The WARN Act (Worker Adjustment and Retraining Notification Act) is a federal law that requires employers to give advance notice to employees and their representatives before significant layoffs or plant closings. The purpose of the law is to give employees time to find new employment and to allow them to take advantage of retraining opportunities if they will be losing their jobs.
In the context of an asset purchase agreement, the WARN Act requires the purchasing company to provide notice to the employees of the seller that will be affected by the transaction. If the purchasing company fails to provide notice, it can face penalties of up to 60 days of back pay and benefits for each affected employee.
To comply with the WARN Act, the asset purchase agreement should include provisions that address the notification requirements. These provisions should describe the process by which the seller will provide notice to employees and how the purchasing company will cooperate in that process.
The asset purchase agreement should also address the allocation of responsibility for any WARN Act liability that may arise as a result of the transaction. Typically, the purchasing company will assume responsibility for any liability related to the notice requirements.
If the purchaser and seller are in different states, it is important to consult local laws and regulations regarding the WARN Act. Some states require additional notice to employees beyond what is required by the federal law.
In summary, the WARN Act is an important consideration in an asset purchase agreement. Employers must comply with the notification requirements to avoid potential liability. Including appropriate provisions in the asset purchase agreement can help ensure compliance and protect the interests of both the purchaser and seller.