Which Employers the Notice Statute Covers
Coverage turns on a head count taken on one particular day. The statute offers two ways to reach it, defines part-time in a way that captures many full-time schedules, and lets an unrepresentative snapshot be replaced by a fairer number.
The rule in short
The federal notice statute reaches a business enterprise employing one hundred or more employees excluding part-time employees, or one hundred or more employees who in the aggregate work at least four thousand hours per week exclusive of overtime. Part-time means an average of fewer than twenty hours a week, or employment for fewer than six of the preceding twelve months. The count is taken on the date the first notice would be required, and workers awaiting recall are counted.
Coverage is the first question and the one most often answered wrongly, because it is a counting exercise governed by definitions rather than an impression of company size. The federal statute reaches a business enterprise of a stated size, and everything that follows, the thresholds, the notice period and the damages, applies only to enterprises inside that definition. An employer below the line owes nothing under the federal statute no matter how large the reduction.
Two tests, either of which is enough
The statute defines an employer as any business enterprise that employs one hundred or more employees excluding part-time employees, or one hundred or more employees who in the aggregate work at least four thousand hours per week exclusive of hours of overtime. The two tests operate in the alternative, and the second exists because the first would otherwise let an employer with a heavily part-time workforce escape.
The arithmetic differs between them in a way worth stating plainly. The first test counts bodies and discards part-time workers entirely. The second counts hours and includes everyone, part-time workers included, subject only to the exclusion of overtime. An enterprise with eighty full-time employees and sixty part-time employees fails the first test and may well pass the second. Both tests must be run before concluding that the statute does not apply.
Neither test is measured across an industry, a region or a corporate group. It is measured across the business enterprise, which the regulations illustrate with a manufacturer operating dozens of plants: each plant is a site of employment, but there is only one employer. Coverage is therefore an enterprise-level question, while the thresholds that require notice are counted at a location. An employer can be comfortably covered and still owe nothing, and a marginal employer can be pushed over the line by a workforce it does not think of as employees at all.
Who is inside the count
The regulations expand the count in three directions. Workers on temporary layoff or on leave who have a reasonable expectation of recall are counted, and that expectation is defined as an understanding, through notification or through industry practice, that employment has been temporarily interrupted and that the worker will be recalled to the same or a similar job. Non-profit organizations of the requisite size are employers. And workers who are exempt from notice under the statute's own exemptions are nonetheless counted for the purpose of determining coverage.
Two categories sit outside. Regular federal, state, local and federally recognized tribal governments are not covered. But the term employer does include public and quasi-public entities that engage in business, meaning they take part in a commercial or industrial enterprise, supply a service or good on a mercantile basis, or provide independent management of public assets while raising revenue and making investments, provided they are separately organized from the regular government, have their own governing bodies and have independent authority to manage their personnel and assets. All three conditions must hold.
| Statute | Head count test | Aggregate hours test | Measured over |
|---|---|---|---|
| Federal notice statute | One hundred, excluding part-time employees | One hundred employees at four thousand hours per week | The date the first notice is required |
| New York | Fifty, excluding part-time employees | Fifty employees at two thousand hours per week | The date notice is required |
| California | Seventy-five persons at a covered establishment | Not used | Employment at any point in the preceding twelve months |
| Federal, workers abroad | Counted toward coverage | Counted toward coverage | Foreign sites themselves are not covered |
| Federal, exempt workers | Counted toward coverage | Counted toward coverage | Not entitled to notice themselves |
A definition of part-time that catches full-time schedules
Part-time employee is a defined term and it has two independent branches. An employee is part-time if employed for an average of fewer than twenty hours per week, or if employed for fewer than six of the twelve months preceding the date on which notice is required. The regulations add expressly that the second branch may include workers who work full-time, and that the category may cover workers ordinarily thought of as seasonal.
The second branch has consequences that surprise employers. A recently expanded workforce is largely part-time for statutory purposes, because most of it has been employed for fewer than six of the last twelve months, and the head count test discards those people. The same expansion can leave an employer below the first threshold while the aggregate hours test carries it above the second. For the averaging calculation, the period used is the shorter of the actual time the worker has been employed or the most recent ninety days.
The regulations separate two questions that sound the same. Workers exempt from notice are still counted in deciding whether the enterprise is a covered employer and whether a closing or layoff has occurred. Part-time employees are excluded from the threshold counts but are still due notice. The regulation gives its own example: closing a temporary project employing ten permanent and forty temporary workers can be a covered plant closing even though only ten workers are entitled to notice.
The day the count is taken
The point in time at which the number of employees is measured is the date the first notice is required to be given. That fixes the count to a day that is itself determined by the planned action, which means the coverage question and the timing question described in the sixty days and when the clock starts are answered together rather than in sequence.
