The Worker Adjustment and Retraining Notification Act (WARN) requires 60 days’ notice of a mass layoff or plant closing. An exception applies if an unforeseen business circumstance arises that precludes notice.
John Halkias worked on a U.S. Navy contract that General Dynamics realized as early as May 1990 would require an extra $700 million. On December 17, 1990, the Navy informed General Dynamics the contract might be terminated January 7, 1991. The company issued layoff notices on December 21, 1990, and Halkias was laid off on January 7, 1991. Halkias sued, alleging a lack of WARN notice.
The district court granted summary judgment to General Dynamics. The court of appeals affirmed and the U.S. Supreme Court denied review. Cancellation was not foreseeable because the Navy supported the program until December. To require notice, possibility of a layoff isn’t enough. Prior to December, the cancellation was possible, not probable, so the notice requirement didn’t apply. Halkias vs. General Dynamics, 137 F.3d 333 (5th Cir. 1998), cert. denied, U.S. Sup. Ct. 10/5/98.
Impact:
Employers can invoke the WARN exception when a circumstance is a possibility, but not a probability.
Source: D. Diane Hatch, Ph.D., a human resources consultant based in San Francisco, and James E. Hall, an attorney with Barlow, Kobata & Denis, based in Los Angeles and Chicago, December 18, 1998.