WARN’S PLACE IN THE FLSA / EMPLOYMENT
DISCRIMINATION DICHOTOMY:
WHY A WARNING CANNOT BE WAIVED
Evan Hudson-Plush*
INTRODUCTION
The loss of a job due to a plant closure or permanent layoff has a
serious emotional and financial impact on dislocated workers and their
families.1 However, the fallout is not limited to the workers and their
immediate kin. A major plant closure or layoff affects the community
in which it occurs as well.2 When a large plant closes, its employees no
* Incoming Executive Editor, Cardozo Law Review. J.D. Candidate (2007), Benjamin N.
Cardozo School of Law. I would like to thank Professor Daniel Crane for his assistance in
developing my thesis as well as for all of his insightful comments; Claire Tuck for her
encouragement and guidance through every step of the Note process; and the editors of Cardozo
Law Review who helped in editing this Note. Most of all, I would like to thank my wife, Sarah,
for her inspiration and resolute confidence in me.
1 U.S. GEN. ACCOUNTING OFFICE, PLANT CLOSINGS: LIMITED ADVANCE NOTICE AND
ASSISTANCE PROVIDED DISLOCATED WORKERS 12 (1987) [hereinafter 1987 GAO REPORT].
The United States General Accounting Office, recently renamed the Government Accountability
Office, or GAO, is the independent, nonpartisan, audit, evaluation, and investigative arm of
Congress. The GAO examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help Congress make informed
oversight, policy, and funding decisions. The GAO prepared this report, at the request of
members of Congress, to assist Congress in assessing the problems of worker dislocation and
employer practices related to advance notice and assistance provided to workers. The report was
used by members of Congress to evaluate whether passage of the Worker Adjustment and
Retraining Notification Act (WARN), 29 U.S.C. §§ 2101-2109 (2000), and its mandatory
notification provision, was desirable.
2 1987 GAO REPORT, supra note 1, at 12. The effect of a plant closing on the local
community has been described as follows:
The decision by General Motors to close its automobile assembly plant in Norwood
[Ohio] meant more than the loss of 4,300 jobs to this small, stable community. It
meant the loss of $2.7 million in earnings and property tax revenues, depriving the city
of some 25% of its annual operating budget. The General Motors shutdown also left
an annual gap of over $2 million in property tax revenues to the Norwood school
system. Such crippling blows have been administered to local education programs and
municipal services in thousands of communities across the country.
S. REP. NO. 100-62, at 7 (1987). Another example of the impact of a major plant closing on a
community is provided in Local 333, United States Steelworkers v. United States Steel Corp., 631
F.2d 1264 (6th Cir. 1980). In U.S. Steel, the labor union plaintiffs sought, unsuccessfully, an
injunction to bar the closing of two steel mills in Youngstown, Ohio. Id. at 1265. The mills had
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longer have discretionary income3 to spend in the community, forcing
many smaller businesses to shut down and resulting in a spiraling effect
of even more job losses.4 This in turn leads to a decline in property
values and the erosion of the local tax base, leaving public schools and
other community services lacking in funds and unable to provide for the
increased needs of the laid-off workers and their families.5
To minimize the harmful consequences of job loss, the earliest
possible notification of an impending plant closing or permanent layoff
is necessary.6 Advance notification, which enables the most effective
delivery of public and private services to displaced workers,7 is an
produced steel in Youngstown since the early twentieth century, and at the time of closing
employed over 3,500 workers. Id. The plants were the “dominant factor” in the life of the city
and its residents. Id. The Sixth Circuit stated that the closure of the plants would be an
“economic tragedy of major proportion” upon the community. The district court judge in the case
conjectured that Youngstown would become a “ghost town” due to the closures, id. at 1279, and
in fact, the population of Youngstown has declined by about thirty percent since the plant closing.
See U.S. CENSUS BUREAU, COUNTY AND CITY DATA BOOK: 2000, at 657 (2000), available at
http://www.census.gov/prod/www/ccdb.html (stating that Youngstown’s population declined
from 115,511 in 1980 to 95,695 in 1990 to 82,026 in 2000). Due to numerous steel plant closures
in Youngstown, approximately 5,000 jobs were initially lost, and over 11,000 were subsequently
lost in other sectors such as wholesaling, retailing, auto supplies, and office supplies businesses.
Nicholas A. Ashford & Christine Ayers, Changes and Opportunities in the Environment for
Technology Bargaining, 62 NOTRE DAME L. REV. 810, 850 n.189 (1987). The city’s
unemployment rate increased to the highest in Ohio, and public services were dramatically
reduced due to budget problems. Iver Peterson, Industry’s Woes Hurting Midwest’s Quality of
Life, N.Y. TIMES, May 31, 1981, § 1, at 1. As has been said about Youngstown, some
communities “never recover from major plant closings.” 134 CONG. REC. H9992 (1985)
(statement of Rep. Traficant).
3 Discretionary income is the “amount of an individual’s income available for spending after
the essentials (such as food, clothing, and shelter) have been taken care of.” InvestorWords.com,
Discretionary Income, http://www.investorwords.com/1483/discretionary_income.html (last
visited Nov. 6, 2005).
4 S. REP. NO. 100-62, at 7.
5 Id. (stating that the time of a plant closing or mass layoff is when “municipal services are
most in demand,” but because of the closing or layoff, the “locality’s tax base may be withering
away.”).
6 U.S. CONGRESS, OFFICE OF TECHNOLOGY ASSESSMENT, PLANT CLOSING: ADVANCE
NOTICE AND RAPID RESPONSE—SPECIAL REPORT 1 (Sept. 1986) [hereinafter OTA REPORT]
(“The conviction that advance notice is an important element in helping displaced workers find or
train for new jobs . . . is broadly held by representatives of business, labor, communities and
public agencies.”). The Congressional Office of Technology Assessment (OTA) closed on
September 29, 1995. During its twenty-three year history, OTA provided Congressional
members and committees with objective analysis of complex scientific and technical issues.
Unlike the General Accounting Office, which is primarily concerned with evaluation of ongoing
programs, and the Congressional Research Service, which provides rapid information on
legislative topics, OTA provided a more comprehensive and more technical level of analysis.
The OTA Legacy, http://www.wws.princeton.edu/ota/ (last visited Oct. 10, 2005). This report
was produced in conjunction with a workshop on advance notice of plant closings and permanent
layoffs that was requested by Representatives William Clay, Silvio Conte, and William Ford and
endorsed by Senator Orrin Hatch. OTA REPORT, at III.
7 134 CONG. REC. S8466-01 (1988) (statement of Sen. Metzenbaum, WARN’s sponsor, in
support of the Act); S. REP. NO. 100-62, at 11 (“In order to minimize the costs of worker
dislocation, those affected and responsible for the delivery of services must be notified in advance
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WHY A WARNING CANNOT BE WAIVED
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essential component of a successful adjustment8 program.9 Even the
largest industrial trade association, the National Association of
Manufacturers,10 agrees that advance notice provides the time necessary
to implement a plan to enhance the dislocated workers’ opportunities
for reemployment.11 Thus, in 1988, Congress passed the Worker
Adjustment and Retraining Notification Act12 (WARN). WARN
requires that employers provide written notice sixty days before a plant
closing or mass layoff.13 If this notice requirement is not met, WARN
provides a cause of action for workers to obtain back pay for each day
notice is not provided, up to a maximum of sixty days.14 The purpose of
WARN is to alleviate the distress associated with job loss by assuring
the most rapid possible assistance to the displaced workers.15
of plant closings and mass layoffs. Advance notification provides service delivers [sic] with the
necessary time to have programs developed and implemented before a closing or layoff becomes
a reality.”).
8 For a description of the services available through an adjustment program, see infra note
248.
9 H.R. REP. NO. 100-285, at 12 (1987) (stating that a rapid response program cannot be
effective unless program officials are made aware of plant closings and large layoffs as soon as
possible); see also Jane Friesen, Mandatory Notice and the Jobless Durations of Displaced
Workers, 50 INDUS. & LAB. REL. REV. 652, 664 (1997) (utilizing a statistical study of Canadian
advance notification laws to conclude that workers covered by notice laws find new employment
more quickly than workers not covered by such laws); John T. Addison & Pedro Portugal,
Advance Notice and Unemployment: New Evidence From the 1988 Displaced Worker Survey, 45
INDUS. & LAB. REL. REV. 645, 658 (1992) (concluding that advance notice is associated with a
reduction in joblessness for most workers).
10 The National Association of Manufacturers is the nation’s largest industrial trade
association, representing manufacturers in every industrial sector, whose “mission is to enhance
the competitiveness of manufacturers by shaping a legislative and regulatory environment
conducive to U.S. economic growth and to increase understanding among policymakers, the
media and the general public about the vital role of manufacturing to America’s economic future
and living standards.” National Association of Manufacturers, http://www.nam.org/s_nam/
index.asp (last visited Aug. 28, 2005).
11 1987 GAO REPORT, supra note 1, at 31 (providing a table quoting numerous business
associations and labor organizations that recognized the benefits of advance notice).
12 Pub. L. No. 100-379, 102 Stat. 890 (1988) (codified at 29 U.S.C. §§ 2101-2109 (2000)).
For a detailed description of WARN, and practical information about the statute, see Ethan Lipsig
& Keith R. Fentonmiller, A WARN Act Road Map, 11 LAB. LAW. 273 (1996).
13 29 U.S.C. § 2102(a). For an analysis of the exclusions and exemptions from WARN
coverage, see Sandra J. Mullings, Warn: Judicial Treatment of Exemptions, Exclusions, and
Excuses, 39 ARIZ. L. REV. 1209 (1997).
14 29 U.S.C. § 2104. The employer may also be liable for lost benefits, civil penalties, and
attorney’s fees. Id. For details, see infra note 60.
15 United Paperworkers Int’l Union v. Specialty Paperboard, Inc., 999 F.2d 51, 54 (2d Cir.
1993) (exploring the purposes of WARN in the context of determining the appropriate statute of
limitations for WARN claims); Local Joint Executive Bd. v. Las Vegas Sands, Inc., 244 F.3d
1152, 1159 (9th Cir. 2001) (exploring the purpose of WARN to conclude that since WARN
provides for a compensatory, make-whole remedy for aggrieved employees, tips and vacation pay
are included within the term back pay as used by WARN). For an analysis of the purposes of
WARN and details about its passage, see Christopher P. Yost, The Worker Adjustment and
Retraining Notification Act of 1988: Advance Notice Required?, 38 CATH. U. L. REV. 675 (1989).
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However, a 2003 Government Accountability Office (GAO)
report16 indicates that the statute is not functioning properly. In 2001, of
the 1,974 plant closures17 and mass layoffs18 subject to the requirements
under WARN, only about thirty-six percent of employers provided
advance notice to their employees.19 In other words, in about two-thirds
of all plant closings and mass layoffs subject to the requirements of
WARN, employers failed to provide any notice.20
This failure to provide the WARN-required advance notice results
from employers taking alternative steps to limit their liability.21
Waivers and releases, which employers utilize to request that
employees, upon discharge, sign a contract waiving their rights under
WARN,22 are becoming increasingly common.23 While WARN and the
16 See U.S. GEN. ACCOUNTING OFFICE, THE WORKER ADJUSTMENT AND RETRAINING
NOTIFICATION ACT: REVISING THE ACT AND EDUCATING MATERIALS COULD CLARIFY
EMPLOYER RESPONSIBILITIES AND EMPLOYEE RIGHTS (2003) [hereinafter 2003 GAO REPORT].
For a description of the GAO, see supra note 1.
17 Under WARN,
[T]he term “plant closing” means the permanent or temporary shutdown of a single site
of employment, or one or more facilities or operating units within a single site of
employment, if the shutdown results in an employment loss at the single site of
employment during any 30-day period for 50 or more employees excluding any parttime employees[.]
29 U.S.C § 2101(a)(2).
18 Under WARN,
[T]he term “mass layoff” means a reduction in force which—(A) is not the result of a
plant closing; and (B) results in an employment loss at the single site of employment
during any 30-day period for—(i) (I) at least 33 percent of the employees (excluding
any part-time employees); and (II) at least 50 employees (excluding any part-time
employees); or (ii) at least 500 employees (excluding any part-time employees)[.]
29 U.S.C § 2101(a)(3).
19 2003 GAO REPORT, supra note 16, at 10 (more specifically, employers provided notice for
approximately forty-six percent of plant closures and twenty-six percent of mass layoffs). The
GAO prepared this report, at the request of members of Congress, to determine the extent to
which plant closures and mass layoffs were subject to WARN’s requirements, the extent to which
employers provided notice, and what issues employers and employees face when assessing the
applicability of WARN. The report provides an extensive analysis of WARN and ways in which
the Act and its enforcement can be improved.
20 Id.
21 Id. According to the 2003 GAO REPORT, the other practice used to limit employer liability
is the practice of pay in lieu of notice. In this case, “employers offer employees money instead of
their full 60-days notice.” Id. The 2003 GAO REPORT then notes that neither the Act nor the
regulations recognize the concept of pay in lieu of notice, and that “failure to give notice does a
significant disservice to workers and undermines other services that are part of the purpose of the
WARN Act.” Id. at 10 n.13.
22 For example, in DePalma v. Realty IQ Corp., No. 01 CIV 446 RMB, 2002 WL 461647
(S.D.N.Y. Mar. 25, 2002), the employer canceled the company Christmas party on December
20th and fired 120 of its 150 employees. Id. at *1. The employees were herded into large group
meetings where they each received a termination letter and a general release of claims. Id. The
termination letter informed employees that the employer eliminated their jobs effective that day
and if the general release was signed on the spot, the employee would receive two weeks of
severance pay. Id. at *1-2. However, if they waited, or failed to sign it, they would receive
nothing. Id. The employer planned the meetings so that the sight of aggrieved employees signing
and returning the releases would motivate others to do so as well. Id.
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WHY A WARNING CANNOT BE WAIVED
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Department of Labor regulations promulgated pursuant to WARN24 are
silent with regard to the waiver of claims, courts have upheld these
retrospective25 waivers of WARN claims26 under the framework used to
analyze releases of employment discrimination claims.27
However, more than fifty years ago, the Supreme Court held, under
the Fair Labor Standards Act of 193828 (FLSA), that employees may not
waive the right to minimum or overtime wages.29 The purpose of FLSA
is to protect the lowest paid segment of the population from substandard
wages and excessive hours which endanger the national health.30 The
statute recognized that, due to the unequal bargaining power between
employers and employees, federal compulsory legislation was required
to “prevent private contracts” from endangering the national well-
23 2003 GAO REPORT, supra note 16, at 10. Although waivers are a primary reason that
WARN notice is often lacking, other reasons that the statute is not as effective as it could
potentially be include that many workers are not aware of their rights under WARN, there is no
agency enforcement of WARN, and relief under the Act is limited to sixty days back pay.
Richard W. McHugh, Fair Warning or Foul? An Analysis of the Worker Adjustment and
Retraining Notification (WARN) Act in Practice, 14 BERKELEY J. EMP. & LAB. L. 1, 60 (1993).
24 20 C.F.R. §§ 639.1-639.10 (2005).
25 This Note only concerns the retrospective waiver, and not the prospective waiver of
WARN claims. A retrospective waiver is the waiver of a claim in which the violation has already
occurred. A prospective waiver is one in which future claims are waived. An example would be
a release signed upon the beginning of employment stating that the employee waives her right to
sixty days notice upon a plant closing and the employer will only provide three days notice.
26 E.g., Williams v. Phillips Petroleum Co., 23 F.3d 930 (5th Cir. 1994) (upholding release of
WARN claims under the knowing and voluntary standard). With regard to the prospective waiver
of WARN claims, while there is no WARN case law directly on point, it is well established that
federal statutory rights cannot be prospectively waived as this would encourage violations of the
law.
See, e.g., Cange v. Stotler & Co., 826 F.2d 581, 595 n.11 (7th Cir. 1987)
(“The . . . prospective waivers of statutory rights tend to encourage violations of the law by
notifying the wrongdoer in advance that he or she can act with impunity.”); see also infra note
205.
27 See, e.g., Int’l Ass’n of Machinists & Aerospace Workers v. Compania Mexicana de
Aviación, 199 F.3d 796, 798-99 (5th Cir. 2000) (release enforced and WARN claim dismissed);
Joe v. First Bank Sys., Inc., 202 F.3d 1067, 1070 (8th Cir. 2000) (same); Wagner v. Nutrasweet
Co., 95 F.3d 527, 530 (7th Cir. 1996) (some employee releases enforced and WARN claims
dismissed, others remanded due to issues of fact that precluded summary judgment); Williams, 23
F.3d at 935 (release enforced and WARN claim dismissed); DePalma, 2002 WL 461647, at *3
(material issue of fact existed as to whether release was knowing and voluntary).
28 29 U.S.C. §§ 201-219 (2000).
