Document Type

Report

Publication Date

9-30-2020

Research Center

Center for Economic Development

Abstract

The Worker Adjustment and Retraining Notification (WARN) Act is a law designed to protect workers against employment losses. Employers are required to provide employees with a 60-day notice in the event of plant closings and mass layoffs. Under normal conditions, WARNs are required in the event of a) Plants closing or stopping operation either permanently or temporarily affecting 50 or more workers; b) Layoffs of 500 or more employees during a 30-day-period or when these layoffs constitute at least a third of the company’s workforce; and c) Temporary layoffs expected to exceed six months, in this case, when a temporary layoff originally not expected to exceed six months gets extended, it would trigger a WARN. This last scenario has been the case of many companies during the COVID-19 pandemic.

In the event of “unforeseeable business circumstances,” businesses are not subject to the 60-day notice requirement, as was also the case of many COVID-19 related layoffs. When the stay-at-home orders caused a sudden loss of business outside of the employer’s control, the state of Ohio required that companies laying-off 50 or more employees due to lack of business must report the layoff within a 7-day period. Given this information, it should be noted that the nature of the WARNs does not allow a complete analysis of all the jobs lost in the region during the pandemic, as small businesses are not obligated to file a WARN and would not traditionally do so. Therefore, the following analysis does not reflect small- to medium-sized businesses. However, sizable layoffs are reflective of large regional employers whose layoffs might trigger considerable impacts in their supply chain.

There were a total of 19,318 layoffs reported from companies in Northeast Ohio (NEO) between January and August of 2020, and 18,458 (96%) have occurred since March 19th, just a few days after the stay-at-home order was instated. Immediately after the stay-at-home order, companies began to state COVID-19 as one of the primary reasons behind their mass layoffs. 91% of the reported layoffs since March 19th have been attributed to the pandemic according to the companies’ own WARNs, for a total of 16,857 reported jobs lost. The months of March and April saw the most COVID-19 related layoffs with 6,190 affected, while April saw 5,129 layoffs. Following these huge losses, the numbers dropped to below 2,000, and during the month of August, only 309 lost jobs were reported, which may be a sign of a beginning stabilization in the region.

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