Employer Liability for Mass Layoffs, a WARN Warning

Most of my clients know that Colorado is an “employment at-will” state, meaning an employee can be terminated at anytime, for any reason, without liability to the company, unless an employment agreement or other agreement covering the worker provides otherwise. Some of my clients know that there are numerous exceptions to that general rule (which is why it is always a good idea to check with your attorney before acting). However, few of my clients know that the WARN Act is one of those exceptions.

The Worker Adjustment and Retraining Notification (WARN) Act is a federal law (with counterparts in a number of the states) that requires, as a general rule, companies with 100 or more employees to give 60 days notice when 50 or more employees are let go. Before the Great Recession, I encountered the issue most often when helping clients buy or sell companies.

The WARN Act is on my mind today because of the irony in news reports that a failing law firm is being sued for not observing the WARN Act as it winds down its affairs. Who warns the warners?

Many human-owned businesses don’t cross that 100-employee threshold, but with employment-related lawsuits being one of the greatest legal concerns in any business, a warning to be wary of the numerous liability traps in terminations is always timely.