29 Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697 (1945) (in addition to minimum and overtime
compensation, employees may not waive right to liquidated damages under FLSA); D.A. Schulte,
Inc. v. Gangi, 328 U.S. 108 (1946) (FLSA precluded a settlement of a dispute over a claim for
overtime compensation and liquidated damages where the employer paid the overtime
compensation in full, but failed to pay the liquidated damages). Liquidated damages under FLSA
include an amount equal to the unpaid minimum wages and overtime compensation. 29 U.S.C. §
216.
30 Brooklyn Sav., 324 U.S. at 706-08 (national health was defined by the Court as “the
minimum standard of living necessary for health, efficiency, and general well-being of workers
and to the free flow of commerce”) (internal quotations omitted).
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being.31 As waiver would nullify the purposes of the statute, the
Supreme Court held that a FLSA claim could not be waived.32
This Note argues that analysis of WARN claims should be guided
by the overarching principle disallowing the enforcement of FLSA
releases, as opposed to the principle upholding employment
discrimination releases. This principle is that labor standard statutes
such as FLSA, which set minimum floors for standards such as wages,
are meant to supercede contractual outcomes such as privately
negotiated releases. Employment discrimination claims do not seek to
supercede contractual outcomes, only to eliminate invidious
discrimination. As WARN is a labor standard statute that sets a
minimum floor for advance notice, analysis of WARN claims should be
informed by the FLSA principle. Additionally, there are collective
action problems with enforcing WARN releases and policy reasons that
support holding WARN releases unenforceable. Consequently, WARN
releases should be unenforceable.33
Part I of this Note examines the background of WARN and how
courts have analyzed the waiver of WARN, FLSA, and employment
discrimination claims. Part II.A argues that the seemingly contradictory
law regarding waiver of FLSA and employment discrimination claims is
actually in harmony. It then shows why WARN, when placed into the
FLSA/anti-discrimination dichotomy, fits neatly into the FLSA
unenforceable waiver principle. Part II.B considers the collective action
problem created by enforcing WARN releases. Part II.C explores the
policy considerations for holding both FLSA and WARN releases
unenforceable. Given that WARN most accurately fits into the
framework for determining the enforceability of waiver of claims
established by FLSA, this Note concludes that private waivers of
WARN claims should be unenforceable.
31
32
33
Id. at 706.
Id. at 707; see infra Part I.C.
An issue beyond the scope of this Note is that even if all WARN releases are held
unenforceable, is the release ratified if the releasor retains the consideration after learning that the
release is not enforceable? In Williams v. Phillips Petroleum Co., the court stated that “A person
who signs a release, then sues his or her employer for matters covered under the release, is
obligated to return the consideration.” 23 F.3d 930, 937 (5th Cir. 1994). However, the court in
Taylor v. Progress Energy, Inc., noted that when “claims are not waivable by agreement, neither
are they waivable by ratification.” 415 F.3d 364, 372 (4th Cir. 2005).
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WHY A WARNING CANNOT BE WAIVED
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I. WARN AND WAIVER OF WARN CLAIMS
A.
Passage of WARN
Congress enacted the Worker Adjustment and Retraining
Notification Act to protect workers from the harmful consequences of
sudden job loss by requiring employers to provide sixty days advance
notice of plant closings and mass layoffs.34 According to a 1987 GAO
report, in a five-year period before the passage of WARN, about 10.8
million workers lost their jobs due to plant closures or mass layoffs.35
Many of these dislocated workers, particularly older workers, women,
minorities, and those with non-transferable skills, had a difficult time
finding new jobs.36 According to the GAO report, approximately forty
percent of dislocated workers were unemployed for more than six
months following their dislocation, and an estimated twenty to thirty
percent of dislocated workers lacked basic skills.37
Dislocated workers are often unable to find work with comparable
salaries to their previous jobs.38 Sudden unemployment also leads to
psychological insecurity and stress, which induces alcohol and drug
abuse, creating serious family tensions.39 Further, health problems
increase upon job loss because dislocated workers often stop seeking
medical help for themselves and their family members when health
insurance coverage expires.40 Thus, dislocated workers are likely to
34 20 C.F.R. § 639.1 (2005). For a discussion of the passage of WARN as well as its
legislative history, see Jessica L. Stein, Note, The Worker Adjustment Retraining and Notification
Act (WARN): What is the Meaning Behind the Language?, 19 SETON HALL LEGIS. J. 648 (1995).
35 1987 GAO REPORT, supra note 1, at 2. Closures and layoffs are a national problem, with
jobs lost in this period in all regions of the country. Id. at 18. In this period, “Closures and
layoffs affected about 1 in every 15 U.S. business establishments that employed 100 or more
workers.” Id. at 19. The closures and layoffs affected “1 in every 8 of the nation’s 35,000 larger
manufacturing establishments.” Id. at 21.
36 Id. at 2, 52. The 1987 GAO REPORT goes on to state that “workers who lose their
manufacturing jobs will not readily fit into job openings in the service sector or into new
manufacturing positions that require familiarity with new, more sophisticated equipment.” Id. at
38.
37 Id. at 2.
38 Id. at 12. The statistics that led to the passage of WARN revealed that more than forty
percent of workers who lost their jobs due to a plant closure or mass layoff, and were
subsequently reemployed, earned less in their new jobs. Id.
39 Id. at 42. As Bruce Springsteen put it, “Well they closed down the auto plant in Mahwah
late that month / Ralph went out lookin’ for a job but he couldn’t find none / He came home too
drunk from mixin’ Tanqueray and wine / He got a gun[,] shot a night clerk[,] now they call’m
Johnny 99.” BRUCE SPRINGSTEEN, Johnny 99, on NEBRASKA (Columbia Records 1982).
40 1987 GAO REPORT, supra note 1, at 41 (“Because of the cost involved, dislocated workers
may stop seeking medical help for themselves and family members if they do not have health
insurance coverage. . . . This is at a time when the stress of unemployment and job seeking may
leave dislocated workers vulnerable to illness.”).
While the Consolidated Omnibus
Reconciliation Act (COBRA) of 1985, 29 U.S.C. §§ 1161-1169 (2000), allows workers who lose
their health benefits due to involuntary job loss to continue employer provided health coverage
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experience significant earnings losses and both psychological and health
problems in adjusting to the loss of their jobs.41
Advance notice, which is mandated by WARN, provides workers
and their families transition time to adjust to the prospective loss of
employment, to enter training programs that enable them to stay
competitive in the job market, and to search for and obtain new jobs.42
Prior to the passage of WARN, two-thirds of workers received
virtually no notice of impending job loss.43 WARN’s legislative history
abounds with stories of plants shut down without any notice. Workers
at one company were told on the same day a plant closed, “Pack up your
tools, pack up your lunchbox, clean out your lockers, you are through,
now.”44 Employees at another company were told to report to different
motels where the company had arranged to rent rooms to inform
workers that they had lost their jobs.45 Workers received their last
paycheck on the spot, and the company posted armed security guards at
the worksite to prevent workers from returning.46
Legislation regarding advance notification of plant closings and
mass layoffs was first introduced into both houses of Congress in the
early 1970s.47 In the intervening years, research revealed the extensive
hardships created by business closings.48 Also, the problem of worker
for a limited period of time, this coverage is often quite expensive. Qualified individuals may be
required to pay the entire premium for coverage up to 102 percent of the cost of the plan. 29
U.S.C. §§ 1161-1162.
41 1987 GAO REPORT, supra note 1, at 38.
42 20 C.F.R. § 639.1 (2005). According to both business and labor leaders, advance notice
provides time to, “plan and implement programs to help workers adjust to their dislocation and
find reemployment, increase worker participation in adjustment programs, and improve the
efficiency and effectiveness of adjustment programs by helping dislocated workers find
comparable jobs faster.” 1987 GAO REPORT, supra note 1, at 30.
43 134 CONG. REC. S8466-01 (1988) (statement of Sen. Metzenbaum). When a plant closed,
the average blue-collar worker received seven days notice, and blue-collar workers in non-union
plants received an average of two days notice. Id.
44 134 CONG. REC. S8449-01 (1988) (statement of Sen. Metzenbaum).
45 S. REP. NO. 100-62, at 13 (1987).
46 Id.
47 See H.R. REP. NO. 100-285, at 4-8 (1987); McHugh, supra note 23, at 6 (Early advance
notice proposals were more comprehensive than the final version of WARN. These bills tried to
limit plant closings by: “(1) providing technical and financial assistance to troubled firms and
affected communities; (2) requiring advance consultation with unions and local governments; (3)
requiring disclosure of financial data; and (4) providing adjustment assistance and training for
workers, in conjunction with a considerable period of advance notice.”).
48 H.R. REP. NO. 100-285, at 9. The report indicated that the negative health effects of job
loss can be even greater than the financial impact. Documented health problems caused by the
stress of a plant closure include increased uric acid, blood pressure, blood sugar and cholesterol
levels, depression, grief, and a sense of bereavement. Additionally, suicide rates increase
dramatically for those who experience plant closings. Id.; see also OTA REPORT, supra note 6, at
5 (“Most displaced workers do return to work, but the majority take a cut in earnings, either
through lower wages or acceptance of part-time employment in place of a full-time job. Many
drop out of the labor force, sometimes after many weeks of discouraging job hunting. Most
displaced workers lose benefits; health benefits usually stop with the loss of a job or shortly
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WHY A WARNING CANNOT BE WAIVED
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dislocation was exacerbated by a decline in the manufacturing sector49
and increased foreign competition.50 A national survey indicated that
eighty-six percent of the American public felt mandatory notification
legislation was necessary.51 Thus, in order to “start . . . protecting
people as they ought to be protected,”52 and because it was critical to the
country’s workers, their families, and the communities in which they
lived,53 Congress passed WARN in August of 1988.54
WARN provides that covered employers55 shall not order a plant
closing or mass layoff until at least sixty days after the employer serves
written notice of such an order.56 An employer who is anticipating
thereafter, pension benefits suffer, and seniority is usually wiped out. The economic stresses of
displacement also take a toll in mental and physical health.”).
49 See 1987 GAO REPORT, supra note 1, at 21. Sixty percent of the plant closures and
permanent layoffs at establishments with more than 100 employees between 1981 and 1986
occurred in the manufacturing sector. These closures affected one in every eight of the nation’s
larger manufacturing companies and the rate of closures and layoffs was more than three times
the rate for the service and trade industries. Id.
50 See 1987 GAO REPORT, supra note 1, at 25-26. Sixty-two percent of the workers laid off
in the manufacturing sector were adversely impacted by foreign trade. Additionally, although
foreign competition had historically been associated with labor-intensive, low-technology
industries, it had a negative impact upon “knowledge-intensive” industries as well. Hightechnology industries had a seventeen percent rate of plant closure or mass layoff occurrence in
the 1981-1986 time frame. Id.
51 134 CONG. REC. S8449-01 (1988) (statement of Sen. Metzenbaum) (“And the Business
Week journal took a poll of the people of this country on this subject. Eighty-six percent of the
people in this country favor plant closing notice. Eighty-six percent of the people. You can
hardly get 86 percent of the people to agree on almost any other subject.”).
52 134 CONG. REC. S8466-01 (1988) (statement of Sen. Metzenbaum).
53 Id. (statement of Sen. Riegle).
54 Pub. L. No. 100-379, 102 Stat. 890 (1988). The worker adjustment and advance notice
provisions of WARN were originally Subtitle E of H.R. 3, the Omnibus Trade and
Competitiveness Act of 1988. This legislation passed the House of Representatives on April 21,
1988, 134 CONG. REC. H2375-76 (1988), and the Senate on April 27, 1998, 134 CONG. REC.
S4926 (1988). However, President Ronald Reagan vetoed the trade legislation, primarily because
of the advance notice provisions. McHugh, supra note 23, at 11. The House overrode the veto,
but the Senate did not. Id. After the veto, the advance notice provisions were removed from the
trade legislation and introduced as S. 2527 by Senator Metzenbaum on June 16, 1988. Id. The
provisions were virtually identical to that in the trade legislation, and passed as WARN on July 6,
1988 by the Senate, by the House a week later, and became law on August 4, 1988 “without the
President’s signature, when President Reagan declined to either sign or veto the legislation.” Id.
at 12. Perhaps President Reagan realized that public support was heavily weighed against him,
with eighty-six percent of the public favoring the advance notice legislation. 134 CONG. REC.
S8449-01 (1988). The bill was able to become law without the President’s signature because
when a bill passes both houses of Congress, if the President does not either sign or veto the bill
within ten days “after it shall have been presented to him, the Same shall be a law, in like Manner
as if he had signed it.” U.S. CONST. art. I, § 7, cl. 2.
55 Covered employers include any business enterprise that employs 100 or more employees,
excluding part-time employees; or 100 or more employees who, in the aggregate, work at least
4,000 hours per week, excluding overtime. 29 U.S.C. § 2101(a)(1) (2000).
56 29 U.S.C. § 2102(a). Recently, legislation has been proposed to amend and strengthen
WARN to address the issue of offshore outsourcing which has led to increasing plant closures
and permanent layoffs in the United States; this legislation would, amongst other changes,
lengthen the notification period to ninety days. See S. 14, 109th Cong. § 212 (2005). For a
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carrying out a plant closing or mass layoff is required to give notice to
affected employees or their union representative, the state dislocated
worker unit,57 and the chief elected official of a unit of local
government.58 An employer who violates the Act is liable for back pay
for each day59 notice is not provided, up to a maximum of sixty days.60
An employer violation in failing to provide notification to local
government is subject to a civil penalty of not more than $500 for each
day of the violation.61 The prevailing party in a WARN suit may also
receive reasonable attorney’s fees.62 Finally, courts may, at their
discretion, reduce the amount of liability or penalty under WARN if the
violation was deemed to be in “good faith.”63
B.
Waiver of WARN Claims
When an employer terminates employees in a plant closing or mass
layoff, it often seeks to obtain a release of claims through which the
terminated employees waive all employment-related claims against the
comparative analysis among five countries as to how the burdens of worker dislocation are
distributed between the dislocated worker, the employer, and social funds, see Clyde W.
Summers, Worker Dislocation: Who Bears the Burden? A Comparative Study of Social Values in
Five Countries, 70 NOTRE DAME L. REV. 1033, 1058 (1995) (revealing that in the United States,
the burden is almost wholly on the dislocated worker, and almost none is on the employer).
57 “The term ‘State dislocated worker unit’ means a unit designated or created in each State
by the Governor under title III of the Job Training Partnership Act, as amended by EDWAA
[Economic Dislocation and Worker Adjustment Assistance Act].” 20 C.F.R. § 639.3(k) (2005).
However, the Job Training Partnership Act, 29 U.S.C. §§ 1501-1792 (2000), was repealed in
1998 and the relevant provisions were replaced by the Workforce Investment Act of 1998, 29
U.S.C. §§ 2801-2945 (2000). See infra note 248.
58 20 C.F.R. § 639.4; see 29 U.S.C. § 2102(a).
59 There is currently a split in the circuits as to whether back pay under WARN refers to sixty
calendar days or sixty workdays (and hence forty-two days of wages). Compare United
Steelworkers v. N. Star Steel Co., 5 F.3d 39, 41 (3d Cir. 1993) (concluding calendar days is the
better approach) with Breedlove v. Earthgrains Baking Cos., Inc., 140 F.3d 797, 801 (8th Cir.
1998) (concluding workdays is the better approach); Burns v. Stone Forest Indus., Inc., 147 F.3d
1182, 1185 (9th Cir. 1998) (same); Saxion v. Titan-C-Mfg., Inc., 86 F.3d 553, 561 (6th Cir. 1996)
(same); Frymire v. Ampex Corp., 61 F.3d 757, 772 (10th Cir. 1995) (same); Carpenters Dist.
Council v. Dillard Dep’t Stores, Inc., 15 F.3d 1275, 1286 (5th Cir. 1994) (same); see also Jeffrey
Turner, Comment, Damages Under the Workers Adjustment and Retraining Act (WARN): Why
Damages Cannot Be Based on Calendar Days, 12 T.M. COOLEY L. REV. 197, 223 (1995)
(concluding workdays is the better approach).
60 29 U.S.C. § 2104(a)(1). In no event should the liability exceed “more than one-half the
number of days the employee was employed by the employer.” Id. Additionally, the amount of
liability can be reduced by any wages paid by the employer to the employee during the violation
period or any voluntary and unconditional payment by the employer to the employee that is not
required by any legal obligation. Id. § 2104(a)(2).
61 Id. § 2104(a)(3). However, this civil penalty does not apply if the employer pays the full
amount for which they are liable within three weeks from the date the shutdown or layoff. Id.
62 Id. § 2104(a)(6).
63 Id. § 2104(a)(4) (“the employer [must have] had reasonable grounds for believing that the
act or omission was not a violation of this chapter”). Id.
