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Wisconsin Business Closing Law Amendments Require Additional Information to Affected Employees

Labor & Employment Law Update David B. Kern, Ely A. Leichtling, Sean M. Scullen

Under the Wisconsin Business Closing Law ("WBCL"), employers with 50 or more employees who reduce their workforce in sufficient numbers, either through a plant closing or a mass layoff, must normally give 60 days' advance notice of that action. On December 1, 2009, the WBCL was amended to require that additional information be provided to affected employees in connection with these notices.

The WBCL requires covered employers to give detailed notice of a closing or mass layoff to any affected employee, any collective bargaining representative of an affected employee, the State Dislocated Worker Unit, and the highest official of the municipality in which the affected employment site is located. The notice requirement is triggered in the case of a permanent or temporary shutdown of an employment site, one or more facilities or operating units at an employment site, or within a single municipality, which affects 25 or more employees. A notice is also required in the event an employer, at a single employment site or within a single municipality, lays off 25 percent of the employer's workforce or 25 employees, whichever is greater, or 500 employees regardless of the percentage affected. Detailed notice requirements are set out in the statute and in regulations issued pursuant to the statute, and the content of the notice varies with each of the recipients listed above.

Under the amendment, which will go into effect for business closings and mass layoffs occurring on or after December 16, 2009, additional information must be provided to affected employees. Specifically, the notice to an affected employee must also include contact information for the local Workforce Development Board serving the area in which the affected employment site is located, and, if available, a list of resources prepared by that local Workforce Development Board which address career planning, job search, job skills training and other support services for affected employees.

Compliance with the WBCL provides unique challenges entirely apart from plant closing notices or mass layoff notices under the Worker Adjustment and Retraining Notification Act ("WARN"). For example, Wisconsin law defines "employees" for purposes of the WBCL to exclude persons employed in a managerial, executive or commissioned sales capacity, or in a capacity in which the person is privy to confidential employment relationship matters. The Wisconsin Labor Standards Bureau, the administrative agency that enforces the WBCL, takes the position that such individuals do not count as employment losses for purposes of determining whether a plant closing notice is required, and that they do not count in either the numerator or the denominator for purposes of analyzing the mass layoff percentage threshold. In addition, the Bureau takes the position, contrary to WARN, that part-time and new employees are not included in either the numerator or denominator for purposes of determining whether mass layoff thresholds are met. In further contrast to WARN, the WBCL also applies employment loss tests both at a single employment site and within a single municipality, requiring testing under both sets of statistics in order to determine whether notice is required. In addition, "closings" can be caused by the shutdown of an operating unit, and analyzing whether a particular action constitutes a closing is sometimes difficult.

Employers who fail to provide the required 60 days' advance notice, or who fail to provide the specific notice required under the statute and regulations, may be liable for back pay of up to 60 days to each affected employee as well as the value of fringe benefits which each employee would have received during that period. Employers are also subject to a penalty of up to $500 for each day that notice was required and was not properly given.

Wisconsin is one of a number of states which maintain their own business closing and mass layoff law. These states include California, Illinois, and most recently, New York. Quarles & Brady regularly assists employers throughout the country in analyzing whether notice is required in a particular situation, and in drafting required notices. Apart from WARN and WBCL compliance, we regularly assist employers in analyzing workforce reduction decisions in order to ensure that, from a statistical standpoint, they do not create a disparate impact on any particular protected group.

If you have questions regarding notice obligations under state and federal law, please contact David B. Kern at (414) 277-5653 / david.kern@quarles.com, Ely Leichtling at (414) 277-5681 / ely.leichtling@quarles.com, Sean Scullen at (414) 277-5421 / sean.scullen@quarles.com or your Quarles & Brady attorney.