The ​‘Faltering Company’ and ​‘Unforeseen Business Circumstances’ Exceptions Under The WARN Act

Under the federal WARN Act, companies that maintain a facility with 100 or more full-time employees are required to provide no less than 60 days’ written notice to employees affected by a mass layoff or facility closure. Many employers are faced with the difficult task of determining whether or when these notices should be distributed.

The WARN Act contains several affirmative defenses that are designed to address this conundrum, and provide employers with a complete defense to liability under the statute when a company’s exigent condition forces an immediate cessation of operations. These exceptions to the WARN notice obligations are identified as the ​‘Faltering Company’ and ​‘Unforeseen Business Circumstances’ exceptions. Employers faced with possible pending layoffs or facility closures should consider both of them independently.