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employer.64 In exchange for a release, employers offer an immediate
payment often worth approximately two weeks of wages, much less
than the sixty days due under WARN.65 Rather than gamble on
litigation that could last months or years, employees frequently sign the
release.66
1.
The Gardner-Denver Framework
When a federal statute governs the claim waived, federal common
law is used to determine whether employees who signed the release
validly waived their right to sue under the statute.67 If a standard
contract exception, such as lack of consideration, fraud, duress, or
mutual mistake,68 does not apply, courts have generally used the
analytical framework first announced in Alexander v. Gardner-Denver
Co.69 to determine if a release of claims is enforceable. In GardnerDenver, a Title VII70 case, the Supreme Court determined that an
64 Parisis G. Filippatos & Sean Farhang, The Increasing Problem of Reductions in Force from
the Perspective of Employee’s Counsel, 661 PRACTISING L. INST. 387, 426 (2001); Local Union
No. 1992 v. Okonite Co., 189 F.3d 339, 348 (3d Cir. 1999) (Rosenn, J., dissenting) (discussing
the history and context of severance pay and releases of claims).
65 See E-mail from Mark Fancher, Senior Staff Attorney, Maurice and Jane Sugar Law Center
for Economic and Social Justice (Aug. 7, 2005, 03:28:52 EST) (on file with author) (stating that
in exchange for a waiver of all rights to sue, employers offer immediate pay worth “two weeks”
of wages; the Sugar Law Center in Detroit, Michigan, serves as a national clearinghouse on
WARN litigation and supports efforts by workers and unions to pursue WARN enforcement); see
also DePalma v. Realty IQ Corp., No. 01 CIV 446 RMB, 2002 WL 461647, at *1 (S.D.N.Y. Mar.
25, 2002) (employees signed releases after being given “take it or leave it” offer of two weeks
pay). Employers may also offer additional insurance coverage, outplacement services, or a
similar additional benefit. Filippatos & Farhang, supra note 64, at 426; Richard S. Zackin & J.
Timothy McDonald, Releases Can Minimize Litigation Arising From a Reduction in Force,
NAT’L L.J., Feb., 26, 1996, at C4.
66 See E-mail from Mark Fancher, supra note 65 (“The reality for the workers is that they can
take this ‘bird in the hand’ payment and run; or they can gamble on litigation that could last
months or years, and in the end receive a settlement for an amount less than 60 days wages.”).
67 E.g., Dice v. Akron, Canton & Youngstown R.R. Co., 342 U.S. 359, 361 (1952) (release
under the Federal Employer’s Liability Act governed by federal law because “[s]tate laws are not
controlling in determining what the incidents of this federal right shall be. . . . Moreover, only if
federal law controls can the federal Act be given that uniform application throughout the country
essential to effectuate its purposes.”); Williams v. Phillips Petroleum Co., 23 F.3d 930, 935 (5th
Cir. 1994). Courts use federal common law because state law could frustrate the policies
embedded in a federal statute. O’Hare v. Global Natural Res., Inc., 898 F.2d 1015, 1017 (5th Cir.
1990) (“Creation of a federal rule rather than absorption of a state rule is appropriate
where . . . the rights of the litigants and the operative legal policies derive from a federal source.”)
(quoting Fulgence v. J. Ray McDermott & Co., 662 F.2d 1207, 1209 (5th Cir. 1981)).
68 As releases are contracts, they can be held unenforceable through these typical exceptions.
See Shaheen v. B.F. Goodrich Co., 873 F.2d 105, 107 (6th Cir. 1989) (examining the
enforceability of a release under the ADEA, Title VII, and the Equal Pay Act).
69 415 U.S. 36, 52 n.15 (1974).
70 Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2000e-17 (2000) (forbidding
employment discrimination based on race, color, religion, sex or national origin).
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employment discrimination claim could be waived if the employee’s
consent was knowing and voluntary.71 Most cases interpreting and
applying the knowing and voluntary standard involve employment
discrimination claims72 and courts have held that a general release of
discrimination claims after the violation has occurred does not violate
public policy.73 Emphasis is placed on the fact that public policy favors
71
72
Gardner-Denver, 415 U.S. at 52 n.15.
These involve employment discrimination claims under such federal statutes as: 1) Title
VII, see, e.g., Melanson v. Browning-Ferris Indus., Inc., 281 F.3d 272, 274 (1st Cir. 2002); 2) the
American with Disabilities Act, 42 U.S.C. §§ 12101-12213 (2000) (prohibiting employment
discrimination based the basis of a disability, a perceived disability, or association with a person
with a disability), see, e.g., Bledsoe v. Palm Beach County Soil & Water Conservation Dist., 133
F.3d 816, 819 (11th Cir. 1998); 3) the Age Discrimination in Employment Act of 1967, 29 U.S.C.
§§ 621-634 (2000) (ADEA) (prohibiting employment discrimination on the basis of age for
individuals 40 and over; note, however, that in 1990 Congress amended the ADEA to add precise
criteria by which courts are to judge the validity of employee waivers of age discrimination
claims. See Older Workers Benefit Protection Act of 1990, Pub. L. No. 101-433, 104 Stat. 978
(1990) (codified at 29 U.S.C. §§ 621-634).), see, e.g., Coventry v. U.S. Steel Corp., 856 F.2d 514,
522-23 (3d Cir. 1988); and 4) section 1981 of the Civil Rights Act of 1866, 42 U.S.C. § 1981
(2000) (section 1981 forbids discrimination on the basis of race, color or national origin in the
making and enforcing of contracts), see, e.g., Torrez v. Pub. Serv. Co. of New Mexico, 908 F.2d
687, 689 (10th Cir. 1990). Section 1981 is part of the Civil Rights Act of 1866, which was the
first civil rights bill in the history of the United States. See generally John Hope Franklin, The
Civil Rights Act of 1866 Revisited, 41 HASTINGS L.J. 1135, 1135 (1990). This Act “made
significant contributions to the difficult transition of African Americans from slavery to freedom
in the post-Civil War years,” and gave citizens, regardless or race or color, the ability to “make
and enforce contracts; to sue, be parties and give evidence, to inherit, purchase, lease, sell, hold,
and convey real and personal property, and to full and equal benefit of all laws and proceedings
for the security of person and property, as is enjoyed by white citizens.” Id. (quoting the Civil
Rights Act of 1866).
73 E.g., Rogers v. Gen. Elec. Co., 781 F.2d 452, 454 (5th Cir. 1986) (“A general release of
Title VII claims does not ordinarily violate public policy”); Stroman v. W. Coast Grocery Co.,
884 F.2d 458, 460-61 (9th Cir. 1989) (same). It is necessary to distinguish prospective
employment claims from retrospective claims. Kendall v. Watkins, 998 F.2d 848, 851 (10th Cir.
1993) (“an employee may agree to waive Title VII rights that have accrued, but cannot waive
rights that have not yet accrued”). There is no bar to waiving claims that have already occurred.
However, as the Court stated in Gardner-Denver, an employee’s rights under Title VII may not
be waived prospectively. 414 U.S. at 52. Thus, courts have held that releases that claim to waive
Title VII claims, as well as other federal statutory rights, based on future events are void as
against public policy. E.g., Rogers, 781 F.2d at 454. Title VII represented Congress’ command
that every employee be free from discriminatory practices. Gardner-Denver, 415 U.S. at 52. The
prospective waiver of the right to be free from discrimination would defeat the congressional
purpose behind Title VII because it would encourage violations of the law by notifying the
wrongdoer in advance that they could discriminate without repercussions. Cange v. Stotler &
Co., 826 F.2d 581, 594 n.11 (7th Cir. 1987).
Additionally, a prospective waiver of all substantive rights under an employment
discrimination statute must be distinguished from the prospective waiver of the right to bring a
claim in a judicial forum. A substantial body of case law has developed regarding the use of
mandatory arbitration agreements in employment contracts. Initially, in 1974 the Supreme Court
found that a compulsory arbitration clause in a collective-bargaining agreement did not preclude a
Title VII federal claim. Gardner-Denver, 415 U.S. at 47-49. In Gardner-Denver, the Court felt
that arbitration was an inappropriate forum in which to adjudicate employment discrimination
claims. Id. at 52-54. The Court expressed the opinion that choice of an arbitral forum would
adversely affect the substantive discrimination claim to be vindicated. Id. at 56. The Court listed
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settlement because voluntary compliance was selected as the preferred
means for eliminating discrimination in the workplace.74
shortcomings of an arbitral forum, such as: the role of the arbitrator is to effectuate the intent of
the parties under the contract, not the requirements of legislation, id. at 56-57; the factfinding and
discovery in arbitration are not as extensive as in a judicial forum, id. at 57; and arbitrators have
no obligation to write opinions giving reasons for their decision; id. at 58. However, in 1991 the
Court ignored these concerns and expressed a “liberal federal policy favoring arbitration
agreements.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991) (quoting Moses H.
Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). The Court stated that the
purpose of the Federal Arbitration Act was to “reverse longstanding judicial hostility to
arbitration agreements . . . by American courts.” Id. at 24. The Court held that an ADEA claim
could be subject to “compulsory arbitration pursuant to an arbitration agreement in a securities
registration application.” Id. at 23. The Court distinguished Gardner-Denver by stating that that
case arose under an arbitration clause pursuant to a collective-bargaining agreement, and thus the
party was seeking to assert a statutory right independent of the rights covered under the collective
bargaining agreement. Id. at 34. However, the Court expressly dismissed the shortcomings of
arbitral forums described in Gardner-Denver. Id. at 27-34. The Court held that compulsory
arbitration of age discrimination claims is not inconsistent with the purposes of the ADEA, id. at
27, and emphasized that “[b]y agreeing to arbitrate a statutory claim, a party does not forego the
substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather
than judicial, forum.” Id. at 26 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc., 473 U.S. 614, 628 (1985)) (emphasis added). As the arbitration agreement in Gilmer was
pursuant to a securities registration application, the Court did not specifically address whether
arbitration clauses applied to employment contracts until 2001. See Circuit City Stores, Inc. v.
Adams, 532 U.S. 105 (2001). In Circuit City, the Court held that employment discrimination
claims could be subject to mandatory arbitration clauses in employment contracts. Id. at 122-24.
The Court reiterated the proposition of Gilmer that the “advantages of the arbitration process [do
not] somehow disappear when transferred to the employment context.” Id. at 123. The Court
again emphasized that the parties were not foregoing their substantive statutory right under the
statute, but simply submitting the claims to an “arbitral, rather than judicial, forum.” Id. at 124
(internal citations omitted). Thus, a prospective waiver of all substantive rights under an
employment discrimination statute must be distinguished from a waiver of the right to a judicial
forum pursuant to a mandatory arbitration agreement. A prospective waiver of all substantive
rights precludes any and all claims from being brought, while substantive rights are not waived
through the use of mandatory arbitration agreements—they are simply brought in another forum.
The Fourth Circuit has described the distinction as: “[A]greeing to submit a claim to arbitration is
entirely different from agreeing to waive it. An agreement to arbitrate preserves the claim; the
agreement simply shifts the forum for resolving the claim from a court to an arbitration setting.”
Taylor v. Progress Energy, Inc., 415 F.3d 364, 372 (4th Cir. 2005).
74 Gardner-Denver, 415 U.S. at 44; Stroman, 884 F.2d at 461; see also Carson v. Am.
Brands, Inc., 450 U.S. 79, 88 n.14 (1981) (“In enacting Title VII, Congress expressed a strong
preference for encouraging voluntary settlement of employment discrimination claims.”); United
States v. Allegheny-Ludlum Indus., Inc., 517 F.2d 826, 846-47 (5th Cir. 1975) (“Thus it is quite
apparent that the basic philosophy of [employment discrimination statutes] is that voluntary
compliance is preferable to court action and that efforts should be made to resolve these
employment rights by conciliation both before and after court action . . . . [I]t is clear that
Congress placed great emphasis upon private settlement and the elimination of unfair practices
without litigation . . . on the ground that voluntary compliance is preferable to court action. . . .
Indeed, it is apparent that the primary role of the EEOC is to seek elimination of unlawful
employment practices by informal means leading to voluntary compliance.”) (internal quotations
and citations omitted).
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Gardner-Denver Applied to WARN
Courts that have analyzed whether a release75 of WARN claims is
enforceable have also utilized the Gardner-Denver framework,76 though
they have provided little reasoning for using the framework typically
applied in employment discrimination cases.77 Courts have simply
made conclusory statements that waiver of WARN claims is governed
by the Gardner-Denver knowing and voluntary standard.78 The
landmark case establishing that WARN claims can be waived under this
analysis is Williams v. Phillips Petroleum Co.79
In Williams, a petroleum company laid off about sixty workers
without providing sixty days notice.80 Six of these workers, all of
whom signed releases in exchange for enhanced layoff benefits, brought
an action alleging WARN violations.81 In considering whether the
releases were enforceable, the Fifth Circuit used the knowing and
voluntary standard for analyzing the enforceability of a WARN release,
which laid the groundwork for the standard used in WARN release
cases thereafter.82 The court stated, “Public policy favors voluntary
settlement of claims and enforcement of releases, but a release of an
employment or employment discrimination claim [including WARN] is
valid only if it is ‘knowing’ and ‘voluntary.’”83 To support this
statement, the court only cited cases involving employment
discrimination claims under the Age Discrimination in Employment
Act84 (ADEA) and Title VII.85 The court then held that if a release was
75 As indicated in note 25, this Note only concerns the retrospective, not the prospective
waiver of WARN claims.
76 See, e.g., Williams v. Phillips Petroleum Co., 23 F.3d 930, 935 (5th Cir. 1994).
77 See supra note 72.
78 See Williams, 23 F.3d at 935.
79 23 F.3d 930 (5th Cir. 1994), cert. denied, 513 U.S. 1019 (1994).
80 Id. at 932-33 (more precisely, Phillips laid off over five hundred employees in one plant
and provided notice to these employees, and sixty-seven employees at other locations, of which
sixty-three did not receive sixty days notice).
81 Id. at 933. The plaintiffs as a group received $210,853.38 of enhanced plan benefits in
exchange for signing the release. Id. at 938. It is unclear from the case whether this constituted
more or less than the plaintiffs would have received had they been given the sixty day back pay
remedy as proscribed by WARN. However, Phillips, in its brief in opposition to Williams’
petition for certiorari, stated that “the consideration provided to the [plaintiffs] was more than the
amount of relief that the [plaintiffs] could expect to recover under WARN.” Brief in Opposition
to Petition for Writ of Certiorari, Williams v. Phillips Petroleum Co., 513 U.S. 1019 (1994) (No.
94-676). The Fifth Circuit did not address the argument that the enhanced benefits provided to
the plaintiffs reduced, perhaps to zero, the amount of liability under WARN. 29 U.S.C. §
2104(a)(2) (“voluntary and unconditional payment by the employer to the employee that is not
required by any legal obligation” reduces employer’s WARN liability).
82 See, e.g., Int’l Ass’n of Machinists & Aerospace Workers v. Compania Mexicana de
Aviacion, 199 F.3d 796, 799 (5th Cir. 2000).
83 Williams, 23 F.3d at 935 (internal citations omitted).
84 The court relied on O’Hare v. Global Natural Res., Inc., 898 F.2d 1015 (5th Cir. 1990)
(under the totality of the circumstances approach, employee knowingly and voluntarily waived
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signed, addressed the claims at issue, and received adequate
consideration, then it is enforceable.86 The burden then shifts to the
signer of the release to prove invalidity due to fraud, duress, or material
mistake.87
The court stated88 that since the releases at hand provided enhanced
benefits, advised the employees to consult an attorney, and specifically
covered all claims relating to the individual’s employment or layoff,
they were enforceable.89 Noting that factory workers had enough
education to be able to read and understand the releases,90 the court
rejected the argument that because the releases did not mention WARN,
they did not bar WARN claims.91 The court reasoned that WARN
applies to layoffs and the releases eliminated all claims relating to the
plaintiffs’ layoffs, the releases barred WARN claims.92 The court did
not even consider whether the public policy goals of WARN would be
skirted by enforcing the releases, only stating that public policy favors
the settlement of claims and the enforcement of releases.93
Following Williams, the cases addressing the enforceability of
releases of WARN claims have essentially held that WARN claims can
be waived if the employee entered into the release knowingly and
voluntarily. For example, in Joe v. First Bank Systems, Inc.,94 two
companies merged, causing a mass layoff.95 The plaintiff was laid-off
his rights under ADEA).
85 The court relied on Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974), and Rogers v.
Gen. Elec. Co., 781 F.2d 452 (5th Cir. 1986) (employee knowingly and voluntarily executed Title
VII release).
86 Williams, 23 F.3d at 935.
87 Id. (or another valid contractual defense). The court noted that it examined the totality of
circumstances to determine whether the signatory has established a viable defense. Id.
