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WARN Act Exception: Unforeseeable Business Circumstances

We've previously discussed the WARN Act and the notice requirements it places on employers facing closures or layoffs. In certain circumstances, regardless of the size or type of business, liability for noncompliance with the WARN Act may be avoided. You should consult an employment law attorney if you anticipate any drastic changes to your business's employment structure

One such exception is the 'Unforeseeable Business Circumstances' exception. It sounds simple: if something happens to your business that you did not expect which necessitates a closure or mass layoff, you won't be penalized for failing to notify your employees in advance. In practice, however, the exception is rarely applied so plainly.

For example, if the event causing closure or layoffs was entirely unexpected and completely out of the business's control (think an economic downturn, or the sudden loss of a major client), the exception may apply as plainly as described above. But, imagine the effects of the economic downturn were apparent to the business for a long time, or the loss of the client was ultimately due to conduct of the business. It may be harder to determine whether those business circumstances were unforeseeable.

The application of this exception is largely determined by considering all of the circumstances that led to the business's action. Chief among those considerations is whether the action of the employer is reasonable.

Of course, what you or I consider reasonable may differ from a judge's legal determination. You should always consult a local employment law attorney to make sure your business is WARN Act compliant, or to determine if one of the WARN exceptions may apply.

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