North Carolina companies finding loopholes in WARN act

Layoffs are sweeping through Charlotte, N.C., but almost all are under the radar. The federal law that requires companies to publicly disclose big job cuts has lots of loopholes and virtually no enforcement authority.

That law, called the WARN Act, garners scarce attention during recessions, and almost none in good times.

The Worker Adjustment and Retraining Notification was enacted 20 years ago, and its intent was to prevent situations where rank-and-file employees show up for work only to discover that their employer has shut down without notice. WARN does this by requiring companies that are planning mass layoffs to notify their state and local government, as well as the affected workers, at least 60 days in advance.

To be sure, the law was created with workers in mind, not public-disclosure principles. Still, the law's multiple loopholes render it virtually useless in tracking layoffs in a company or throughout a city.

The federal WARN Act applies to businesses with 100 or more full-time employees. Companies must file a WARN if they lay off at least 50 people, representing at least a third of the company's active workforce. Companies also must file a WARN if they lay off 500 or more people, regardless of the proportion of workers they represent.

There are plenty of ways to follow the letter of the WARN Act but not the spirit. For example, for WARN to be triggered, the layoffs generally must occur within a 30-day period, so companies can get around WARN by staggering their job cuts. Buyouts, retirements and firings don't count as layoffs, so if a smaller company wants to lay off 55 workers without filing a WARN, it can get six of them to take buyouts.

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