88 The court actually determined that WARN did not even apply because “no mass layoff
occurred at the single sites of employment where the original plaintiffs worked,” as is required by
the statute. Williams, 23 F.3d at 933-34. However, the court went on to address the
enforceability of the releases to determine whether the action was frivolous. Id. at 935 n.2. The
court stated that “[T]his discussion is unnecessary to the issue of whether WARN was violated.”
Id. (emphasis added). Thus, although widely cited to, this portion of the case is actually dicta.
89 Williams, 23 F.3d at 935-36.
90 Id. at 936.
91 In some cases, the release will specifically address WARN claims. See DePalma v. Realty
IQ Corp., No. 01 CIV 446 RMB, 2002 WL 461647, at *1 (S.D.N.Y. Mar. 25, 2002). However, in
many cases, including in Williams, the release will not specifically mention WARN, but be a
general release waiving all employment related claims. See, e.g., Williams, 23 F.3d at 936.
Courts have held that a general release which waives all employment-related claims waives
WARN claims as well. Id. (“There is no obligation under WARN or the common law for the
defendants to mention WARN for the releases to be valid.”); see also Wagner v. Nutrasweet Co.,
95 F.3d 527, 533 (7th Cir. 1996) (“When a release is broadly worded . . . to cover all
claims . . . the plaintiff is giving up the right to sue that she might otherwise have on claims
related to her employment that could arise under any law.”).
92 Williams, 23 F.3d at 936.
93 Id. at 935.
94 202 F.3d 1067 (8th Cir. 2000).
95 Id. at 1069.
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the day after the merger, having received only two days notice. The
Eighth Circuit held that the general release of claims barred the
plaintiff’s WARN claim because the plaintiff had received some
severance pay and because the release was discussed with the plaintiff’s
attorney.96 In International Ass’n of Machinists & Aerospace Workers
v. Compania Mexicana de Aviación,97 an employer terminated union
members after providing only one month’s notice.98 The court
dismissed the WARN claims because the releases signed by the
employees were knowingly and voluntarily entered into, contained valid
consideration, and were not procured by fraud, duress, or material
mistake.99
Only one case, DePalma v. Realty IQ Corp.,100 considered whether
public policy considerations forbid waiver of WARN claims. In
DePalma, the plaintiffs argued that enforcement of the releases violated
WARN’s public policy goals: to protect workers, their families, and
their communities.101
The court noted that an agreement is
unenforceable on grounds of public policy if the interest in its
enforcement is outweighed by the public policy against enforcement.102
However, the court declined to address this argument at the motion to
dismiss stage because the issue would not be reached if the releases
were later determined, at trial, to be invalid as not knowing and
voluntary.103
Although there is not a great deal of case law dealing with the
waiver of WARN claims, it is clear that releases are frequently used to
avoid liability under WARN. As discussed in the Introduction, in
approximately two thirds of the 1,974 plant closures and mass layoffs
subject to the requirements under WARN in 2001, no advance notice
was provided.104 The aggressive use of waiver by employers is
defeating the purpose of WARN.105 Given the difficult showing needed
to overcome the validity of a release, workers are deterred by the
scarcity of lawyers willing to take on WARN cases, the high cost of
litigation, the limited relief afforded under WARN, and the fact that it
96 Id. at 1070-71 (that the release was voluntary was “not surprising since Joe had the release
for two or three days and discussed it with his attorney”).
97 199 F.3d 796 (5th Cir. 2000).
98 Id. at 797.
99 Id. at 798-99 (citing Williams v. Phillips Petroleum Co., 23 F.3d 930, 935 (5th Cir. 1994)).
100 No. 01 CIV 446 RMB, 2002 WL 461647 (S.D.N.Y. Mar. 25, 2002). See supra note 22.
101 Id. at *4 (internal quotations omitted).
102 Id.
103 Id. at *5. The DePalma court held that that it was inappropriate at the motion to dismiss
stage to determine the factual issue of whether the releases, under the totality of the circumstances
test, were entered into knowingly and voluntarily. Id. at *3.
104 2003 GAO REPORT, supra note 16, at 10.
105 Id.
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can take up to two years to litigate a case in court.106 Therefore, WARN
releases are not frequently litigated.
C.
Prohibition on Waiver of FLSA Claims
In stark contrast to employment discrimination and WARN claims,
courts have interpreted the waiver of claims under the Fair Labor
Standards Act107 radically differently. FLSA guarantees covered
workers the right to minimum wage108 and overtime compensation.109
Any private release of FLSA claims by an employee, prospectively or
retrospectively, is unenforceable, as the rights provided by FLSA cannot
be waived without government supervision.110 There are only two ways
in which FLSA claims can be settled by employees: either the Secretary
of Labor must supervise payment to employees of the unpaid wages
owed to them,111 or, in the litigation context, a district court may enter a
stipulated judgment after scrutinizing the settlement for fairness.112
106 McHugh, supra note 23, at 60 (quoting the public testimony of the director of the Maurice
and Jane Sugar Law Center for Economic and Social Justice in Detroit, Michigan, which serves
“as a national clearinghouse on WARN litigation and supports efforts by workers and unions to
pursue WARN enforcement”).
107 29 U.S.C. §§ 201-219 (2000).
108 Id. § 206 (currently $5.15 an hour as of Sept. 1, 1997).
109 Id. § 207 (“no employer shall employ any of his employees . . . for a workweek longer than
forty hours unless such employee receives compensation for his employment in excess of the
hours above specified at a rate not less than one and one-half times the regular rate at which he is
employed.”).
110 See, e.g., Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-53 (11th Cir.
1982). Note, however, that FLSA can be waived if the settlement is made to settle a dispute in
which the only issue is one of fact, such as a dispute over how many overtime hours an employee
actually worked. See Runyan v. Nat’l Cash Register Corp., 787 F.2d 1039, 1042-44 (6th Cir.
1986); Robert G. Hass, Note, Waivers Under the Age Discrimination in Employment Act: Putting
the Fair Labor Standards Act Criteria to Rest, 14 GEO. WASH. L. REV. 382, 387 (1987) (citing to
Strand v. Garden Valley Tel. Co., 51 F. Supp. 898, 904-05 (D. Minn. 1943), which was cited with
approval in D. A. Schulte, Inc. v. Gangi, 328 U.S. 108, 115 (1946)).
111 Lynn’s Food Stores, 679 F.2d at 1352-53 (citing the ability to settle FLSA claims with the
Secretary of Labor under 29 U.S.C. § 216(c)). An employee who accepts this payment that is
supervised by the Secretary thereby waives the right to bring suit for both the unpaid back wages
and for liquidated damages, provided the employer pays the back wages in full. Id. at 1353. In
this context, for the Secretary of Labor to “supervise” the payment of back wages means that the
Secretary is to “aid the worker by authorizing the Wage-Hour Administrator to work out an
agreement with the employer and the employee as to any wages due the employee by the
employer, and to supervise the adjustment of the wage claim.” 1 GUIDE TO EMPLOYMENT LAW
AND REGULATIONS § 14:7 (2005) (quoting congressional sponsors of section 16(c) of FLSA).
112 Id. (citing to the “only other route for compromise” of FLSA claims: a stipulated judgment
in the context of suit brought under 29 U.S.C. § 216(b)). Courts have been willing to allow
stipulated judgments because of the greater procedural assurances of an adversarial context. Id. at
1354. When analyzing the proposed settlement of a private FLSA claim, a “court must scrutinize
the settlement for fairness and determine that the settlement is a fair and reasonable resolution of
a bona fide dispute over FLSA provisions.” Stalnaker v. Novar Corp., 293 F. Supp. 2d 1260,
1263 (M.D. Ala. 2003) (internal citations and quotations omitted).
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Without this proper supervision, however, the Supreme Court has held
that FLSA rights cannot be “abridged” by contract or otherwise waived,
as this would nullify the purpose of the statute and frustrate the
legislative policy it was designed to effectuate.113
The Supreme Court’s analysis of whether FLSA claims are
waivable began in Brooklyn Savings Bank v. O’Neil.114 Brooklyn
Savings raised the question of whether an employee can waive his right
to receive liquidated damages under section 16(b) of FLSA.115 The
Supreme Court consolidated cases in which the employees had valid
claims for unpaid wages, and had signed releases in return for either full
or partial payments of the back wages due.116 In these cases, the
employer failed to pay liquidated damages to the employees equivalent
to the unpaid back wages,117 and the employees subsequently sued for
these liquidated damages.
The Court began by stating that a statutory right of a private party
that affects the public interest may not be waived if such waiver
contravenes the statute’s policy.118 The “controlling question” then was
whether the policy of FLSA would permit a waiver of claims.119 As
both the statute and the legislative history are silent with regard to
waiver of claims, the Court resorted to considering the legislative policy
of the Act.120 The Court stated that Congress intended to protect
113 Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 740 (1981) (citing Brooklyn
Sav. Bank v. O’Neil, 324 U.S. 697, 707 (1945)). An unsupervised release will not preclude
further proceedings.
114 324 U.S. 697 (1945).
115 Id. at 699. Section 16(b) of FLSA, 29 U.S.C. § 216(b), concerns employer liability for
violating the minimum wage and overtime compensation provisions of FLSA. It provides,
amongst other remedies, that an employer liable for a violation of FLSA shall pay liquidated
damages equal to the amount of unpaid minimum wages, or unpaid overtime compensation.
116 Brooklyn Sav., 324 U.S. at 700-02. Brooklyn Savings Bank employed O’Neil as a night
watchman for its eleven-story office building. He claimed to have worked several overtime
hours, but had not received compensation at the FLSA-prescribed time and a half rate. Brooklyn
Savings offered O’Neil, and he accepted, a check for $423.16 in exchange for a release of all
claims. The check covered the appropriate statutory overtime amount, but no liquidated damages
under § 216(b). In the second consolidated case, a box factory employee worked certain hours of
statutorily defined overtime. His employer offered him a check for $500.00, an amount less than
the overtime compensation to which the employee was entitled, in exchange for a release of all
FLSA rights. Both parties were aware that under FLSA more than $500.00 was due to the
employee. The employee sued for the balance of statutory compensation due and liquidated
damages. In the last of the consolidated cases, the employee accepted a delayed payment of
statutory overtime compensation, which the employer asserted was a release of any claim to
liquidated damages under FLSA. Runyan v. Nat’l Cash Register Corp., 787 F.2d 1039, 1042 n.3
(6th Cir. 1986).
117 Brooklyn Sav., 324 U.S. at 700.
118 Id. at 704 (the court stated further that “Where a private right is granted in the public
interest to effectuate a legislative policy, waiver of a right so charged or colored with the public
interest will not be allowed where it would thwart the legislative policy which it was designed to
effectuate.”).
119 Id. at 705.
120 Id. at 706.
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workers from substandard wages and excessive hours, and that due to
the unequal bargaining power in the employment relationship, the
statute was necessary “to prevent private contracts” from undermining
this initiative.121 Thus, the Court held that the private waiver of FLSA
would “nullify the purposes” of the Act.122
The Court emphasized that the failure to pay minimum wages in a
timely manner may be so detrimental to a worker’s minimum living
standards that double payment must be made to restore the worker to
that minimum standard of well-being.123 Employees receiving less than
minimum wage are not likely to have sufficient monetary and other
resources to maintain their welfare until the wages are paid to them.124
Since permitting an employer to secure releases from workers who need
wages promptly would nullify the deterrent effect125 of the Act, the
private waiver of FLSA claims was declared “absolutely void.”126
The following year, the Court extended its holding in Brooklyn
Savings to D.A. Schulte, Inc. v. Gangi.127 In Schulte, the Court held that
the FLSA precluded a settlement of a dispute over a claim for overtime
compensation and liquidated damages where the employer paid the
overtime compensation in full, but failed to pay the liquidated
damages.128 The Court noted that Congress’s purpose—to provide the
lowest paid employees with promptly paid minimum wages—would be
thwarted if employers could bargain out of statutory obligations through
settlements.129 More recently, the Court has continued to reaffirm the
language of Brooklyn Savings and Schulte. In Tony & Susan Alamo
Foundation v. Secretary of Labor,130 the Court held that the purpose of
the Act requires it to be applied to all employees, even to those who
decline its protections.131 The Court warned that if an exception to
121
122
123
124
125
Id. at 706-07.
Id.
Id. at 707.
Id.
Id. at 709-10. However, the Court recognized that FLSA is generally remedial in nature.
Id. at 707.
126 Id. at 714. The Court reached this holding even though Congress had considered and
rejected an anti-waiver provision when it passed FLSA in 1937. Id. at 718 (Stone, C.J.,
concurring and dissenting).
127 328 U.S. 108 (1946). Schulte concerned building and maintenance employees. Each had
put in varying hours of overtime for which no payment had been made. The employees made
claims for overtime compensation and liquidated damages. The employer refused to pay on the
grounds that its tenants did not ship their products directly into interstate commerce. Under threat
of suit, the employer paid the overtime compensation and obtained a release of further claims
from the employees. Runyan v. Nat’l Cash Register Corp., 787 F.2d 1039, 1042 n.4 (6th Cir.
1986).
128 Schulte, 328 U.S. at 110.
129 Id. at 116.
130 471 U.S. 290 (1985) (holding that FLSA covered workers engaged in commercial activities
of a religious foundation, even if those employees do not consider themselves to be employees).
131 Id. at 302.
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FLSA was made for employees who claimed to perform work
voluntarily, employers would use superior bargaining power to coerce
employees to waive the Act’s protections.132 It is thus well established
that a release of FLSA claims is unenforceable.133
D.
Other Statutory Comparisons to FLSA for Waiver Purposes
In the context of determining the enforceability of a release, it is
not unprecedented to compare a statute, such as WARN, to FLSA.
Courts have used just such a comparison to determine whether the
waiver of rights under various employment statutes should be
unenforceable.134
132
133
Id.
Other cases affirming this principle include: Barrentine v. Arkansas-Best Freight Sys., Inc.,
450 U.S. 728, 740 (1981) (“FLSA rights cannot be abridged by contract or otherwise waived”);
Taylor v. Progress Energy, Inc., 415 F.3d 364, 374 (4th Cir. 2005) (“[T]he Supreme Court has
consistently held that the rights guaranteed by the FLSA cannot be waived by private agreement
between employer and employee.”); Rogers v. Troy, 148 F.3d 52, 57 (2d Cir. 1998) (“waiver or
agreement does not insulate a practice from being held to be a violation of the FLSA”); Calderon
v. Witvoet, 999 F.2d 1101, 1107 (7th Cir. 1993) (“provisions of the FLSA are not waivable”);
Runyan v. Nat’l Cash Register Corp., 787 F.2d 1039, 1042 (6th Cir. 1986) (“We think the
purpose of the [FLSA] . . . leads to the conclusion that neither wages nor the damages for
withholding them are capable of reduction by compromise of controversies over coverage.”);
Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352 (11th Cir. 1982) (“FLSA rights
cannot be abridged by contract or otherwise waived”); Mitchell v. Greinetz, 235 F.2d 621, 625
(10th Cir. 1956) (“Waiver of [FLSA] wages by agreement is not permissible”).
134 See, e.g., Taylor, 415 F.3d 364 (comparing the Family and Medical Leave Act to FLSA);
Leavitt v. Nw. Bell Tel. Co., 921 F.2d 160 (8th Cir. 1990) (concluding that Employee Retirement
Income Security Act (ERISA) is not comparable to FLSA for waiver purposes); Miller v. Gen.
Motors Corp., No. 87-1493, 1988 WL 38965 (6th Cir. 1988) (Contie, J., dissenting) (concluding
that ERISA is comparable to FLSA for waiver purposes); Runyan, 787 F.2d 1039 (comparing
ADEA to FLSA). This comparison has never been made between WARN and FLSA for the
purpose of determining the validity of a WARN release. However, it has been made in another
context, in determining the appropriate statute of limitations for WARN. United Paperworkers
Int’l Union v. Specialty Paperboard, Inc., 999 F.2d 51, 52-53 (2d Cir. 1993); see also Aaron v.
Brown Group, 80 F.3d 1220 (8th Cir. 1996). In United Paperworkers, the Second Circuit
determined that the proper statute of limitations to apply to WARN (which lacks an express
statute of limitations) is an analogous state-law statute, not the six-month period of § 10(b) of the
National Labor Relations Act (NLRA), 29 U.S.C. § 160(b) (2000). United Paperworkers, 999
F.2d at 52 (the decision to use an analogous state-law statute of limitations for WARN claims was
held proper by the Supreme Court in North Star Steel Co. v. Thomas, 515 U.S. 29 (1995)). In
reaching this result, the Second Circuit provided a detailed analysis of why the NLRA and
WARN are not closely analogous. United Paperworkers, 999 F.2d at 54-56. The court also
cursorily stated that FLSA also did not provide a closer analogy to WARN than a state statute
such as a plant closing law. Id. at 55. However, FLSA only has a statute of limitations of two to
three years, 29 U.S.C. § 255, while the analogous state-law in United Paperworkers had a statute
of limitations of six years. United Paperworkers, 999 F.2d at 52. The court was attempting to
formulate a longer statute of limitations for WARN actions, and that is how it distinguished
FLSA from WARN, stating “Unlike most employees who have not received the minimum wage,
victims of a failure to warn will often be unaware that they have suffered a compensable harm.”
