Layoff notices law riddled with loopholes

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Keeping track of the banks’ job cuts is nearly impossible, partly because the federal law that governs layoff notices is full of loopholes and rarely enforced anyway.

But that could change: The law, which is called the WARN Act, would get a lot tougher if Congress passes a bill introduced last month.

WARN generally requires companies to notify workers, as well as state and local government, of mass layoffs at least 60 days in advance. The idea is to give workers time to look for new positions, and help the government coordinate programs like job training or unemployment insurance.

It’s a nuanced law, and many workers aren’t even aware of it. But it’s getting more attention in the recession.

WARN applies to businesses with at least 100 workers. WARNs are required for layoffs of 50 or more employees at one “employment site” within a 30-day period ? but only if those employees represent one-third of the work force. WARNs also are required for any layoff of 500 or more employees.

But WARN, which stands for Worker Adjustment and Retraining Notification, is riddled with technicalities. Companies can stagger layoffs over several months. They can fire employees, or offer buyouts or retirement, which don’t count as layoffs. And the definition of “employment site” is so ambiguous, companies can classify it in a wide variety of ways.

Wells Fargo, which filed a WARN for 548 uptown workers in May, said it counts eight uptown addresses as a single site, a decision it calls “the most appropriate approach.” Had it classified them separately, it almost certainly could have avoided filing a WARN.

Bank of America declines to specify how it classifies employment sites, except to say that it has “many employment sites in Charlotte, including our corporate offices, banking centers and satellite work locations.”

It has not filed any WARNs for recent uptown layoffs, though it says it complies with all federal and state WARN laws. Employment lawyers say companies are probably within their rights to classify adjacent buildings as separate sites if they house different divisions, such as commercial banking and investment banking.

Loopholes aside, WARN has another issue that has drawn criticism: The federal government has no authority to enforce it, so companies aren’t necessarily motivated to comply. Businesses filed WARNs for only about one-third of the layoffs where there should have been a filing, according to the most recent WARN study by the Government Accountability Office, released in 2003.

In most states, including North Carolina, workers or local governments who think a company has violated WARN have no recourse but to sue. If they succeed, workers can collect back pay for each day of violation ? so, up to 60 days. Local governments can collect up to $500 per day.

Though workers have filed recent WARN lawsuits against a handful of companies, such as Lehman Brothers, Goody’s and USA Jet, lawyers say that employees usually don’t think a lawsuit is worth the expense. But at least one state ? New York ? has given its labor commissioner the power to enforce WARN.

“When you’re laid off, the most important thing for you is to try to find more employment to get a paycheck to feed your family,” said Kevin Jones, associate attorney for the New York Department of Labor, which overhauled its WARN Act in February. “You don’t want to be thinking about how your past employer did you wrong, or expending what resources you have in a lawsuit for two months’ pay.”

In Washington, some legislators are pushing for a stricter federal WARN. Their bill, which is in committee in the House and Senate, is called FOREWARN and stands for Federal Oversight, Reform and Enforcement of the WARN Act.

The bill would give the federal Department of Labor the authority to enforce WARN, and increase the penalty for violation to double back pay. It would require 90 days’ notification instead of 60, and apply the law to smaller companies ? those with 75 or more employees, instead of 100. Most significantly, it would severely lower the trigger for what qualifies as a mass layoff: any layoff of 25 or more employees, regardless of whether they make up one-third of the work force.

Though FOREWARN doesn’t address the issue of how to define an “employment site,” its advocates say that lowering the trigger for a mass layoff should address that problem.

FOREWARN also would require companies to send their WARNs to the federal Labor Department, which means a national database of filings could easily be created. Currently, the only way to figure out how many WARNs have been filed nationwide by, say, Bank of America, is to check with each state where the company has employees.

From 2001 through 2008, Bank of America filed four WARNs for Charlotte, for a total of 386 layoffs. Wachovia, now owned by Wells Fargo, filed one, for 270 layoffs in 2002.

So far this year, Bank of America has filed one WARN in North Carolina, when it laid off 139 employees in Ballantyne. That WARN was required because the company was closing an entire unit. Wells Fargo also has filed one, for the 548 uptown workers.

Kathy Neal, a spokeswoman for the N.C. Department of Commerce, declined to comment on the FOREWARN legislation. “But we are certainly interested in making sure displaced workers have adequate notice to plan for retraining or re-employment,” Neal said. “Our experience is that this has a positive impact on workers, their families and their communities.”

City Council members John Lassiter and Anthony Foxx, who are running for mayor, both said they hadn’t studied the FOREWARN legislation in depth. But Lassiter said changing WARN probably isn’t the best use of resources at a time when Charlotte residents are so worried about jobs.

“All we’re adding is red tape to affect increasingly smaller companies,” Lassiter said. “There’s little or no impact on creating or protecting jobs.”

A more effective measure, he said, is making Charlotte business-friendly, to encourage companies to move or expand here and hire workers.

Foxx said it has been useful when companies provide the city with advance notice of layoffs.

“Particularly when you get a large number of layoffs at one time, that warning is very helpful,” Foxx said. “It helps public agencies prepare transitional assistance and other resources that workers need.”

(c) 2009, The Charlotte Observer (Charlotte, N.C.). Source: McClatchy-Tribune Information Services.