The regulations then supply a corrective. If the snapshot of employees on that date is clearly unrepresentative of the ordinary or average employment level, a more representative number may be used. The examples given are a level near the peak or the trough of an employment cycle, and large upward or downward shifts around the time notice is to be given. The alternative may be an average over a recent period or the number on a different, more typical date. The regulations add two limits: alternative methods cannot be used to evade the purpose of the statute, and they should be used only in unusual circumstances.
That corrective cuts both ways, and it is worth noticing which way it usually cuts. An employer whose headcount peaks seasonally cannot avoid coverage by timing an announcement for the trough, because the trough is the unrepresentative figure the regulation is aimed at. Equally, an employer that has just completed a large hiring round is not fixed with a number that overstates its ordinary level. The test is whether the snapshot describes the enterprise as it normally is, and the burden of displacing the snapshot falls on whoever wants a different number.
Whether the enterprise is covered is only the first gate. Coverage does not itself require notice; a covered employer owes notice only when a reduction meets one of the two event thresholds set out in plant closing and mass layoff as separate triggers, and those thresholds are counted at a location rather than across the company. State statutes set their own coverage lines, some considerably lower, as described in state statutes that demand more.
Points to carry away
- Coverage is met by one hundred employees excluding part-time workers, or by one hundred employees working four thousand aggregate hours per week.
- The aggregate hours test excludes overtime hours and includes part-time employees in the count.
- A part-time employee averages fewer than twenty hours per week or has been employed fewer than six of the last twelve months.
- Workers on temporary layoff or leave with a reasonable expectation of recall are counted as employees.
- The count is taken on the date the first notice is required, with a more representative figure allowed if that date is atypical.
- Regular federal, state, local and tribal governments are outside the definition of employer.
Questions readers ask
Are two related companies counted together?
It depends on their independence. The regulations state that independent contractors and subsidiaries wholly or partially owned by a parent are treated as separate employers or as part of the parent depending on the degree of independence, and list five factors: common ownership, common directors or officers, de facto exercise of control, unity of personnel policies emanating from a common source, and dependency of operations. No single factor decides it. A subsidiary that sets its own personnel policy and runs its own operations is usually separate even under common ownership.
Do employees working outside the country count?
For coverage, yes; for the site thresholds, no. The regulations provide that foreign sites of employment are not covered by the statute, but that workers of the employer at such sites are counted in determining whether the employer meets the one hundred employee test. The result is that a company with most of its workforce abroad can be a covered employer while none of the employment losses at its foreign sites triggers a notice obligation of their own.
Are workers on leave included in the count?
Yes, where recall is expected. The regulations state that workers on temporary layoff or on leave who have a reasonable expectation of recall are counted as employees, and define that expectation as an understanding, through notification or through industry practice, that employment has been temporarily interrupted and that the worker will be recalled to the same or a similar job. Seasonal patterns and past practice are therefore evidence, and a workforce that looks small in a slack month may not be.
Sources
- 29 U.S.C. 2101 — DefinitionsSets the two coverage tests and defines part-time employee, employment loss and affected employees.
- 20 CFR 639.3 — DefinitionsAdds the recall rule, the treatment of governments and non-profits, the five-factor test for related entities and the ninety-day averaging period.
- 20 CFR 639.5 — When must notice be givenFixes the snapshot date for measuring the workforce and permits a more representative figure where that date is atypical.
- 29 U.S.C. 2107 — Authority to prescribe regulationsThe rulemaking authority under which part 639 was issued, and the source of the service-of-notice provisions.
- California Labor Code section 1400.5Defines a covered establishment at seventy-five or more persons employed within the preceding twelve months.
- New York Labor Law section 860-aDefines employer at fifty or more employees excluding part-time workers, or fifty working two thousand aggregate hours.
Rapid Response Law is a publication, not a law firm. This article states general rules and cites its sources; it is not advice about any particular case, and the law differs by state and changes over time.
More in Layoff Notice
Giving as Much Notice as Possible When an Exception Applies
Where a statutory exception applies, the employer must give as much notice as is practicable to the union, non-represented employees, the state dislocated worker unit and the unit of local government, and the regulation acknowledges that in some circumstances this may be notice after the fact. At the time notice is actually given, the employer must also provide a brief statement of the reason for reducing the notice period, in addition to the ordinary content elements.
What Counts as a Single Site of Employment
A single site of employment can be one location or a group of contiguous locations, and a campus or industrial park may be one site. Separate buildings not in immediate proximity may still be one site where they are reasonably close, used for the same purpose and share staff and equipment. Contiguous buildings with separate management, different products and separate workforces are separate sites. Mobile and outstationed workers belong to the home base from which their work is assigned.
State Statutes That Demand More
State notice statutes depart from the federal model in four directions. California sets coverage at a seventy-five person establishment and counts a mass layoff at fifty separations without any percentage test. New York halves the employer threshold, sets closings at twenty-five and requires ninety days. Maine requires ninety days to a state official before a closing or relocation and imposes severance pay of one week per year of service.