Id. at 55. Thus, the distinction drawn upon by the court—the employee’s likely knowledge of a
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For example, in Taylor v. Progress Energy, Inc.,135 the Court of
Appeals for the Fourth Circuit was presented with the question of
whether a release of a retrospective Family and Medical Leave Act136
(FMLA) claim is enforceable.137 In Taylor, an employee and her
employer disagreed on the amount of leave to be designated under the
FMLA.138 Because of her FMLA-protected absences, the employee
received a negative performance review and was laid off as a part of a
reduction-in-force.139 In order to receive transition benefits upon her
layoff, the employee signed a general release of “all claims” against the
employer.140 The employee then sued in federal court asserting a
violation of her FMLA rights;141 the employer defended on the ground
that the release waived her FMLA claim.142 Even though a Department
of Labor regulation provided that “employees cannot waive” their rights
under FMLA,143 the district court held the release enforceable, relying
on Faris v. Williams WPC-I, Inc.,144 which held that the regulation
prohibited only the prospective waiver of FMLA rights.145
WARN claim versus a FLSA claim—is applicable to distinguish the statutes for statute of
limitations purposes, but is irrelevant and not a means of distinguishing the statutes for
enforceability of waiver purposes. In fact, if employees are often unaware of their WARN rights,
this provides further support to the proposition that WARN releases should be unenforceable,
because an employee unaware of a right is less likely to knowingly waive that right in a general
release.
135 415 F.3d 364 (4th Cir. 2005).
136 29 U.S.C. §§ 2601-2654 (2000) (FMLA protects an employee’s right to take up to twelve
weeks of unpaid medical leave in any one-year period for pregnancy, adoption, an illness, or to
care for a family member with an illness).
137 Taylor, 415 F.3d at 365-66.
138 Id. at 366. The employee, who underwent a spinal tap, had been experiencing severe pain
and swelling in her right leg. She was out of work approximately six weeks and was told that the
full six weeks qualified as FMLA leave. However, she later discovered that she was only
credited with four weeks of FMLA leave. Id.
139 Id. at 367.
140 Id. (the employee received $12,000 in exchange for signing the release).
141 The employee alleged that “the company had violated the FMLA by (1) not fully informing
her of her FMLA rights, (2) improperly denying her requests for medical leave, (3) terminating
her employment because of her medical absences, and (4) terminating her employment because
she complained about the company’s violations of the FMLA.” Id. at 367-68.
142 Id.
143 29 C.F.R. § 825.220(d) (2005) (“Employees cannot waive, nor may employers induce
employees to waive, their rights under FMLA.”).
144 332 F.3d 316 (5th Cir. 2003).
145 Id. at 320. In Faris, the court reasoned that the term “their rights” in the regulation, 29
C.F.R. § 825.220(d), only applied to substantive rights under FMLA, such as rights to leave and
reinstatement, “rather than to a cause of action for retaliation for the exercise of those
[proscriptive] rights.” Faris, 332 F.3d at 320. Thus, the court held that a “plain reading of the
regulation is that it prohibits prospective waiver of rights, not the post-dispute settlement of
claims.” Id. at 321. The Fifth Circuit said the plain meaning of the statute was bolstered by a
comparison to waiver of employment discrimination claims such as under the ADEA and Title
VII. Id. The court reasoned that employees cannot prospectively waive substantive rights under
employment discrimination statutes, but they can waive their right to money damages arising
from discriminatory acts that occurred before the execution of the release. Id.
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The Fourth Circuit reversed, holding that the regulation barred
both the prospective and retrospective waiver of FMLA rights, relying
in part on the parallel between FMLA and FLSA.146 The court stated
that the FMLA enforcement scheme was intended to parallel FLSA, in
which employees cannot waive or release their rights without prior
Department of Labor or court approval.147 The court held that Congress
intended FMLA to “provide employee protections similar to those
provided by the FLSA.”148 The court noted that the Supreme Court
consistently held that rights guaranteed by FLSA cannot be waived by
private agreement between an employer and an employee,149 and since
“the FMLA was (and was intended to be) more similar to FLSA than to
employment discrimination statutes such as Title VII,”150 both
prospective and retrospective waiver of FMLA claims are barred.151
The Fourth Circuit went on to explore the policy similarities
between FMLA and FLSA. The court noted that FMLA was enacted to
set a minimum labor standard for family and medical leave, and was
analogized, in the legislative history, to FLSA, child labor, and
occupational safety laws.152 These minimum labor standard laws
eliminate societal concerns from the competitive process so that
employers do not compete on these standards.153 The court reasoned
that a prohibition on waivers is consistent with the elimination of
competition based on medical leave or minimum wages, and that
without the bar on waivers, the “unscrupulous employer could
systematically violate the FMLA and gain a competitive advantage by
buying out FMLA claims at a discounted rate.”154 Therefore, due in
146 Taylor, 415 F.3d at 368. The Fourth Circuit also reached this result by relying upon the
plain language of the statute. Id. This decision created a split between the Fourth and Fifth
Circuits on whether the regulation prohibits prospective and retrospective waivers of FMLA
claims, or just prospective waivers. The Fourth Circuit expressly rejected the Fifth Circuit’s plain
language reading of the statute, holding that the words “their rights” in the statute includes the
proscriptive right to be free from discrimination and retaliation. Id. at 370.
147 Id. at 371.
148 Id. (“If the DOL had adopted business’s recommendation of incorporating Title VII and
ADEA rules on waiver into the FMLA regulations, this would have indicated acceptance of an
enforcement scheme in which FMLA claims could be settled or released without agency or court
approval. The DOL, however, rejected the Title VII/ADEA approach by analogizing the
FMLA’s enforcement scheme to that of the FLSA. The rights guaranteed by the FLSA cannot be
waived or settled without prior DOL or court approval.”) (citations omitted).
149 Id. at 374.
150 Id. at 373.
151 Id.
152 Id. at 374. (“FMLA’s minimum standard was justified by a concern that middle—and lowincome workers should not be forced to choose between keeping their jobs and quitting to deal
with pressing medical or family care needs. Without a minimum leave standard, the minority of
employers who act irresponsibly could more easily exploit employees at the times when they are
most vulnerable.”) (citations and quotations omitted).
153 Id. at 375.
154 Id.
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part to the analogy with FLSA, the Fourth Circuit held that the
regulation barred retrospective waivers of FMLA claims.155
In another case, the ADEA was held to be dissimilar from FLSA
for the purpose of determining whether the waiver of its claims should
be prohibited.156 In Runyan v. National Cash Register Corp.,157 the
Sixth Circuit, sitting en banc, overruled the panel’s determination that a
release of an ADEA claim is void as a matter of law because the ADEA
incorporated the enforcement provisions of FLSA.158 The court
recognized that Congress expressly incorporated the enforcement
provisions of FLSA into the ADEA,159 but because the purposes of
FLSA and the ADEA are “obviously different,” the court held waivers
of ADEA claims permissible.160 The court noted that FLSA was meant
to set a minimum national standard for the protection of the lowest paid
segment of society, while the ADEA, in seeking to eliminate age
discrimination, protected many highly paid employees.161 Thus,
because ADEA claims differ from FLSA claims brought by “lay
persons seeking payment of minimum wages, in amounts ascertainable
by uncomplicated methods, usually with little knowledge of their legal
rights,” there is no absolute bar on the release of ADEA claims.162
155 Id. at 371. (“We therefore hold that, in the absence of prior approval of the DOL or a
court, 29 C.F.R. § 825.220(d) bars the waiver of both substantive and proscriptive FMLA rights.
This is the case regardless of whether the waiver is executed before or after the employer
commits the FMLA violation.”).
156 See Runyan v. Nat’l Cash Register Corp., 787 F.2d 1039 (6th Cir. 1986); see also Coventry
v. U.S. Steel Corp., 856 F.2d 514 (3d Cir. 1988). Note that these analyses took place before
Congress amended the ADEA in 1990 to add precise criteria by which courts are to judge the
validity of employee waivers of age discrimination claims. See Older Workers Benefit Protection
Act of 1990, Pub. L. No. 101-433, 104 Stat. 978 (1990) (codified at 29 U.S.C. §§ 621-634). The
Congressional amendments overturned the holdings of these cases, but the cases still illustrate
that employment statutes have been compared to FLSA for purposes of determining if waiver of
claims should be barred.
157 787 F.2d 1039 (6th Cir. 1986).
158 Id. at 1040.
159 Id. at 1043.
160 Id.
161 Id.
162 Id. at 1044. The court stated that ordinary contract principles applied to determine if
settlements and releases of ADEA claims are valid. Id. at 1044 n.10, 1045. The court also noted
that that the preference for voluntary resolution of disputes under the ADEA, as under Title VII.
Id. The Third Circuit in Coventry came to the same conclusion as the Sixth Circuit in Runyan.
Coventry v. U.S. Steel Corp., 856 F.2d 514, 521-22 (3rd Cir. 1998) (holding that ADEA claims
can be knowingly and voluntarily waived). In a footnote, the court rejected applying FLSA
waiver prohibitions to the ADEA because of differing policy concerns between the statutes. Id. at
522 n.8. The court stated that FLSA was designed to protect minimum wages and maximum
working hours, policies that Congress intended to be absolute. Id. Thus, allowing releases of
claims would undermine FLSA. Id. The court stated that the ADEA, on the other hand, “was
designed to provide protection to older persons from discrimination because of their age, and it
appears that Congress intended that resolution of disputes arising under the act would be
expeditiously achieved.” Id. Thus, the court stated that “voluntary waiver of claims does not
contravene the policies underlying the ADEA and, therefore, we hold that private waivers are not
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II. WHY WARN WAIVERS SHOULD BE UNENFORCEABLE163
A.
The FLSA / Employment Discrimination Waiver Dichotomy:
The Superceding of Contractual Outcomes
There is a fundamental distinction between labor standard statutes,
like FLSA, and employment discrimination statutes. The seemingly
contradictory holdings of the waiver cases, that FLSA cannot be waived
but anti-discrimination statutes164 can, actually make sense when placed
into a guiding principle based upon the distinction.165 The fundamental
difference is that labor standard statutes, such as FLSA, are meant to
supercede private contractual outcomes,166 while employment
discrimination statutes are not meant to override private contracts, but to
remedy a societal wrong.167 When the waiver of claims is analyzed
within this framework, it becomes evident that a private contract
waiving a FLSA claim should not be enforceable, while a contract
waiving an employment discrimination claim may be enforceable.
FLSA sets mandatory rules, regarding minimum wage168 and
overtime compensation,169 which specify a statutory minimum, a
precluded by that act.” Id.
163 This Note argues that private waivers of WARN claims should be unenforceable. The
Note does not argue that WARN claims can never be settled. For instance, in a class action
WARN suit, the unequal bargaining power and absence of a lawyer that is present upon the
signing of a private release on the day of the layoff is not present. In this and other contexts in
which unequal bargaining power and the sudden trauma of job loss are not prominent factors,
settlement may be appropriate. Thus, the settlement of WARN claims could parallel that of
FLSA: WARN claims should only be allowed to settle under the supervision of the Secretary of
Labor or after a district court enters a stipulated judgment after scrutinizing the settlement for
fairness. See Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352-53 (11th Cir. 1982).
However, since the Department of Labor does not have the statutory power to enforce WARN,
settlement of WARN claims should only be permitted in the context of a stipulated judgment. In
this context, employees will likely be represented by an “attorney who can protect their rights
under the statute. Thus, when the parties submit a settlement to the court for approval, the
settlement is more likely to reflect a reasonable compromise of disputed issues than a mere
waiver of statutory rights brought about by an employer’s overreaching.” Id. at 1354.
164 For a list of “anti-discrimination” statutes, see supra note 72.
165 This distinction is not directly discussed in the legal reasoning of the cases that developed
the waiver doctrines for FLSA and the employment discrimination statutes.
166 See, e.g., Taylor v. Progress Energy, Inc., 415 F.3d 364, 375 (4th Cir. 2005) (“Federal
labor standards take broad societal concerns out of the competitive process so that conscientious
employers are not forced to compete with unscrupulous employers.”).
167 See, e.g., Alexander v. Gardner-Denver Co., 415 U.S. 36, 44 (1974) (stating that Title VII’s
purpose is to eliminate discrimination on the basis of race, color, religion, sex, or national origin).
168 29 U.S.C. § 206 (2000) (“Every employer shall pay to each of his employees . . . wages at
the following rates: . . . not less than $5.15 an hour beginning September 1, 1997.”).
169 29 U.S.C. § 207 (“[N]o employer shall employ any of his employees . . . for a workweek
longer than forty hours unless such employee receives compensation for his employment in
excess of the hours above specified at a rate not less than one and one-half times the regular rate
at which he is employed.”).
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floor,170 governing the contractual relationship between the employer
and employee. The statute supercedes the ability of employers and
employees to bargain below that minimum so as to prevent employment
contracts that are unfair to workers.171 Congress recognized that a
mandatory contractual outcome was necessary due to the unequal
bargaining power between employers and the employees FLSA sought
to protect, the unorganized and lowest paid of the workforce.172
Without FLSA, employers and employees could bargain to any market
efficient contractual outcome.173 An employee covered by FLSA,
however, can no longer negotiate with his employer to get paid at a rate
of $3.00 per hour.174 FLSA specifies a contractual floor175 that cannot
170 E.g, Rogers v. City of Troy, 148 F.3d 52, 57 (2d Cir. 1998) (“FLSA sets a national ‘floor’
in terms of working conditions, in order to protect workers from the substandard wages and
excessive hours that might otherwise result from the free market.”) (emphasis added); Barefield v.
Village of Winnetka, 81 F.3d 704, 711 (7th Cir. 1996) (“FLSA sets a floor, not a ceiling, on
compensation that employees must receive.”); Alexander v. United States, 32 F.3d 1571, 1576
(D.C. Cir. 1994) (“FLSA . . . establishes an overtime pay ‘floor,’ requiring that an employee be
paid at the rate of one and one-half times his or her regular rate of pay for all hours of overtime
worked during a given pay period.”); Marshall v. W. Union Tel. Co., 621 F.2d 1246, 1250 (3d
Cir. 1980) (“Specifically, [FLSA] was manifestly designed to place a floor under wages.”).
171 Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706 (1945) (“[C]ertain segments of the
population required federal compulsory legislation to prevent private contracts on their part”
which would endanger the national health by providing substandard wages and hours.) (emphasis
added); see also Braddock v. Madison County, 34 F. Supp. 2d 1098, 1106 (S.D. Ind. 1998)
(“Congress made the FLSA’s provisions mandatory, so that they are not subject to negotiation or
bargaining between employers and employees.”).
172 Brooklyn Sav., 324 U.S. at 706-07, 707 n.18 (citing the legislative debates over FLSA); see
Lynn’s Food Stores, Inc. v. United States, 679 F.2d 1350, 1352 (11th Cir. 1982) (recognizing the
“great inequalities in bargaining power” between employers and employees as a reason FLSA’s
provisions were made mandatory).
173 Creating a level below which there can be no bargaining “help[s] all businesses maintain a
minimum floor of protection for their employees without jeopardizing or decreasing their
competitiveness. . . . A central reason that labor standards are necessary is to relieve the
competitive pressure placed on responsible employers by employers who act irresponsibly.”
Taylor v. Progress Energy, Inc., 415 F.3d 364, 374-75 (4th Cir. 2005) (discussing the minimum
leave labor standard under the Family and Medical Leave Act).
174 See Rudolph v. Metro. Airports Comm’n, 103 F.3d 677, 680 (8th Cir. 1996) (“Employers
and employees may not . . . make agreements to pay and receive less pay than the statute provides
for. Such agreements are against public policy and unenforceable.”). The current minimum wage
is $5.15 per hour. 29 U.S.C. § 206 (2000). However, certain employees are exempt from either
the minimum wage or overtime provisions of FLSA, or both. For example, those employees
employed in an “executive, administrative, or professional capacity” are exempt from both
provisions, see 29 U.S.C. § 213(a)(1) (2000), and seamen on American vessels are exempt from
the overtime provision. See 29 U.S.C. § 213(b)(6). For a list of the various exemptions, see 29
U.S.C. § 213. Note, however, that most employees are covered by FLSA and exemptions are to
be construed narrowly against the employer seeking to assert them. See, e.g., Arnold v. Ben
Kanowsky, Inc., 361 U.S. 388, 392 (1960) (holding that retail employer did not qualify for FLSA
exemption for employees working at retail establishment engaged in intrastate commerce). Even
though undocumented immigrants are covered by FLSA, employers often pay these workers less
than minimum wage. See, e.g., Leslie D. Alexander, Note, Fashioning a New Approach: The
Role of International Human Rights Law in Enforcing Rights of Women Garment Workers in Los
Angeles, 10 GEO. J. ON POVERTY L. & POL’Y 81, 85-89 (2003).
