WARNing TO ALL LOTTO WINNERS

By Michael Santo, COSHRM Legislative Director and Managing Attorney at Bechtel & Santo

XYZ, Inc. was a successful widget-making company.  XYZ, Inc. grew from a 5-employee shop to a 200-employee plant within 10 years. But due to increasing competition, XYZ’s profits plummeted, and its stock certificates became fuel for starting barbeques. One night on the way home from a depressing meeting with the Board, the President and sole shareholder bought a lottery ticket.  Twenty-four hours later, the President discovered that he was the only winner of the $200 million jackpot. The President called the Company headquarters and left this simple message, “I won the Lotto.  XYZ is officially closed. Look me up if you are ever in Cancún.”

So, you may be thinking, didn’t XYZ’s President mess up giving such a short notice under the WARN Act? That Act (i.e., the Worker’s Adjustment and Retraining Notification Act (“WARN Act”)) was enacted in 1988 and provides that, with certain exceptions, employers of 100 or more employees must give at least sixty (60) days’ advance notice of a plant closing or mass layoff to affected workers or their representatives, to the State dislocated worker unit, and to the appropriate local government. 

The term “plant closing” means the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss, during any 30-day period, for 50 or more employees, excluding part-time employees.  A “mass layoff” is a reduction in force that results in an employment loss at the single site during any 30-day period for at least 33.3% of the employees and at least 50 employees, excluding part-time employees. Accordingly, a company with 100 to 150 employees would need to lay off 50 employees before the Act would apply, while a company with greater than 150 would need to lay off 33.3% of their workforce before the Act would apply. 

So, is XYZ’s President lazing in hot tubs in Cancun in figurative hot water as well?  Maybe not!  After all, there are a few exceptions to the requirement.  One such exception, which was used by many companies during COVID, is the “unforeseeable business circumstances” exception.  The United States Department of Labor explains that this exception “applies to plant closings and mass layoffs caused by business circumstances that were not reasonably foreseeable at the time that 60-day notice would have been required.” For example, business circumstances caused by “some sudden, dramatic, and unexpected action or condition outside the employer’s control.”  The test for determining when business circumstances are not reasonably foreseeable focuses on an employer’s business judgment. In short, the employer must exercise such commercially reasonable business judgment as would a similarly situated employer in predicting the demands of its particular market. The employer is not required, however, to accurately predict general economic conditions that also may affect demand for its products or services. See United States’ Department of Labor, Worker Adjustment and Retraining Notification Act Frequently Asked Questions

So, perhaps XYZ’s President is in better shape than it first appeared, which gives the rest of would-be LOTTO winners some hope, right?

Now, those above requirements may be changing as the United States House of Representative recently introduced a bill (i.e., the Fair Warning Act of 2025) that would amend the WARN Act.  See H.R. 5761. Principally, this bill proposes stricter requirements for employers, including expanding coverage to cover smaller employers, increasing the required notice period from 60 to 90 days, and strengthening penalties, which includes providing employees the right to seek liquidated damages. This bill has only recently been introduced, so it is too early to tell where it will wind up.