When a company has to close a plant, it is a certain kind of action taken by a business to terminate a particular location. Plant closings can be caused by mergers, consolidations, or financial challenges. It is important for business owners to understand the legal implications of plant closings in order to ensure the business is compliant with the law.
Different Types of Plant Closings
There are two main types of plant closings—temporary shutdowns and permanent closures. Temporary shutdowns, sometimes called “idle” or “furlough” status, are typically in conflict with labor contracts and typically provide for readjustment payments to affected employees. Permanent closures are designed to reduce overhead and often involve large-scale layoffs.
Legal Considerations of Plant Closings
When a business is closing a plant, there are a number of legal considerations that must be taken into account. For example, businesses must comply with the Worker Adjustment and Retraining Notification (WARN) Act, which requires employers with 100 or more employees to provide written notice to their employees at least sixty (60) days in advance of a plant closing or mass layoff. Businesses must also comply with appropriate state laws, including applicable laws governing collective bargaining, severance pay, and transfer rights.
Recent Plant Closings
In recent years, many companies have had to close plants due to economic uncertainty and changing market conditions. In 2018, General Motors announced that it was closing five plants, including one in Michigan and one in Ohio, which were both major sources of employment for the states. In 2020, Coca-Cola closed a plant in Michigan that had been a staple in the community for over 30 years. Such decisions can be difficult for a company, but understanding the legal implications of a plant closing is essential for business success.