175 See supra note 170; see also Milan R. Kosanovich & Crystal E. Barnes, Employment-
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be bargained away when the employee is hired, nor can it be bargained
away through a private contractual waiver upon discharge.176 Thus,
labor standard statutes, like FLSA, cannot be waived because waiver
would completely defeat the purpose of the statute: to supercede private
contracts.177
In contrast, the anti-discrimination statutes do not seek to
supercede contractual outcomes, but to remove morally repugnant
actions from the employment setting. While FLSA supplants private
contracts by specifying a floor for the minimum wage, antidiscrimination statutes set no such floor to govern the “civility” of the
workplace.178 An employer can be excessively harsh and critical,
making the workplace atmosphere miserable, so long as the employer
does not treat members of a protected class less favorably than other
employees and there is no disparate impact upon the protected class.179
Nevertheless, anti-discrimination statutes do supercede contractual
outcomes to a certain degree. For example, the statutes eliminate the
ability of an employer to bargain with a black employee to accept lower
wages than a similarly situated white employee.180 However, the
Related Crimes, 42 AM. CRIM. L. REV. 305, 321 (2005) (“FLSA specifies that its minimum wage
standards are the floor.”); William R. Corbett, Waiting for the Labor Law of the Twenty-First
Century: Everything Old Is New Again, 23 BERKELEY J. EMP. & LAB. L. 259, 270-71 (2002)
(“The objective of enacting the FLSA was . . . to set a floor for wages, hours, and child labor; it
sought to set collective bargaining minimums from which unions could bargain upward. . . .
FLSA declared a minimum wage, a maximum number of hours before overtime was due, and
minimum ages for engaging in work and in certain types of work. These are rights that cannot be
bartered for something else, even if employees prefer something else.”); Richard A. Bales, The
Discord Between Collective Bargaining and Individual Employment Rights: Theoretical Origins
and a Proposed Reconciliation, 77 B.U. L. REV. 687, 689 (1997) (“Proponents of the FLSA
intended for it to provide a floor to support, not supplant, collective bargaining.”).
176 E.g., Lynn’s Food Stores, 679 F.2d at 1352 (“Congress made the FLSA’s provisions
mandatory; thus, the provisions are not subject to negotiation or bargaining between employers
and employees. . . . FLSA rights cannot be abridged by contract or otherwise waived.”) (internal
quotations omitted).
177 Brooklyn Sav., 324 U.S. at 707 (“No one can doubt but that to allow waiver of statutory
wages by agreement would nullify the purposes of [FLSA].”); Coventry v. U.S. Steel Corp., 856
F.2d 514, 521 n.8 (3d Cir. 1998) (“Most significant, perhaps, among those policy concerns is the
fact that the principal rights that the FLSA was designed to protect—minimum wages and
maximum work hours—effect a public policy that Congress intended to be absolute. Validation
of releases that allowed employers and employees to compromise those rights would undermine
the statute itself.”) (emphasis added).
178 See, e.g., Faragher v. City of Boca Raton, 524 U.S. 775, 788 (1998) (stating that Title VII
is not a “general civility code” for the workplace).
179 See, e.g., Int’l Bhd. of Teamsters v. United States, 431 U.S. 324, 335-36 n.15 (1977)
(explaining that: 1) disparate treatment employment discrimination claims are ones in which the
employer simply treats some people less favorably than others because of their protected
characteristic; and 2) disparate impact employment discrimination claims are ones in which a
practice is facially neutral in its treatment of different groups, but in fact falls more harshly on a
protected group and cannot be justified by business necessity).
180 See 42 U.S.C. § 2000e-2(a) (2000) (making it an unlawful employment practice to fail or
refuse to hire or discriminate against any individual with respect to his compensation because of
such individual’s race, color, religion, sex, or national origin).
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paramount purpose of employment discrimination laws is not to
supercede contractual outcomes, but to eliminate the existence of
invidious discrimination that acts as a barrier to the normal functioning
of the economy.181
The anti-discrimination statutes seek to eliminate discrimination
mainly through voluntary conciliation between the parties.182 When
Congress provided for voluntary conciliation as the main mechanism to
eliminate discrimination, it sought to provide a framework in which the
parties could reach an optimal outcome.183 Congress did not, as it did
with FLSA in setting a minimum wage, specify what that optimal
outcome should be. Voluntary conciliation was chosen, at least in part,
because the unequal bargaining power that always exists in the FLSA
context is not necessarily present in the employment discrimination
context.184 For instance, a wealthy female executive, who likely has the
ability to obtain numerous job offers, can still maintain a sex
discrimination action,185 and the ADEA protects many highly paid
employees capable of obtaining legal assistance and bargaining
effectively with their employers.186 Thus, since the anti-discrimination
statutes do not specify a contractual outcome, but only use voluntary
181 McDonnell Douglas Corp. v. Green, 411 U.S. 792, 800-01 (1973) (stating that the purpose
of Title VII is to eliminate invidious discriminatory employment practices that are a barrier to
efficient and trustworthy work). For example, a racist employer may not hire the most qualified
applicant for a job only because she is black. This results in inefficiencies in the job market and
serves as barrier to the normal functioning of the economy.
182 See, e.g., Alexander v. Gardner-Denver Co., 415 U.S. 36, 44 (1974) (“Cooperation and
voluntary compliance were selected as the preferred means for achieving [the elimination of
unlawful employment discrimination].”); United States v. Allegheny-Ludlum Indus., Inc., 517
F.2d 826, 846-47 (5th Cir. 1975) (“[I]t is clear that Congress placed great emphasis upon private
settlement and the elimination of unfair practices without litigation on the ground that voluntary
compliance is preferable to court action [for Title VII claims]. Indeed, it is apparent that the
primary role of the EEOC is to seek elimination of unlawful employment practices by informal
means leading to voluntary compliance.”) (citations and quotations omitted); Carson v. Am.
Brands, Inc., 450 U.S. 79, 88 n.14 (1981) (“In enacting Title VII, Congress expressed a strong
preference for encouraging voluntary settlement of employment discrimination claims.”).
183 See, e.g., Pinkard v. Pullman-Standard, 678 F.2d 1211, 1221 (5th Cir. 1982) (stating that
Title VII’s framework is set up so as to effectuate the belief that voluntary compliance with Title
VII’s mandate is preferable to compelled compliance).
184 Dorosiewicz v. Kayser-Roth Hosiery, Inc., No. 86-3163, 1987 WL 37945, at *2 (4th Cir.
June 24, 1987) (citing a proposed EEOC rule, Administrative Exemption Allowing for Waivers
Under the ADEA, 50 Fed. Reg. 40,870 (1985) (proposed Oct. 7, 1985), which stated “Although
under the FLSA there is an absolute presumption that any waivers of minimum wage rights
would necessarily be based upon unequal bargaining power and duress, this reasoning does not
apply to the ADEA [or Title VII].”); Hass, supra note 110, at 399 (citing same proposed rule).
This is not to say that there is never unequal bargaining power in the employment discrimination
context. When an African-American janitor is discriminated against, unequal bargaining power
clearly exists. However, unequal bargaining power will not always be present in the
discrimination context; it is not a necessary complement of an anti-discrimination claim.
185 See, e.g., Gambale v. Deutsche Bank AG, 377 F.3d 133 (2d Cir. 2004) (managing director
of investment bank brought action against her employer alleging sex discrimination).
186 See Runyan v. Nat’l Cash Register Corp., 787 F.2d 1039, 1043 (6th Cir. 1986).
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conciliation to provide a framework to reach an optimal outcome, the
statutes do not supercede private contracts.
As the anti-discrimination statutes seek to eliminate wrongful
conduct through conciliation, and not to supercede contractual
outcomes, the ability to voluntarily settle, or waive, a prior claim does
not directly conflict with the purpose of the statutes. The parties are not
seeking to contract around a statutory command that forbids private
contracting. The inherent purpose of the anti-discrimination statutes is
not nullified by allowing a knowing and voluntary waiver of an existing
claim.187 Further, voluntary conciliation is appropriate for employment
discrimination claims because calculating the amount of damage
suffered by, for example, a woman who was sexually harassed, is not a
simple task.188 As it is difficult to determine the damage to an
individual caused by discrimination, the parties can most accurately
negotiate a proper dollar value for the claim. On the other hand, the
damage amounts for FLSA claims are readily ascertainable, calculated
using uncomplicated formulas based on minimum and overtime wage
rates.189 It would make little sense to forbid the waiver of antidiscrimination claims because the voluntary negotiations that would be
prohibited provide the most accurate method to value these claims.
A dichotomy thus exists between labor standard statutes that set
minimum standards and supercede contractual outcomes, and
employment discrimination statutes which do not seek to supplant
private contractual outcomes, but to eliminate wrongful conduct and
barriers to labor market efficiency.190 Voluntary waiver of the latter is
not illogical, while waiver of the former is inherently inconsistent.
When attempting to classify WARN according to this dichotomy, it fits
neatly into the labor standard/FLSA framework. Therefore, allowing a
187 Allegheny-Ludlum, 517 F.2d at 862 (Congress selected voluntary conciliation and
compliance as the preferred means for the vindication of Title VII rights).
188 Cf. Runyan, 787 F.2d at 1044 (stating that cases concerning the release of employment
discrimination claims are “very different from cases concerning releases of FLSA claims” in
which the plaintiff seeks payment of minimum wages “in amounts ascertainable by
uncomplicated methods”).
189 Id. (FLSA damages can be calculated by uncomplicated methods).
190 See Diaz v. Fort Wayne Foundry Corp., 131 F.3d 711, 713 (7th Cir. 1997) (There is a “big
difference between anti-discrimination statutes and [labor standard] laws . . . that set substantive
floors.”); Stephen F. Befort, Labor and Employment Law at the Millennium: A Historical Review
and Critical Assessment, 43 B.C. L. REV. 351, 378 (2002) (“Congress has adopted a host of more
recent employment-related statutes. These newer statutory enactments fall into two basic
categories: 1) statutes that prohibit discrimination on the basis of certain protected characteristics;
and 2) statutes that establish minimum workplace requirements.”); James J. Brudney et al.,
Judicial Hostility Toward Labor Unions? Applying the Social Background Model to a Celebrated
Concern, 60 OHIO ST. L.J. 1675, 1743 n.204 (1999) (distinguishing between “laws establishing
the individual’s right to equal treatment in the workplace,” such as Title VII and ADEA and
“laws establishing the individual’s right to minimum standards in the workplace,” such as
WARN).
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knowing and voluntary waiver of WARN is inconsistent with the
fundamental distinction between labor standard and anti-discrimination
statutes.
WARN possesses the vital characteristics that distinguish FLSA
from the anti-discrimination statutes: WARN is a labor standard191
statute setting a minimum workplace standard that is meant to
supercede contractual outcomes. In requiring that covered employers
give sixty days advance notice of a plant closing or mass layoff to their
employees, WARN sets a minimum labor standard specifying the
contractual outcome.192 Just as FLSA sets a minimum floor for wages,
WARN sets a minimum floor for advance notice.193 The legislative
history and purpose of WARN indicate congressional intent to mold a
labor standard statute in the vein of the minimum wage laws.194 The
minimum advance notice mandated by WARN was said to be “squarely
in the tradition” of social reforms such as the minimum wage.195 One of
191 Befort, supra note 190, at 380 (setting out two basic categories of statutory rights: antidiscrimination statutes and minimum labor standard statutes, and then stating “[These] second
category of federal statutes are those that mandate minimum workplace requirements. These
include . . . WARN.”).
192 29 U.S.C. § 2102(a) (2000) (“An employer shall not order a plant closing or mass layoff
until the end of a 60-day period after the employer serves written notice of such an order.”)
(emphasis added); United Paperworkers Int’l Union v. Specialty Paperboard, Inc., 999 F.2d 51,
52 (2d Cir. 1993) (“WARN requires that companies with one hundred employees or more provide
their workers with a minimum of sixty-days’ [sic] written notice before a plant closing or mass
layoff.”) (emphasis added); Butler v. Giant Markets, Inc., 960 F. Supp. 884, 885 (M.D. Pa. 1997)
(“WARN requires . . . that employers of more than 100 persons provide a minimum of sixty (60)
days written notice.”); McClain v. Laurel Street Art Club, Inc., 925 F. Supp. 496, 498 (E.D. Ky.
1995) (“[WARN] requires that employers of 100 or more employees provide a minimum of sixty
days written notice.”).
193 See United Steelworkers v. Crown Cork & Seal Co., 32 F.3d 53, 55 (3d Cir. 1994)
(“[WARN is a] federal statute which requires companies . . . to provide their workers with a
minimum of sixty days written notice before a plant closing or mass layoff.”) (emphasis added);
Teamsters v. Norcal Waste Sys., Inc., No. C 03-03667 SI, 2004 WL 1975220, at *3 (N.D. Cal.
Sept. 7, 2004) (“While the 60-day period is the minimum for advance notice, this provision is not
intended to discourage employers from voluntarily providing longer periods of advance notice.”)
(citing 20 C.F.R. § 639.2); Brudney et al., supra note 190, at 1743 n.204 (categorizing WARN as
a law that establishes a right to “minimum standards in the workplace” as opposed to “equal
treatment in the workplace,” like the anti-discrimination laws); 131 CONG. REC. H10465-01
(1985) (statement of Rep. Roemer) (“[W]e have often done things as a nation to improve the
conditions of employers and employees. A classic example . . . was the minimum wage. What
we are talking about here is minimum notice.”) (debating a failed predecessor bill to WARN, the
Labor-Management Notification and Consultation Act of 1985, H.R. 1616).
194 134 CONG. REC. S8466-01 (1988) (statement of Sen. Riegle):
Other changes in our labor laws have not come about easily, yet they are looked
upon as part of what makes this country an advanced, compassionate, and
civilized society. We have laws which protect children from being exploited in
the workplace; we have laws which protect workers from an unhealthy or unsafe
working environment; we have laws which maintain a minimum wage and
minimum hours of work.
195 134 CONG. REC. S8598-01 (1988) (statement of Sen. Dodd) (The plant closing provision is
“[s]quarely in the tradition of such social reforms as the child labor and minimum wage laws.
These act to soften the social consequences of free market decisions and thus permit the market
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the statute’s supporters declared during Congressional debates that
opposition to WARN was comparable to opposition to minimum wages
laws: both impose labor standards to protect workers at the bottom
rungs of the economic ladder.196 Thus, WARN, like FLSA, is easily
characterized as a labor standard statute setting a minimum workplace
standard.197
More importantly, WARN supercedes private contractual
outcomes. Before WARN, an employer could simply choose to provide
as little or as much notice of a plant closing as it desired, or could
bargain with employees over the length of such notice. But Congress
recognized that the same concerns about unequal bargaining power,
present in FLSA cases, are also present in the WARN context.198 The
workers hit hardest by dislocation, and for whom WARN’s protections
are most important, are the less educated workers living in economically
depressed areas.199 As a result, the Senate Report on WARN expressly
stated that the practice of voluntary bargaining failed to result in
continued public acceptance without the sort of deep Government involvement often practiced
abroad.”) (quoting Walter Mossberg in the Wall Street Journal). Another congressman stated that
WARN was meant to improve conditions of employers and employees, and then compared the
minimum notice provisions of WARN to the minimum wage laws. See statement of Rep.
Roemer, supra note 193. Additionally, comments pepper the legislative history about how
WARN mandates “a minimum standard of fairness to workers, their families, and to those state
and local governments which must absorb the costs of unemployed and dislocated workers.” 134
CONG. REC. H3533-01 (1988) (statement of Rep. Vento).
196 134 CONG. REC. H5500-01 (1988) (statement of Rep. Scheuer).
197 Although WARN was enacted in the tradition of FLSA, its enforcement and remedy
provisions are different. WARN is enforced solely in federal courts through private civil lawsuits
for back pay and civil penalties, with a prevailing plaintiff receiving reasonable attorney’s fees.
29 U.S.C. § 2104(a) (2000). The maximum liability of an employer is the value of sixty days
back pay and fringe benefits for each aggrieved employee and the local government unit has a
civil penalty remedy of $500 a day for a violation. Id. Under FLSA, workers can file claims with
the U.S. Department of Labor, which can pursue the claim administratively or through the federal
courts. 29 U.S.C. § 216 (2000). In addition, individuals or groups also have a private right of
action to seek FLSA enforcement in the courts. Id. FLSA also provides for compensatory
damages, liquidated damages if good faith is not shown, attorney’s fees, and even imprisonment
of up to six months for multiple willful offenders. 29 U.S.C. §§ 216, 260. There is a split in the
circuits as to whether punitive damages may be available in instances of retaliatory discharge.
