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WARN Act

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supplier issues

Expansion of Worker Notification (WARN) and
Extension of Health Coverage to Laid-Off Workers

Description: On October 31, the House of Representatives passed H.R.3920, the Trade and Globalization Assistance Act of 2007, to extend and expand the Federal Trade Adjustment Assistance Program (TAA). The bill also contained provisions opposed by industry to expand worker notification prior to lay-offs under the Worker Adjustment and Retraining Notification Act (WARN) and the Consolidated Omnibus Budget Reconciliation Act (COBRA), which gives workers who lose their jobs the option of continuing to receive health benefits for up to 18 months at their own expense.

Status: The proposed WARN expansion would amend the 1988 law to increase to 90 days the notice that businesses with at least 100 full time workers must provide when 25 or more lose their jobs at a single site – or when 100 or more lose jobs at multiple locations during a 30 day period. Currently, 60 days notice is required for businesses closing a single work site that results in job loss of 50 employees during any 30-day period. Under the House proposal, if an employer failed to post sufficient notice, employees would have the right to seek double their wages and benefits for up to the 90 day period.

The proposed expansion of COBRA would allow workers age 55 or older, or those who have worked for an employer for 10 years or longer, to have the option of continuing their health care coverage at their own expense until they become eligible for Medicare at 65 or until they obtain health coverage through a subsequent employer. Under the current law, workers who lose their jobs generally may continue their health benefits for up to 18 months at their own expense.

On December 10, the House passed H.R. 4341 to extend TAA to March 31, 2008, (without the provisions expanding WARN and COBRA) prior to its expiration on December 31 and the bill passed to the Senate. A hold was placed on the bill in the Senate by an unidentified senator.

Impact on Industry: The proposed expansion of WARN and COBRA would be costly and difficult to administer. We are not aware of any quantitative estimates of the cost of compliance if the proposal becomes law.

2008 Anticipated Action: MEMA has begun and will continue to educate members about this issue. We expect expansion of WARN and COBRA will be pursued by proponents as part of TAA expansion and reauthorization in 2008. MEMA will work independently and in coalition with other industry groups to lobby Congress about the negative effects on industry of the proposed expansion of WARN and COBRA.

MEMA Staff Contacts: