WARN Act Passes with Corporate Loopholes, Toothless Plant Closing Protection

The Worker Adjustment and Retraining Notification (WARN) Act becomes law on August 4, 1988, requiring employers with 100 or more workers to provide 60 days advance notice before plant closings or mass layoffs. Congress passes the bill over President Reagan’s veto threats, responding to the devastation of deindustrialization that has shuttered thousands of factories throughout the Rust Belt. However, corporate lobbying ensures the final bill contains so many exceptions and loopholes that enforcement becomes nearly impossible.

The law exempts employers with fewer than 100 workers, part-time employees, and closings affecting fewer than 50 workers at a single site. More critically, the “unforeseeable business circumstances” and “faltering company” exceptions allow employers to claim they couldn’t provide notice due to sudden market changes or fear that notice would prevent obtaining financing—loopholes corporations exploit routinely. The law lacks meaningful penalties: employers face only back pay and benefits for the notification period, amounts small enough that companies often violate WARN and pay the minimal consequences.

The WARN Act exemplifies how corporate influence hollows out worker protection legislation. Labor initially sought six months advance notice with serious penalties and retraining funding. What emerged protects only a fraction of affected workers while providing corporations multiple escape routes. Studies find that only 1-2 percent of plant closings trigger WARN notice requirements, and enforcement actions are rare. The law creates the illusion of worker protection while allowing deindustrialization to continue devastating communities with minimal corporate accountability—a pattern that accelerates with NAFTA’s passage in 1993 and permanent normal trade relations with China in 2000.