Compare Snapp v. Unlimited Concepts, Inc., 208 F.3d 928, 933-34 (11th Cir. 2000) (punitive
damages unavailable), with Travis v. Gary Cmty. Mental Health Ctr., Inc., 921 F.2d 108, 111-12
(7th Cir. 1990) (punitive damages available). However, even though a statute “does not
incorporate the enforcement provisions of the FLSA . . . [if the statute has] a similar policy of
protecting employees,” the waiver of rights under the statute should be enforceable in the same
circumstances as they are under FLSA. Miller v. Gen. Motors Corp., No. 87-1493, 1988 WL
38965, *6 (6th Cir. Apr. 27, 1988) (Contie, J., dissenting).
198 See 134 CONG. REC. H2278-01 (1988) (statement of Rep. Dorgan) (WARN was enacted to
protect the “worker trying to support a family and making ends meet.”).
199 S. REP. NO. 100-62, at 4 (1987) (“Not surprisingly, groups in society that are particularly
vulnerable to change face even longer periods of joblessness. Blacks and women who lose their
jobs far[e] worse than white males. Less educated and older workers can expect longer than
average time without a job. Workers living in economically depressed areas are hard hit by
dislocation.”).
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2959
adequate notice, and so the legislation sought to impose a requirement
on employers to consider the interests of their workers.200 And in fact,
certain members of Congress opposed WARN because it made
mandatory what was previously determined by free bargaining.201
Thus, just as FLSA supercedes free bargaining to the market
efficient wage, WARN supercedes free bargaining to the market
efficient length of advance notice, eliminating the ability to privately
contract over notice.202 Without WARN, employers and employees had
the ability to bargain to an outcome of providing twenty days advance
notice of a plant closing. WARN overrides the ability to reach this
private contractual outcome, specifying that the contractual outcome
reached be at least sixty days advance notice for every employee.
WARN is therefore a labor standard statute meant to supercede
private contractual negotiations.203 The floor of sixty days notice
cannot be bargained away when the employee is hired.204 Permitting it
to be bargained away through a private contractual waiver upon
discharge is incompatible with this labor standard statute that mandates
a minimum contractual outcome. The advance notice floor is illusory if
employers can simply contract around it using a release of claims. As
the Senate Report indicated, “the issue of advance notice is too
important as a matter of public policy to be left to the vagaries of
private contractual relations.”205 Further, the free bargaining eliminated
by not allowing waiver is not problematic because WARN claims, like
200
201
S. REP. NO. 100-62, at 12.
Id. at 90 (Minority Views of Senators Quayle, Thurmond, and Cochran on Part B of S.
538) (“The question of notice is currently a subject of collective bargaining between labor and
management. Under [WARN], however, we determine by statute what is currently decided by
the free choice of the parties.”).
202 Frymire v. Ampex Corp., 61 F.3d 757, 764 (10th Cir. 1995) (“[T]he WARN Act imposes a
federal mandate upon employers that effectively obligates them as if bound by the terms of an
employment contract.”); 134 CONG. REC. H5500-01 (1988) (statement of Sen. Bartlett)
(“[WARN] preempts . . . privately negotiated collective bargaining contracts,” and makes
advance notice of closing no longer a negotiated item.).
203 See Washington v. Aircap Indus. Corp., No. 2:91-3153-IB, 1992 WL 547993, at *1 (D.S.C.
Jul. 8, 1992) (“The WARN Act compels employers to give sixty-day notice to their employees
before mass layoffs or plant closings which would result in the termination of a large number of
jobs.”) (emphasis added).
204 See infra note 205.
205 S. REP. NO. 100-62, at 13. In this vein, the Department of Labor regulations regarding
WARN provide that “[c]ollective bargaining agreements may be used to clarify or amplify the
terms and conditions of WARN, but may not reduce WARN rights.” 20 C.F.R. 639.1(g) (2005).
This regulation provides support for the proposition that WARN, like both anti-discrimination
statutes and FLSA, cannot be prospectively waived by contract. That WARN cannot be
prospectively waived is a logical conclusion, as federal statutory rights in general cannot be
prospectively waived because this would encourage violations of the law. See, e.g., Cange v.
Stotler & Co., 826 F.2d 581, 595 n.11 (7th Cir. 1987) (“The . . . prospective waivers of statutory
rights tend to encourage violations of the law by notifying the wrongdoer in advance that he or
she can act with impunity.”).
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FLSA claims, have readily ascertainable damage values.206 Hence,
prohibiting private negotiations is not an obstacle to the accurate
determination of the value of claims, like it is in the discrimination
context. Thus, waivers of WARN should not be enforceable because
waiver would completely frustrate the “superceding of private
contracts” purpose of the statute.207
206 The damage value is based on one day of back pay for each day notice is not given, up to a
maximum of sixty days. 29 U.S.C. § 2104(a) (2000).
207 Cf. Wallace v. Detroit Coke Corp., 818 F. Supp. 192, 196 (E.D. Mich. 1993) (“The type of
interest harmed in [WARN] suits is contractual. When an employer unilaterally and radically
changes an employee’s terms of employment without notice and the employee is suddenly
discharged from employment, he essentially is breaching that worker’s employment contract.”).
At this juncture it is worth noting “labor standard” statutes that do not provide a
meaningful comparison to WARN for waiver purposes. The Occupational Safety and Health Act
(OSH), 29 U.S.C. §§ 651-678 (2000), imposes on employers a general duty to provide employees
safe and healthful working conditions. 29 U.S.C. § 654(a). However, employees “have no
independent statutory remedies for violations or for injuries resulting from violations. Employees
are totally dependent on the Occupational Safety and Health Administration (OSHA) for
protection.” Clyde Summers, Effective Remedies for Employment Rights: Preliminary Guidelines
and Proposals, 141 U. PA. L. REV. 457, 500 (1992). Thus, as workers lack a statutory cause of
action under OSH, a private waiver of that cause of action is not applicable.
Likewise, although the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§
1001-1461 (2000), is a labor standard statute that sets minimum standards for voluntarily
established pension and health plans, it does not necessarily provide a relevant comparison to
WARN for waiver purposes. Although the Supreme Court has “not discussed the conditions
under which releases of ERISA benefit claims are permitted or are effective,” Albert Feuer, When
Are Releases of Claims for ERISA Plan Benefits Effective?, 38 J. MARSHALL L. REV. 773, 798
(2005), various circuits have held that ERISA claims can be knowingly and voluntarily waived.
See, e.g., Rodriguez-Abreu v. Chase Manhattan Bank, N.A., 986 F.2d 580, 587 (1st Cir. 1993)
(“ERISA does not prohibit knowing and voluntary relinquishment of employee benefits.”);
Leavitt v. Nw. Bell Tel. Co., 921 F.2d 160, 162 (8th Cir. 1990). These opinions are not
necessarily relevant because ERISA has a crucial distinction from WARN that makes comparison
for waiver purposes unsound. If an employer chooses to offer an ERISA plan, nothing precludes
an employee from not participating in the plan. Laniok v. Advisory Comm. of Brainerd Mfg. Co.
Pension Plan, 935 F.2d 1360, 1365 (2d Cir. 1991). WARN’s advance notice provisions, on the
other hand, are mandatory. Thus, the comparison between WARN and ERISA for waiver
purposes is faulty, because while it is logically permissible to allow an employee to choose to
knowingly waive an ERISA claim under a plan in which he could have voluntarily chosen not to
participate, this same logic does not apply to WARN.
Also note that the National Labor Relations Act (NLRA), 29 U.S.C. §§ 141-187 (2000), is
not a labor standard statute providing substantive rights, but a statute providing procedural rights
intended to encourage collective bargaining to improve conditions of employment. 29 U.S.C. §
151 (The NLRA alleviates impediments to the free flow of commerce “by encouraging the
practice and procedure of collective bargaining and by protecting the exercise by workers of full
freedom of association, self-organization, and designation of representatives of their own
choosing, for the purpose of negotiating the terms and conditions of their employment or other
mutual aid or protection.”); NLRB v. Am. Nat’l Ins., 343 U.S. 395, 402 (1952) (“The [NLRA]
does not compel any agreement whatsoever between employees and employers. Nor does the
[NRLA] regulate substantive terms governing wages, hours and working conditions.”). The
NLRA did not vest individual employees with substantive minimum labor standards, but
legitimized collective bargaining as means to achieve improved terms and conditions of
employment.
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B.
2961
The Collective Action Distinction
There is another important distinction between statutes like FLSA
or WARN and the employment discrimination statutes. While
employment discrimination statutes can function effectively if suits are
only brought by individuals, FLSA and WARN lawsuits must be
brought collectively in order for the statutes to be properly enforced.208
This is so because anti-discrimination laws protect individual rights209
that relate directly to the treatment of individual employees by their
employers.210
Because they involve individual rights, antidiscrimination laws provide remedies that incentivize individual
employees to bring suit to advance their personal interest.211 On the
other hand, both WARN and FLSA create rights vested in a group of
employees,212 and provide benefits, such as advance notification and
minimum wages, to all employees at companies covered by the
statutes.213 Individual enforcement of group rights like WARN and
FLSA is unlikely because, due to free-riding problems, employees lack
the incentive to vindicate these rights on their own.214 Therefore,
collective action protects group rights like WARN and FLSA more
effectively than individual action.215
208 See Louise Sadowsky Brock, Note, Overcoming Collective Action Problems: Enforcement
of Worker Rights, 30 U. MICH. J.L. REFORM 781, 784-86 (1997) (distinguishing between two
categories of statutory rights for workers: individual rights such as anti-discrimination laws which
can function properly without collective action, and public rights such as FLSA and WARN,
which only function properly through collective action).
209 An individual right is a right that relates to how a particular employee is treated by his
employer on an individual basis. Id. at 784.
210 Id. at 784-85; see also Marion Crain & Ken Matheny, Labor’s Identity Crisis, 89 CAL. L.
REV. 1767, 1797 (2001) (“Minority interests were cast as ‘individual’ and channeled into
individual rights statutes such as Title VII. . . . Ultimately, labor law doctrine came to reflect the
view that . . . race and sex discrimination claims are more appropriately raised by individuals in
litigation pursuant to anti[-]discrimination statutes.”); Befort, supra note 190, at 379-80 (antidiscrimination statutes “provide protection to individuals . . . as members of a particular group or
on the basis of a specified protected trait.”).
211 Brock, supra note 208, at 784-85; see also Crain & Matheny, supra note 210, at 1797.
212 A group, or public right, provides benefits to all employees in a particular company or
industry. Brock, supra note 208, at 785.
213 Id. (“These benefits— . . . notification of plant closings and mass layoffs, minimum wages,
and overtime pay—are ‘public goods’ because they have two characteristics, namely jointness of
supply and impossibility of exclusion. . . . More simply, ‘public goods’ are those that cannot be
provided to one person unless provided to all.”).
214 Id. at 785, 787:
The rational individual recognizes that if she puts forth the time, effort, money,
and risk to protect a collective good, the benefit she gains for herself will be
shared by all employees affected by that law, while she bears the full cost of her
effort. Consequently, she may choose not to exert the effort, hoping instead to
enjoy the benefits when another individual acts. This phenomenon is commonly
known as free-riding. . . . Individual efforts are both unlikely and inadequate to
enforce the rights protected by . . . WARN[ ] and FLSA.
215 Id. at 786.
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Examining the remedies available under the statutes reveals why
collective action is necessary for WARN, but not for employment
discrimination statutes. Title VII’s enforcement regime, in addition to
traditional remedies for employment law violations—like front pay and
back pay—includes full compensatory216 and punitive damages.217 The
median jury award in employment discrimination actions is in excess of
$200,000.218 At these award levels, individual plaintiffs have no
significant difficulty finding attorneys to take their cases.219 However,
under WARN, the most an individual employee can recover is sixty
days back pay.220 If an individual earned approximately the median
national income during 2004, this equates to maximum damages of less
than $6,000.221 Furthermore, neither compensatory222 nor punitive
damages are available.223 At damage levels this small, it would be
nearly impossible to find a lawyer.224 WARN, as well as FLSA,225
actions would virtually disappear if they could not be brought
collectively.226 Thus, collective action is necessary to properly enforce
216 In this context, compensatory damages are damages for “future pecuniary losses, emotional
pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary
losses.” 42 U.S.C. § 1981a(b)(3) (2000).
217 Rivera v. NIBCO, Inc., 364 F.3d 1057, 1067 (9th Cir. 2004); 42 U.S.C. § 1981a(a)(1). The
total amount of compensatory and punitive damages is capped at various amounts depending on
the number of employees employed by the employer, and ranges from a low of $50,000 to a high
of $300,000 for companies with over 500 employees. Id. § 1981a(b)(3). Additionally, attorney’s
fees are available to prevailing plaintiffs. Id. § 2000e-5(k).
218 Glenn Kramer, Note, Reasonableness For Free: Why Buy Employment Practices Liability
Insurance When EEOC.gov Gives Protection Away?, 3 CARDOZO PUB. L., POL’Y & ETHICS J.
459, 460 (2005) (citing ultimately to data from Jury Verdict Research which indicated that the
median jury award in civil rights employment litigation was $218,000 in 2001).
219 See generally Rivera, 364 F.3d at 1067 (stating that Title VII relies upon individuals as
plaintiffs to enforce the purposes of the statute) (citing N.Y. Gaslight Club, Inc. v. Carey, 447
U.S. 54, 63 (1980)).
220 29 U.S.C. § 2104(a)(1)(B) (2000).
221 The median national income in 2004 was $36,842. See U.S. CENSUS BUREAU, INCOME,
POVERTY, AND HEALTH INSURANCE COVERAGE IN THE UNITED STATES: 2004, at 5 (2005),
available at http://www.census.gov/prod/2005pubs/p60-229.pdf (calculated by using Table 1, the
line item Earnings of Full-Time, Year-Round Workers, and combining men and women
earnings). The approximate damage award works out to $5,951 calculated on calendar day basis,
see supra note 59.
222 Compensatory damages as defined in the Title VII context, see supra note 216.
223 See, e.g., Finnan v. L.F. Rothschild & Co., 726 F. Supp. 460, 464-65 (S.D.N.Y. 1989)
(holding that punitive damages are not available in WARN suits). Note however that reasonable
attorney’s fees are available to a prevailing plaintiff. 29 U.S.C. § 2104(a)(6).
224 E-mail from Mark Fancher, supra note 65 (stating that as a practical matter, no legal
assistance is available to individuals because a WARN case is financially feasible for an attorney
only if suit can be brought on behalf of large numbers of employees).
225 FLSA would also likely disappear if suits could only be brought by individuals and not by
the Department of Labor or as class actions. As with WARN, because FLSA protects the lowestpaid segment of workforce, individual damages awards will not be great and finding attorneys to
pursue individual cases would be difficult.
226 See generally McHugh, supra note 23, at 60-61 (stating that attorney interest in WARN
suits could likely only be sparked by class actions) (quoting John Portz, a political scientist at
2006]
WHY A WARNING CANNOT BE WAIVED
2963
WARN and FLSA, but is not necessary to enforce employment
discrimination statutes.227
With statutes that can be enforced effectively by individuals, like
Title VII, it is appropriate to allow for a release of an existing claim.228
As each individual has the ability to enforce her claim, it is therefore
logical that the individual should be permitted to knowingly and
voluntarily forego her right to assert it.229 However, the same logic does
not apply to rights vested in a group, like WARN, that are most
appropriately enforced collectively.230 An individual should not possess
the legal ability to waive a right vested in a group; this will diminish the
ability to collectively enforce the right because fewer individuals will
have a stake in the outcome and fewer resources can be pooled to bring
an action.231 A WARN case simply will not be financially feasible
unless it is brought on behalf of a large number of employees.232 If
enough individual employees waive their claims, the critical mass of
Northeastern University who has studied WARN’s implementation).
227 See Brock, supra note 208, at 785-86. WARN itself provides expressly for the use of a
collective action mechanism to enforce its provisions. 29 U.S.C. § 2104(a)(5) (“A person seeking
to enforce [WARN] liability . . . may sue . . . for other persons similarly situated.”).
228 See Judith Droz Keyes & Douglas J. Farmer, Settlement of Age Discrimination Claims—
The Meaning and Impact of the Older Worker Benefit Protection Act, 12 LAB. LAW. 261, 266
(1996):
Typically under Title VII, employees (or applicants for employment) recognize
and complain about unequal treatment. These employees initiate disputes which
may than [sic] be resolved through a compromise settlement. Any waiver of
rights is negotiated on an individual basis as part of the settlement. The
settlement agreement is executed by individuals who are on notice that they are
involved in an arm’s length adversarial relationship with their employer. In
such a “dispute” context, the parties can negotiate a binding settlement which
may include a knowing and voluntary waiver of rights.
