Section 3(b) of WARN sets forth three conditions under which the
notification period may be reduced to less than 60 days. The employer
bears the burden of proof that conditions for the exceptions have been
met. If one of the exceptions is applicable, the employer must give as
much notice as is practicable to the union, non-represented employees,
the State dislocated worker unit, and the unit of local government and
this may, in some circumstances, be notice after the fact. The employer
must, at the time notice actually is given, provide a brief statement of
the reason for reducing the notice period, in addition to the other
elements set out in Sec. 639.7.
(a) The exception under section 3(b)(1) of WARN, termed ``faltering
company'', applies to plant closings but not to mass layoffs and should
be narrowly construed. To qualify for reduced notice under this
exception:
(1) An employer must have been actively seeking capital or business
at the time that 60-day notice would have been required. That is, the
employer must have been seeking financing or refinancing through the
arrangement of loans, the issuance of stocks, bonds, or other methods of
internally generated financing; or the employer must have been seeking
additional money, credit, or business through any other commercially
reasonable method. The employer must be able to identify specific
actions taken to obtain capital or business.
(2) There must have been a realistic opportunity to obtain the
financing or business sought.
(3) The financing or business sought must have been sufficient, if
obtained, to have enabled the employer to avoid or postpone the
shutdown. The employer must be able to objectively demonstrate that the
amount of capital or the volume of new business sought would have
enabled the employer to keep the facility, operating unit, or site open
for a reasonable period of time.
(4) The employer reasonably and in good faith must have believed
that giving the required notice would have precluded the employer from
obtaining the needed capital or business. The employer must be able to
objectively demonstrate that it reasonably thought that a potential
customer or source of financing would have been unwilling to provide the
new business or capital if notice were given, that is, if the employees,
customers, or the public were aware that the facility, operating unit,
or site might have to close. This condition may be satisfied if the
employer can show that the financing or business source would not choose
to do business with a troubled company or with a company whose workforce
would be looking for other jobs. The actions of an employer relying on
the ``faltering company'' exception will be viewed in a company-wide
context. Thus, a company with access to capital markets or with cash
reserves may not avail itself of this exception by looking solely at the
financial condition of the facility, operating unit, or site to be
closed.
(b) The ``unforeseeable business circumstances'' exception under
section 3(b)(2)(A) of WARN 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.
(1) An important indicator of a business circumstance that is not
reasonably foreseeable is that the circumstance is caused by some
sudden, dramatic, and unexpected action or condition outside the
employer's control. A principal client's sudden and unexpected
termination of a major
contract with the employer, a strike at a major supplier of the
employer, and an unanticipated and dramatic major economic downturn
might each be considered a business circumstance that is not reasonably
foreseeable. A government ordered closing of an employment site that
occurs without prior notice also may be an unforeseeable business
circumstance.
(2) The test for determining when business circumstances are not
reasonably foreseeable focuses on an employer's business judgment. 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.
(c) The ``natural disaster'' exception in section 3(b)(2)(B) of WARN
applies to plant closings and mass layoffs due to any form of a natural
disaster.
(1) Floods, earthquakes, droughts, storms, tidal waves or tsunamis
and similar effects of nature are natural disasters under this
provision.
(2) To qualify for this exception, an employer must be able to
demonstrate that its plant closing or mass layoff is a direct result of
a natural disaster.
(3) While a disaster may preclude full or any advance notice, such
notice as is practicable, containing as much of the information required
in Sec. 639.7 as is available in the circumstances of the disaster still
must be given, whether in advance or after the fact of an employment
loss caused by a natural disaster.
(4) Where a plant closing or mass layoff occurs as an indirect
result of a natural disaster, the exception does not apply but the
``unforeseeable business circumstance'' exception described in paragraph
(b) of this section may be applicable.
