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WARN Act Plant Closing Law Needs Broader Scope, Stronger Teeth |
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Wednesday, 21 May 2008 |
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It’s been nearly 20 years since a federal law went into effect to give workers a little heads up by requiring employers to provide a 60-day notice before a massive layoff or plant closing.
By Mike Hall AFLCIO Now Blog But the Worker Adjustment and Retraining Notification Act (WARN) has so many loopholes and exemptions it has “failed to live up to its promise,” AFL-CIO Secretary-Treasurer [1] Rickard Trumka told the Senate Health, Education, Labor and Pension Committee this morning.Joe Aguiar knows that first hand. He told the committee that after working for 27 years at the Quaker Fabric plant in Fall River, Mass., he received a phone call the evening of July 2 telling him that he and his 900 co-workers were out of a job. The plant was shuttered and padlocked the next morning. We were in disbelief….About a week after the company closed, my former co-workers and I received a letter in the mail telling us what we already knew, that we had been terminated effective the prior week. The Worker Adjustment and Retraining Act, the WARN Act, was mentioned in that letter, but I had never heard of the law and was unaware that there was any law that protected employees like me who are terminated as part of a mass layoff or plant closing. The WARN Act requires employers with more than 100 workers—as Quaker had—to provide 60 days advance notice of a closing or mass layoff. Aguiar said if he had been given the 60-day notice, it could have made a big difference. I would have prepared myself for both the financial and emotional impact. I would have had a head start looking for a new job. But less than a quarter of all layoffs are covered by the WARN Act and, according to a Government Accountability Office (GAO) study, only about one-third of those actually come with WARN notices. Trumka told the committee: By any fair assessment, WARN has not lived up to its promise. It has certainly not lived up to the hopes of those of us in the labor movement who, beginning in the 1970s, fought to develop a more comprehensive and coherent strategy for dealing with the wave of plant closings and corporate downsizing that has now resulted in the de-industrialization of large parts of America. The shortcomings of WARN boil down to this: the act requires too few employers to give too little notice to too few workers, and it allows too many employers to flout the law with impunity.
Sen. Sherrod Brown (D-Ohio) said one of the glaring loopholes in the WARN Act is the lack of an enforcement mechanism. Due to enforcement only by the courts, employers have often failed to provide notice….Less than one-third of mass layoffs are even covered by the Warn Act because of its many loopholes. And most employers who are covered fail to comply with the law, either out of ignorance or because the penalties and enforcement are so weak they can be ignored. With no enforcement hammer, affected workers are forced to hire attorneys and take their case to the federal courts. Aguiar and his co-workers have filed suit. But more than half of WARN cases, according to a 2007 investigation by the Toledo Blade, are thrown out of court because of the law’s loopholes. What few penalties are assessed provide no deterrent, said Brown. Workers at National Machinery in Tiffin, Ohio, filed a WARN lawsuit after employers announced mass layoffs without any notice. The company claimed it was seeking new financing when it laid off hundreds of workers. Workers filed a lawsuit, and eventually, a judge approved a settlement that paid $375 to each worker for the violation. That kind of settlement hardly deters bad corporate behavior.
Last year, Brown, along with Sens. Hillary Rodham Clinton (D-N.Y.) and Barack Obama (D-Ill.), introduced the FOREWARN Act (S.1792) to cover more plants, provide a 90-day notice, increase penalties and require the U.S. Department of Labor to enforce the law. A similar bill (H.R. 3796), introduced by Rep. George Miller (D-Calif.), [2] was passed by the House in October but faces a veto threat from President Bush. Trumka called both bills “tremendous progress.” But with mass layoffs occurring at a pace of about 1.5 million workers a year—almost half-a-million workers have been idled by mass layoffs in just the first three months of 2008—a six-month notice should be required, Trumka said. One of the principal purposes of early warning is to give state and local governments time to prepare effective services for displaced workers and develop strategies for responding to the sudden loss of jobs and tax revenue. The earlier that notice is given, the more effective assistance programs can be in getting workers back to work more quickly at better wages. Another purpose of early warning is to give workers time to prepare themselves financially, to pursue education and retraining opportunities, and to search for other employment. Dislocated workers who receive advance notice and early adjustment assistance are more likely to be successfully retrained, and they get new jobs sooner and earn more than they would have without early intervention. And early warning increases the likelihood that employees can find work prior to being laid off, thus avoiding unemployment spells.
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