(quoting S. REP. NO. 101-79, at 13 (1989)).
229 This is the reason that “[c]ooperation and voluntary compliance were selected as the
preferred means for achieving” the elimination of unlawful employment discrimination.
Alexander v. Gardner-Denver Co., 415 U.S. 36, 44 (1974); see also Ronald Turner, Employment
Discrimination, Labor and Employment Arbitration, and the Case Against Union Waiver of the
Individual Worker’s Statutory Right to a Judicial Forum, 49 EMORY L.J. 135, 198 (2000) (“An
individual’s Title VII rights to equal and fair employment opportunities can be waived only by
the person who holds them: the individual worker.”).
230 Brock, supra note 208, at 795 (“[T]he overall rights protected under [WARN] are in fact
fundamentally collective in nature.”) (internal quotations omitted); see also Local Joint Executive
Bd. v. Las Vegas Sands, Inc., 244 F.3d 1152, 1163 (9th Cir. 2001) (“[Most plaintiffs] will be
unable to proceed as individuals because of the disparity between their litigation costs and what
they hope to recover [in this WARN action].”).
231 Cf. Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 704 (1945) (“[W]aiver of a right so
charged or colored with the public interest will not be allowed where it would thwart the
legislative policy which it was designed to effectuate.”). “[W]hile in individual cases hardship
may result, the restriction will enure to the benefit of the general class of employees in whose
interest the law is passed and so to that of the community at large.” Id. at 713 (quotations and
citations omitted).
232 See E-mail from Mark Fancher, supra note 65 (stating that collective damages under
WARN must be sufficient to cover costs and a reasonable contingent fee, even from a non-profit
entity whose mission is to enforce WARN).
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employees needed to motivate an attorney to take a WARN case will
not exist. Thus, it is inappropriate to allow the waiver of WARN
claims.233
C.
Policy Considerations Support Holding WARN Releases
Unenforceable
The law is clear that a statutory right conferred upon a private
party, but affecting the public interest, may not be waived if such
waiver contravenes the statutory public policy intended by Congress.234
Because the language of FLSA and WARN lack specific congressional
intent regarding waiver, courts resort to a broader consideration of the
legislative policy behind the right as evidenced by legislative history,
the structure of the statute,235 or the need to protect some aspect of the
public welfare.236 In examining the legislative policy behind FLSA,
FLSA releases were held unenforceable because waiver would nullify
the purpose of that statute.237 Exploring the policy of WARN reveals a
persuasive justification for holding the waiver of WARN claims
unenforceable.
233 Allowing waiver of WARN claims effectively precludes employee access to court, even for
those employees whose waivers may have been held unenforceable for not being knowing and
voluntary. See E-mail from Mark Fancher, supra note 65:
Typically, the employer will assemble the workforce in the plant cafeteria and
explain that the workers are all fired. The employer might acknowledge the
requirement that the workers receive 60 days advance notice, and also imply
that the workers could sue to recover 60 days wages and benefits. However, the
employer will offer immediate “severance pay” worth two weeks wages in
exchange for the workers’ waiver of all rights to sue. The reality for the
workers is that they can take this “bird in the hand” payment and run; or they
can gamble on litigation that could last months or years, and in the end receive a
settlement for an amount less than 60 days wages. For those employees who
stand firm and reject the severance package, there is, as a practical matter, no
legal assistance that is available to them—even from us. . . . When releases are
circulated, it is rare that the overwhelming majority of employees will refuse to
sign, and they thereby disqualify themselves from filing a lawsuit.
234 E.g., Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 704-05 (1945).
235 Id. at 706.
236 RESTATEMENT (SECOND) OF CONTRACTS § 179 (1981). Note also that simply because
Congress is silent as to the question of waiver, this does not indicate an intent to allow the waiver
or release of a claim. Taylor v. Progress Energy, Inc., 415 F.3d 364, 373 (4th Cir. 2005)
(rejecting the argument that because Congress was silent with regard to the waiver of FMLA
claims, it should be interpreted as indicating an intent to allow the waiver of such claims).
237 Brooklyn Sav., 324 U.S. at 706-07. It was also held that FLSA releases were unenforceable
due in part to the unequal bargaining power between employees and employers that led to
inequitable outcomes. Id. at 706. As discussed in Part II.A, supra, the unequal bargaining
rationale employs equally as strongly in the context of WARN claims.
2006]
WHY A WARNING CANNOT BE WAIVED
1.
2965
Legislative Purpose Defeated by Waiver
Another reason why waivers of FLSA claims are unenforceable is
that allowing employees to release such claims would nullify the
purpose of the statute.238 The purpose of FLSA is to protect certain
segments of the population from substandard wages and excessive hours
that endanger the national health.239 If an employee were given the
option of waiving their right to the minimum wage, it would defeat the
purpose of eliminating substandard wages.240 Thus, the primary
purpose of the legislation, to aid the unprotected, unorganized and
lowest paid of the nation’s workers, would be defeated if workers could
release their rights to a minimum subsistence wage.241
Allowing waiver of WARN claims would similarly nullify the
purposes of WARN. There are two purposes of WARN’s advance
notice requirement. First, advance notice enables the delivery of rapid
response services to the affected employees through state dislocated
worker units so that assistance can be promptly and effectively
provided.242 Second, advance notice provides workers and their
families with an “appropriate” amount of transition time to adjust to the
prospective loss of their jobs, to search for and obtain new jobs, and to
enter a skills training program that will enable the workers to
successfully re-enter the job market.243 Both of these purposes would
be defeated by allowing the waiver of WARN claims.
The first purpose of WARN, to enable the prompt and effective
delivery of dislocated worker assistance, is nullified by permitting the
waiver of WARN claims. Advance notice allows the dislocated worker
unit to go to the employment site and provide information about job
services before the workers are laid off, disperse throughout different
communities, and are much harder to locate.244 If advance notice is not
provided, a state will be unable to deploy the necessary dislocated
worker reemployment assistance before the plant closure.245 Without
238
239
240
Brooklyn Sav., 324 U.S. at 706-07.
Id. at 706.
Id. at 706-08 (employees receiving less than minimum wage are not likely to have
sufficient resources to maintain their welfare and productivity).
241 Id. at 707 n.18 (citing the legislative debates over FLSA).
242 2003 GAO REPORT, supra note 16, at 5; 20 C.F.R. § 639.1 (2005).
243 2003 GAO REPORT, supra note 16, at 5; 20 C.F.R. § 639.1. Additionally, “people benefit
from knowing if their jobs are about to vanish.” OTA REPORT, supra note 6, at 19. “They can
avoid some financially disastrous decisions–buying a new car, for example, or deciding that the
family can do without the extra money from a spouse’s job.” Id.
244 2003 GAO REPORT, supra note 16, at 5; see also OTA REPORT, supra note 6, at 2
(“Another benefit of advance notice is that displaced workers are much more likely to participate
in projects that begin before job loss; it is difficult even to let workers know that help is available
after they are out of work and out of touch.”).
245 2003 GAO REPORT, supra note 16, at 10-11 (“[E]mployees might receive payment for
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advance notice, states face severe challenges in enrolling workers in
adjustment programs, enlisting managers and workers as participants in
displaced worker projects, and deploying services at the time of the
actual layoff.246 It can take about two to four months, depending on the
number of workers involved, to prepare a comprehensive worker
dislocation program.247 If WARN advance notice is not provided, these
comprehensive, beneficial services248 will not be available to workers
foregoing the advance notice, but the lack of an advance notice means that the state is less likely
to be able to deploy services to facilitate workers’ reemployment before the plant closure or mass
layoff.”). An example of a state dislocated worker unit is New York’s Dislocated Worker Unit,
part of the New York State Department of Labor, which maintains a Rapid Response and
Business Retention Plan. The rapid response activities in New York are triggered by WARN
notices and intelligence developed at the local level and target candidates for layoff aversion,
skills upgrade training and rapid response services. For a detailed description of the Plan and the
rapid response services provided, see New York State Department of Labor: Workforce New
York:
New
York
State
Rapid
Response
and
Business
Retention
Plan,
http://www.labor.state.ny.us/workforcenypartners/nysrrplan.shtm (last visited Oct. 29, 2005).
Another example is North Carolina’s Dislocated Worker Unit. Some of the North Carolina unit’s
rapid response activities include: job search and placement assistance, career counseling, labor
market information, assessment of skills, development of individual employment plans,
occupational skills training, on-the-job training, skill upgrading, entrepreneurial training, and job
readiness training. Division of Employment & Training: Early Intervention for Dislocated
Workers
Rapid
Response
Assistance,
http://www.ncdet.com/employers/
rapidresponseinfosheet.asp (last visited Oct. 29, 2005). For a detailed review and description of
North Carolina’s Dislocated Worker Unit, see STATE OF N.C., WORKFORCE INVESTMENT ACT,
PROGRAM
YEAR
2004,
ANNUAL
REPORT
(2004),
available
at
http://www.ncdet.com/pdf/wia_annual_report_2004.pdf (last visited Mar. 28, 2006).
246 S. REP. NO. 100-62, at 11-12 (1987) (quoting the importance of advance notice from the
OTA REPORT, supra note 6, at 13); 134 CONG. REC. H5500-01 (1988) (statement of Rep. Miller)
(“With no advance warning—no opportunity to prepare for the future or to train for new
employment—[workers] must turn to temporary or part-time work at low wages in order to make
ends meet.”); OTA REPORT, supra note 6, at 13 (“In the period between announcement and
layoff, workers can readily find out what the project will offer through orientation sessions,
bulletin board announcements, union newsletters, and personal counseling.”).
247 OTA REPORT, supra note 6, at 1:
One of the most important benefits of advance notice is that it allows
companies, labor, and government agencies time to plan and develop adjustment
assistance. The peak demand for help in finding or training for new jobs is
immediately after job loss. It takes about 2 to 4 months’ work in advance
(depending on the number of workers involved) to prepare a comprehensive
adjustment program, including testing and assessment, counseling, job search
skills training, job development, vocational skills training, and remedial
education.
248 The services are provided by State Dislocated Worker Unit Rapid Response teams, as
authorized and funded by the Workforce Investment Act of 1998, 29 U.S.C. §§ 2801-2945
(2000), see supra note 57. The term “rapid response” means:
[A]n activity provided by a State . . . in the case of a permanent closure or mass layoff
at a plant, facility, or enterprise, or a natural or other disaster, that results in mass job
dislocation, in order to assist dislocated workers in obtaining reemployment as soon as
possible, with services including—(A) the establishment of onsite contact with
employers and employee representatives—(i) immediately after the State is notified of
a current or projected permanent closure or mass layoff; . . . (B) the provision of
information and access to available employment and training activities; (C) assistance
in establishing a labor-management committee, voluntarily agreed to by labor and
2006]
WHY A WARNING CANNOT BE WAIVED
2967
when the actual layoff occurs. Thus, allowing the waiver of WARN
hinders the ability of state dislocated worker units to provide the most
effective reemployment services possible.
The second purpose of WARN, allowing a proper amount of
transition time between employment and unemployment, is also
nullified by allowing the waiver of claims.
Without advance
notification, an employee cannot mentally adjust to the prospect of
unemployment, be informed of and enter the proper skills training
programs, search for a new job, and start saving money while still
employed and cushioned by the receipt of a paycheck. The transition
time provided by advance notice, which is eliminated by a release of
WARN claims of liability, limits the amount of depression, suicidal
tendencies, increases in blood pressure and cholesterol, and other
psychological and physical attributes which accompany sudden job
loss.249 This in turn decreases costs of social services that must be
provided in communities in the midst of mass layoffs or a plant
closing.250
In fact, advance notice, due to the decrease in
unemployment insurance compensation benefits and decrease in social
services, saves the country approximately $257 million to $386 million
per year.251 Thus, allowing waiver of WARN claims also nullifies its
management, with the ability to devise and implement a strategy for assessing the
employment and training needs of dislocated workers and obtaining services to meet
such needs; (D) the provision of emergency assistance adapted to the particular
closure, layoff, or disaster; and (E) the provision of assistance to the local community
in developing a coordinated response and in obtaining access to State economic
development assistance.
29 U.S.C. § 2801(38). For more details about the services provided by State Dislocated Worker
units, see 29 U.S.C. § 2864. In general, dislocated workers receive services and information
about obtaining information about unemployment insurance, pension benefits and health
insurance coverage, job search assistance, job referral, local area job openings, resume assistance,
and job training. If these core services do not produce results, other assistance includes one-onone assistance, group career workshops, assessment of skills, resume writing classes, help
panning how to get back to work, stress and financial management workshops and one-on-one
job counseling. Additional training is available, such as occupational skills training, on-the-job
training, skills improvement, GED preparation, English as a Second Language classes, and math
and reading training. General services available may include: use of computers, telephones, and
fax machines for the job search; financial planning and stress management workshops; financial
support for training; income support if job was lost due to foreign trade; and special services for
veterans and adults with disabilities. See U.S. Department of Labor: Employment & Training
Administration: Dislocated Workers, http://www.doleta.gov/layoff/workers01.cfm (last visited
Oct. 12, 2005).
249 H.R. REP. NO. 100-285, at 9-10 (1987) (the report lists some of the hardships created by
plant closures, including: an increase in uric acid content, blood pressure, and blood sugar
cholesterol levels; depression, grief and a sense of bereavement; a dramatic increase in suicide
rates; a “huge” increase in child and spousal abuse; as well as an higher rates of desertion and
divorce).
250 Id.
251 S. REP. NO. 100-62, at 10-11.
The economic losses are not only the unemployment compensation, public assistance,
and food stamps that must be paid to those who have lost their jobs through no fault of
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purpose of providing an appropriate transition time252 to workers and
their families.253
CONCLUSION
When examining the waiver of federal employment claims, a
principle develops that explains the seemingly contradictory holdings
that FLSA claims cannot be waived while anti-discrimination claims
may be waived. The principle is that a labor standard statute, such as
FLSA, which sets a minimum floor for standards such as wages, is
meant to supercede private contractual outcomes.
Employment
discrimination statutes set no such floor; they simply seek to remedy an
inefficient social evil that exists in the workplace. WARN, setting a
minimum labor standard of sixty days notice upon a plant closing or
mass layoff, fits squarely into the FLSA guiding principle.
Further, there is a collective action problem with permitting the
waiver of WARN claims. While employment discrimination statutes
can still function properly when brought only by individuals, WARN
actions would virtually disappear if they could not be brought
collectively. Allowing waiver of WARN claims hampers employees’
ability to bring WARN claims collectively.
Finally, policy
considerations support holding WARN waivers unenforceable.
Allowing waiver of WARN claims nullifies WARN’s purpose of
their own. Every unemployed and underemployed worker represents an opportunity
cost to the nation, which loses the value of the goods and services these people could
produce if their skills were put to work.
Id. at 5.
252 While the amount of WARN liability can be reduced by a voluntary and unconditional
payment by the employer to the employee that is not required by any legal obligation, 29 U.S.C. §
2104(a)(2) (2000), the “primary purpose” of the statute is “to provide advance notice of plant
closings so as to allow a transition time.” United Mine Workers v. Midwest Coal Co., No. TH
99-C-141-T/H, 2001 WL 1385893, at *6 (S.D. Ind. Aug. 31, 2001). As WARN’s primary
sponsor stated, “[Providing sixty days’ pay] is really not the objective of this legislation. Our bill
is about notice, not severance.” 134 CONG. REC. S8536-01 (1988) (statement of Sen.
Metzenbaum) (emphasis added) (discussing a rejected amendment to WARN by Sen. Quayle
which would have made severance pay an alternative to sixty days advance notification).
253 In contrast to FLSA and WARN, the waiver of employment discrimination claims does not
nullify the purposes of those statutes. As discussed in this section and Part II.A, supra, the
purpose behind labor standard statutes like WARN and FLSA is to establish minimum standards
of the terms of employment such as wages, hours, or the length of notice upon discharge. On the
other hand, employment discrimination statutes set no minimum standards or conditions of
employment; instead they seek to eliminate discrimination that exists in the employment context
largely through voluntary conciliation between the parties. See supra note 182. Therefore, as
opposed to nullifying the purposes of the employment discrimination statutes, waiver agreements
encourage the use of cooperation and voluntary compliance as the preferred means of eliminating
unlawful employment discrimination. United States v. Allegheny-Ludlum Indus., Inc., 517 F.2d
826, 862 (5th Cir. 1975).
2006]
WHY A WARNING CANNOT BE WAIVED
2969
enabling the efficient delivery of rapid response services by state
dislocated worker units and providing workers with an appropriate
amount of transition time. Therefore, the private waiver of WARN
claims should be unenforceable.