations gives notice to close one site and offers employment to staff members at an operation in another state? Bridgesmith says, “It relates to the measure of reasonableness of the commute.” Meaning, if a city location closes and jobs are migrated to a suburban location with a reasonable commute, the employer may be excluded from WARN. However, it is not likely considered “reasonable” if jobs are made available at another center in another geographic region.
Perhaps call centers are traditionally compliant with WARN, which is why so little is heard about the topic. Conversely, it could be that the enforcement body of WARN, the Department of Labor (DOL), doesn’t often exercise its power of judicial options. After all, DOL is only apprised of violations when an official complaint is registered by an employee or employee group (such as a union) and the application of the law is only contested when a suit is brought, typically by the affected employees. Another factor unique to the call center industry could be the vast number of part-time employees, who are excluded from the liability of WARN if they work less than 20 hours per week.
Truthfully, it’s likely a combination of all factors. However, looking at an unscientific sample of the recently announced call center closures, it seems as though compliance is not an issue.
Effects of Non Compliance
Employers that do not comply with WARN are liable to each employee affected for an amount equal to the back pay and benefits for the period of the violation, up to 60 days. This is based upon the notice provided to the employee and any other voluntary arrangements made by the employer. Employers who do not provide 60 days’ notice to the local government may be required to pay a civil penalty of $500 for each day of violation. However, this can be avoided by satisfying the amount owed to employees within three weeks after the closing or layoff.
The bottom line is this: If a call center must close a site or lay off a portion of its workforce, it must be compliant with WARN, and is required to give employees 60 days’ advance notice of the closure or layoffs to avoid any potential legal entanglements.
For more information on WARN, visit the U.S. Department of Labor’s web site at www.dol.gov. CP
Sidebar: Career Transition Services for Laid-off Workers
In the unfortunate event that a call center has to close a location or
reduce its workforce, progressive companies support their laid-off workers
by connecting them to the public workforce system before a closing or
reduction is announced. According to Dr. Jim Koeninger, COO of Strategic
Partnerships LLC in Alexandria, VA, the services that the State Rapid
Response Unit or local One-Stop Centers can provide include:
• Core Services On-site: orientation workshops, Unemployment Insurance (UI) claims filing information, initial worker assessment, job search workshops, placement assistance
• Intensive Services: comprehensive assessment, group counseling, individual counseling and career planning, development of an Individual Employment Plan, literacy training for workforce readiness, relocation assistance
• Training Services: job readiness training, skill upgrading and/or retraining, and on-the-job training
The most important action, according to Dr. Koeninger is ensuring that, when laying off workers, that the company connects with the State Rapid Response Unit (if WARN is in effect) or the local One-Stop Career Center (if WARN is not in effect) to ensure that employees receive all dislocated worker benefits as they search for a job and/or a new career. For more information, contact Jennifer McNelly at
