Most employees who are laid off in a group termination assume there was nothing procedurally required before the company let them go. Under federal law, that assumption is often wrong. Under Maryland law, it may be wrong in ways that entitle the affected employees to additional compensation. The Maryland Economic Stabilization Act is the state’s analogue to the federal WARN Act, and both statutes impose advance notice requirements on covered employers before mass layoffs and plant closings. Wrongful termination lawyers in Maryland who handle layoff cases regularly evaluate whether these notice requirements were satisfied and, when they were not, what compensation the laid-off employees may be owed.
Maryland employees who were part of a significant layoff and received no advance notice, or substantially less than the required notice period, may have a claim for back pay and benefits for the period the notice should have covered. Understanding the threshold requirements, what the statutes actually mandate, and where exceptions exist gives laid-off workers a starting point for evaluating whether their employer complied with the law.
The Federal WARN Act: What It Requires and Who It Covers
The federal Worker Adjustment and Retraining Notification Act requires covered employers to provide 60 days’ advance written notice to affected employees before a plant closing or mass layoff. A plant closing under the WARN Act means the permanent or temporary shutdown of a single site of employment affecting 50 or more employees, excluding part-time workers, during any 30-day period. A mass layoff means a reduction in force at a single site that either affects 500 or more employees, or affects 50 to 499 employees if that number constitutes at least 33 percent of the workforce.
The WARN Act applies to employers with 100 or more full-time employees, or 100 or more employees including part-time workers who together log at least 4,000 hours per week. Notice must be provided to the affected workers, to the state dislocated worker unit, and to the chief elected official of the local government where the employment site is located.
An employer who violates the WARN Act is liable to each affected employee for back pay and the value of lost benefits for each day of the violation period, up to 60 days. If the employer provided some notice but fewer than 60 days, the liability is reduced by the number of days of notice actually given. The employer is also liable for civil penalties of up to $500 per day of violation payable to the local government, unless the employer pays the employees within three weeks of the ordered judgment.
The Maryland Economic Stabilization Act: How It Differs From Federal Law
Maryland’s Economic Stabilization Act applies to employers with 50 or more employees in Maryland, which is a significantly lower threshold than the federal WARN Act’s 100-employee minimum. This difference is meaningful for employees of mid-sized Maryland employers who would fall below the federal threshold but are covered under state law.
The MESA requires covered employers to provide at least 60 days’ advance notice before a reduction in operations that results in the layoff of 25 or more employees from a single establishment within any three-month period, or the relocation of all or substantially all operations more than 25 miles away. The notice must be provided to the Secretary of Labor, Licensing and Regulation and to any applicable collective bargaining representative. The statute also encourages employers to provide notice to affected employees and to work with the state on assistance programs, though the notice-to-employees obligation is structured differently than under the federal WARN Act.
The MESA was substantially strengthened in 2020 and 2021 amendments. Maryland law now requires that notice be provided to the Department of Labor, affected workers, and local officials, and the state has increased scrutiny of employer compliance. Employers who fail to comply with the MESA’s requirements face penalties and, in some circumstances, civil liability to affected employees.
The Exceptions Employers Claim and When They Actually Apply
Both the federal WARN Act and the Maryland MESA contain exceptions that employers frequently invoke to justify providing less than the required notice. Understanding when these exceptions legitimately apply, and when they are invoked improperly to avoid liability, is one of the analytical tasks that employment attorneys perform in evaluating these cases.
The faltering company exception under the WARN Act allows an employer to provide less notice if it was actively seeking capital or business at the time, had a reasonable belief that the required notice would have precluded obtaining that capital, and providing notice would have made the sought financing unavailable. This exception applies only to plant closings, not mass layoffs, and requires the employer to demonstrate a concrete, ongoing effort to obtain financing that the notice would have jeopardized. Courts have applied this exception narrowly, and employers who claim it without the required factual predicate do not succeed.
The unforeseeable business circumstances exception applies when the closing or layoff was caused by business circumstances that were not reasonably foreseeable at the time that notice would have been required. A sudden loss of a major contract, an unforeseen natural disaster, or an unexpected government action might qualify. A general business downturn, a predictable market change, or financial difficulties that had been building for months do not. Employers who point to economic conditions that were visible in industry reports and financial statements months before the layoff often cannot satisfy the unforeseeable circumstances standard.
The natural disaster exception is distinct from the unforeseeable circumstances exception and covers situations where a plant closing or layoff is directly caused by a flood, earthquake, drought, storm, tidal wave, or similar natural disaster. A company that experiences financial hardship in the aftermath of a natural disaster but whose actual layoff decision was made independently of the disaster itself typically cannot claim this exception.
When a Layoff Violates Both WARN Requirements and Anti-Discrimination Law
A mass layoff can simultaneously violate WARN notice requirements and federal or state anti-discrimination law. The two issues are separate but related. A company that conducts a reduction in force with insufficient WARN notice and that selected employees for termination in a pattern that disproportionately eliminated older workers has created both a WARN Act liability and a potential ADEA disparate impact claim.
The Older Workers Benefit Protection Act, which governs the waiver of ADEA claims in group layoff situations, requires employers conducting a group exit program to provide affected employees with a list of the ages of all employees selected and not selected for the program. This disclosure requirement exists specifically to allow employees to assess whether the layoff had an age-discriminatory pattern. An employer who failed to provide this disclosure in a group layoff has created a defect in any age discrimination waivers contained in severance agreements signed by affected employees.
Maryland employees who were part of a group layoff should therefore evaluate both the procedural compliance with WARN and MESA requirements and the demographic composition of who was selected for termination. Both analyses can yield independent claims, and both claims may be pursued simultaneously.
What Compensation Employees Can Recover for WARN Violations
Federal WARN Act claims are filed in federal district court. The statute of limitations is three years for the underlying employment claim, though some courts apply a shorter period. Back pay is calculated based on the employee’s average regular rate of compensation for the period of the violation, up to 60 days, plus the value of benefits under company benefit plans during that period.
WARN Act cases are particularly well suited to collective action. When a large number of employees from the same layoff have the same WARN violation claim, a class or collective action can be efficient for both the plaintiffs and the courts. Employment attorneys evaluate the feasibility of collective treatment early in these cases because the economies of scale affect both the litigation strategy and the potential recovery per employee.
Maryland MESA claims may be pursued through the Maryland Department of Labor and through civil litigation. Given that the MESA covers smaller employers than the federal WARN Act, there is a population of Maryland workers who have claims under state law with no federal remedy available. Knowing which statute applies, and that both may apply simultaneously when the employer meets both thresholds, affects how these cases are structured.
Talk to Wrongful Termination Lawyers in Maryland After a Group Layoff
Being laid off alongside a significant number of coworkers with no advance warning is a disorienting experience, and the legal landscape around such events is more developed than most employees realize. Whether the employer provided sufficient notice, whether the exceptions it claims actually apply, whether the layoff had a discriminatory pattern, and whether any severance agreements signed by the affected employees were procedurally valid are all questions with answers that affect the compensation available.
The Mundaca Law Firm’s wrongful termination lawyers in Maryland evaluate WARN Act and MESA claims alongside age discrimination and other layoff-related legal theories, giving clients a complete picture of their options after a group reduction in force. If you were laid off in Maryland without the notice the law required, contact The Mundaca Law Firm to schedule a consultation and determine what compensation you may be owed.
