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Workforce Reductions May Trigger Plant Closing & Union Notice, Benefit, & Other Obligations


Where a distressed business contemplates a plant closing or mass layoff, the business and its leaders should consider its potential responsibilities under the Worker Adjustment and Retraining Notification Act (WARN) and where applicable, make appropriate arrangements to comply or implement the restructuring to minimize or avoid triggering WARN obligations. In addition to WARN, business contemplating or implementing a plan closing, mass layoff or other reductions in force also should evaluate and make appropriate arrangements to address potential obligations under state plant closing laws, the medical coverage continuation mandates of the Consolidated Omnibus Budget Reconciliation Act (COBRA), retirement plan funding, notice and distribution, vesting or other obligations, for unionized environments, union notification, negotiation or other obligations, voluntary or contractually obligated termination pay or other severance obligations, unemployment, and other obligations. In this respect, particular attention generally is warranted to ensure that vesting and funding requirements for employee benefit plans are assessed and fulfilled, including any new or accelerated obligations to vesting if the reductions result in a partial or complete plan termination, cause underfunding of a defined benefit plans, special tax, securities or other obligations arising from the vesting of payment of deferred compensation under Internal Revenue Code § 409, golden parachute payments under Code §280G or other special compensation or benefits, as well as providing for appropriate application of employee benefit contributions withheld from pay., or otherwise. Continue reading

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