Objectives

To determine whether the Department of Labor (Department) is providing appropriate and timely services to workers affected by closings and layoffs that are covered under the Worker Adjustment and Retraining Notification Act (WARN Act or Act), and is effectively overseeing employer compliance with the Act. The audit covered  WARN Notices received by the Department that were dated January 2019 through April 2022. We also considered Department activities related to these Notices through January 2023.

About the Program

The Department’s mission is to provide outstanding services to its customers – the workers and businesses in New York State. As part of fulfilling its mission, the Department, through its Division of Employment and Workforce Solutions (DEWS), administers the State’s WARN Act and provides related services. Enacted in 2008, the WARN Act requires covered employers to give early warning to employees – defined as at least 90 days advance notice (Notice) – of a mass layoff, relocation, or employment loss, with some exceptions. Employers must also notify the Department, Local Workforce Development Boards, and certain local officials.

Covered employers are those with 50 or more full-time employees in the State or 50 or more employees who, in aggregate, work at least 2,000 hours per week. This advance notice protects employees – as well as their families and communities – by giving them time to transition, seek new employment, and enter workforce training programs. Employers that fail to submit a Notice at least 90 days prior to the event and are not exempt may be liable for back pay and the value of any benefits that laid-off employees would have been entitled to. This liability can be reduced if the employer pays all applicable employees appropriate back pay and benefits within 3 weeks from the date the employer orders the mass layoff, relocation, or employment loss.

Department receipt of a Notice triggers staff to offer Rapid Response services, such as job search and résumé preparation assistance, career counseling, and occupational skills training, to assist workers in obtaining re-employment as soon as possible. DEWS maintains the Notices and the workforce intelligence data needed to initiate a response to mass closures or layoffs. Within DEWS, the Statewide Rapid Response Coordinator oversees a WARN Unit and 10 Regional Rapid Response Teams (Regional Teams) located throughout the State. The WARN Unit receives the Notices, tracks their receipt in a database, and delegates Rapid Response activities to the appropriate Regional Teams. The Department also works with partners, such as Local Workforce Development Boards and Career Centers, to provide Rapid Response services to workers affected by Notices.

With many New Yorkers losing their jobs as a result of the COVID-19 pandemic, starting in March 2020, the Department shifted its work focus, including those of Rapid Response staff, to processing Unemployment Insurance (UI) claims instead of performing their regular duties. The WARN Act’s 90-day advance notice requirement was not suspended during the pandemic. Existing provisions of the notice requirements of the Act, however, include exceptions, such as when the need to provide Notice was not reasonably foreseeable at the time it would have been required. The Department received 2,752 Notices that were dated during the period January 2019 through April 2022, covering a reported 280,302 affected employees. Of the 2,752 Notices, 1,887– about 69% – cited the pandemic as the reason for the Notice.

Key Findings

We found several areas the Department could improve to better meet its obligations under the Act and ultimately the needs of dislocated workers. Specifically, we found weaknesses in the Department’s oversight of employer compliance with the advance notice requirements of the Act. We also identified WARN Notices that were not entered into the Department’s One-Stop Operating System (OSOS), the system used to record related services to employers and affected employees. Further, Department staff were often late in attempting initial outreach to employers that submitted Notices and to affected employees, and in some cases, there was no record of any outreach. In combination, these weaknesses impede the Department’s success in meeting the needs of dislocated workers and may undermine public perception of its commitment to its mission. The Department was cooperative throughout the audit and cited the unprecedented challenges of the pandemic as a major factor in these audit results:

• We reviewed 50 Notices, covering 19,132 affected employees, to determine whether they were submitted timely by employers and to identify any actions Department staff took when they were not. For five Notices covering 1,310 employees, we found the Department didn’t take adequate action to substantiate either the validity of the exemption or the employer’s claim that it would pay the affected employees.
• Of a random sample of 184 Notices, representing 17,171 reported employees, 91 Notices, representing 6,908 reported employees, were not entered in the system the Department uses to record related services to employers and affected employees. Projecting these results to the population of 2,752 Notices with a 95% confidence interval results in at least 1,164 Notices that were received but not entered in OSOS, indicating that the number of affected employees not offered Rapid Response services (in addition to the number of related employers) is potentially much greater.
• The Department’s attempts at outreach to both employers and the affected employees were often late and at times did not happen at all, according to its records.

Key Recommendations

• Implement a process to substantiate that employers that file late Notices meet exemption criteria and, where applicable, to verify that they pay affected employees when they cite past or planned payments in Notices.
• Follow up on Notices that were not entered in OSOS, including those identified by our audit, and offer and provide Rapid Response services as appropriate.
• Take steps to improve timely outreach to both employers and employees affected by employment changes covered by the WARN Act.