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What does the WARN Act require when a business is sold?

On Behalf of | Apr 29, 2014 | WARN Act

As we’ve discussed before, the WARN Act generally requires large-scale employers to notify workers of any mass layoffs or plant closures 60 days before the event occurs. We’ve also discussed some circumstances, such as unforeseeable business events, or dire financial hardship, in which the Act’s requirements are diminished. When a large-scale business is sold, however, when and to whom the Act applies can be tricky to determine.

If you’re in the process of selling or buying a business, you should consult a local employment law attorney to make sure you are WARN Act compliant.

The Act’s requirements will change depending on the point at which any plant closing or mass layoff will occur. For example, if the layoffs occur at any point before or on the day of sale, the seller will be responsible for providing the 60 days notice. If the layoffs occur the day after the sale, or at any point thereafter, the buyer is responsible for providing the notice. The logic is most employees of the seller become employees of the buyer, for the purposes of the WARN Act, immediately following a sale.

But these notice requirements will not apply to every sale. Of course, no WARN notice is required if there is no layoffs or plant closures resulting from the sale. Likewise, if employees were hired with the understanding that a sale would occur at the completion of a particular project, at which point their employment would end, no new notice will be required.

Understanding when the WARN Act applies can be difficult. The benefits that come with avoiding its penalties, however, are clear. If you you’re looking to buy or sell a business, you should contact an employment law attorney who can help you determine whether your actions may trigger any WARN Act duties.