Tuesday, March 17, 2009

Worker Adjustment Retraining Notification Act


The end came abruptly for Sterling Casino cruise ship employees.

One evening last July they were steaming out to sea with 800 gamblers on board, and the next morning their jobs were gone. Sterling ceased operations at Port Canaveral and gave workers no notice.

The closure might have violated a long-standing but little-known federal law designed to protect workers in the event of major layoffs. Known as the Worker Adjustment Retraining Notification Act, or WARN, it requires that employers give workers at least 60 days' notice of planned layoffs.

But the act comes with little bite, making lawsuits brought by employees the only real enforcement.

Now, as layoffs become a regular event, labor advocates argue that WARN should be strengthened.

"A lot of employees have never even heard of it," said Tony Paris, a staff attorney with the Sugar Law Center for Economic and Social Justice in Detroit. "When I went through law school, I never heard of it."

Jones, 53, of Cocoa Beach, hadn't either, until he spoke to a co-worker who'd had a similar experience with another cruise line. When he learned of the law, he helped organize a group of employees to sue the company. Their class-action lawsuit, which is pending in federal court, asks for $3 million in back pay for about 400 employees.

Sterling's attorney would not discuss the case, but in court filings the company argues that "unforeseeable business circumstances" — a defense allowed by the WARN act — led to the sudden shutdown.

The 20-year-old law was passed during an era of factory closures in the nation's "rust belt." With companies folding, the law was portrayed as a way to protect employees and towns dependent on a single major employer.

But the law's effectiveness has been questioned for years. It contains exemptions and, generally, applies only to companies with at least 100 employees.

In the 1990s, the U.S. General Accounting Office found that in more than half of the cases it studied, exemptions permitted employers to withhold notice. When notice was required, auditors discovered companies did so less than 30 percent of the time.

In part, that's because there's little downside to ignoring the law. Neither the state nor federal government can punish a company for violating the law, so employees' lawsuits are the primary enforcement mechanism. If a company loses in court, it pays back wages and lawyers' fees, not fines or punitive damages.

"In some ways," said Melanie Damian, the attorney for former Sterling workers, "it almost makes sense for an employer to ignore the act."

Businesses and business advocacy groups generally oppose any changes to the law that would increase penalties or reporting requirements. In many cases, they say, companies can't predict what will happen within 60 days. And broadcasting plans to shut down, they point out, could make it difficult or impossible to stay open at all.

"We're confident that employers nationally and across the state are trying to do what's best for employees," said Kirsten Borman of the Florida Chamber of Commerce. "We hope the government doesn't get into mandating the employer-employee relationship."

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