New Fair Warning Act of 2019 would impact more small businesses

On November 20, 2019, Rep. Tim Ryan (D-OH) proposed legislation that would require more small businesses to give their employees an advance warning before closing their doors.  

H.R. 5205, the Fair Warning Act of 2019, which is supported by Sen. Sherrod Brown (D-OH) and Sen. Chuck Schumer (D-NY), would amend a 1988 law called the WARN Act (Worker Adjustment and Retraining Notification Act).  The WARN Act currently requires employers to give 60 days advance notice to employees who may experience an employment loss due to a plant closing or mass layoff that effects 50 or more full–time employees at a single site of employment. An employer under the WARN Act must have at least 100 or more full-time employees.

The proposed Fair Warning Act of 2019, if enacted, would require a 60-day advance warning from businesses employing 50 or more employees, including part-time employees (rather than 100 or more full-time employees). It would also require a 60-day advance notice if the employer has an annual payroll of at least $2 million. 

Employment termination would be redefined to include: 

• An employment termination, other than a discharge for cause, voluntary departure, or retirement. 
• A layoff exceeding 3 months.
• A reduction in hours of work of more than 50% during each month of any 3 month period.

A mass layoff would be redefined to include:

• A reduction in force that results in an employment loss during any 90-day period for 10 or more employees at a single site of employment, or for 250 or more employees, irrespective of employment site. 

A site closing would be defined as:

• The permanent or temporary shutdown of a single site of employment, or one or more facilities  or operating units within a single site of employment, that results in an employment loss at the single site of employment during any 30-day period for 5 or more employees. 

Violators would be required to pay certain back pay and benefits, along with potential penalties of not more than $500 foe each separate offense.

The proposed Fair Warning Act of 2019 was just introduced to the House of Representatives and has been referred to the House Committee on Education and Labor. It has a long way to go before it becomes law.  If it does become law, small business owners will need to be aware of its scope and legal ramifications.