With all the talk of a high-tech labor shortage, one would think that large-scale layoffs among information-technology companies couldn't possibly occur.
But the extreme case of Inacom Corp., which axed about 4,000 jobs last month, shows the error of such thinking (SP, July 10, p. 26, www.smartpartnermag. com/issues). Sure, Inacom had a lot of issues: a difficult transition into services, the legacy of its rebate-driven product business, and a faltering alliance with Compaq Computer Corp. proved too much for the company to overcome. But even high-flying Web integrator MarchFirst cut jobs in recent months as part of its post-merger integration of USWeb/CKS and Whitt man-Hart.
To be sure, it can happen.
Given the industry's lack of layoff immunity, both employers and employees should become acquainted with the Worker Adjustment and Retraining Notification (WARN) Act. The law requires companies with more than 100 workers to provide notice of 60 days in advance of a plant closing or a mass layoff. WARN defines a mass layoff as one involving 500 or more employees or, in the case of smaller companies, 50 to 499 employees (if they make up at least a third of the workforce).
WARN act obligations also may arise if a business is sold and layoffs occur (www.doleta.gov/programs/factsht/warn.htm).
The law was enacted in the waning days of the Reagan administration and over the years has been applied to rust-belt factory closings. But Internet-era companies fall under its scope, as well. The National Lawyers Guild/Maurice and Jane Sugar Law Center for Economic and Social Justice (www.sugarlaw.org), a Detroit-based nonprofit public-interest law center, may take action against Inacom on behalf of its former employees.
Enforcement of WARN is through the U.S. District Court system, where workers may bring individual or class-action suits. Julie Hurwitz, executive director of the law center, says most WARN act claims prevail in court or are settled out of court. But she adds that many WARN act violations go unreported, due to lack of awareness among employees or fear of bringing legal action against employers.
If a court upholds a WARN claim, workers are entitled to one day's pay for each day the employer failed to comply with the WARN act. That's a fairly stiff penalty, especially for employers providing no prior notice.
Employers, meanwhile, have a few defenses against a WARN act claim. An employer, for example, may cite the "faltering company" defense, which holds that giving notice would have ruined the opportunity to get new capital or business. This defense applies only to plant closings, according to the Department of Labor (DOL).
An employer also may cite business circumstances that were not "reasonably foreseeable at the time notice would otherwise have been required," according to DOL. That exception applies to both plant closings and mass layoffs. Employers also are off the hook if a layoff or plant closing was due to a natural disaster.
In this high-tech boom, chances are you'll never have to file a WARN claim or protect yourself from one. Still, consider yourself warned.
John Moore (firstname.lastname@example.org) is services editor of Sm@rt Partner.