Shared HR, Payroll, or Management? Your WARN Exposure May Be Bigger Than You Think

The Fourth Circuit’s decision in Gautier v. Tams Management, Inc. reinforces that employers cannot avoid obligations under the Worker Adjustment and Training Notification Act (WARN) by relying solely on corporate formalities. Where affiliated entities operate as an integrated business, they may be treated as a single employer for WARN purposes, potentially expanding notice obligations in connection with layoffs or plant closings.

For guidance on employment contracts, compliance, or retention-bonus structuring, please contact the ILS Legal Team at contact@consultils.com. We provide tailored legal solutions to help employers manage compliance risks and maintain operational stability.

What is the WARN Act?

The WARN Act is a U.S. federal law that helps protect workers and communities from sudden large layoffs. In certain situations, it requires eligible employers to give advance written notice—typically 60 days— before a mass layoff or a worksite closing, so employees and local agencies have time to prepare.

Key Points:

• When it applies: Usually when there’s a plant/worksite closing or a mass layoff that meets legal thresholds.

• Who it applies to: Generally covered employers (often larger employers; rules depend on headcount and worker categories).

• Notice timing: Typically 60 days before the layoff/closure date.

• Who must be notified: Commonly affected employees (or their union representative) and certain state/local government agencies.

• Why it matters for HR: Failing to comply can lead to significant liability (e.g., back pay and benefits exposure), and some states have mini-WARN laws that can be stricter than federal rules.

If your organization is planning a restructuring, RIF, site closure, or major schedule/hour reductions—especially across related entities—build a WARN/mini-WARN check into your timeline early to reduce surprises and compliance risk.

Case Background

The case arose from the termination of a mining employee who was laid off without advance notice. The employee later filed a class action alleging violations of the WARN Act on behalf of workers who were terminated or experienced reduced hours.

Rather than suing only his direct employer, the plaintiff named five related corporate entities. A jury returned a verdict in favor of the employee class, and the defendants appealed, challenging their classification as a single employer under WARN.

Key Legal Reasoning

The Fourth Circuit upheld the jury’s decision and made the takeaway clear: WARN Act responsibility isn’t determined by what your org chart says—it’s determined by how your companies function day to day. If affiliated entities operate like a single, integrated business, the court may treat them as one employer for WARN purposes.

To assess “single employer” status, courts commonly weigh practical indicators such as:

• Common ownership (same parent/owners)

• Overlapping leadership (shared officers/directors or management)

• Real control over employment decisions (who actually decides hiring, firing, layoffs, scheduling)

• Centralized HR/policies (shared HR systems, handbooks, benefits, discipline practices)

• Operational interdependence (shared resources and coordinated operations)

In this case, the evidence pointed strongly toward integration—such as shared office space, common management, employees and equipment moving between entities, and a unified payroll system—so the court concluded the group operated as one employer under WARN.

Employer Implications

• WARN risk can “travel” across a corporate group: Even if only one entity executes a layoff, affiliated companies may still be pulled into WARN responsibility if the group operates as a single, integrated business.

• Courts focus on how things work in real life—not what the org chart says: Formal separation won’t help much if day-to-day operations are intertwined.

• Red flags that increase single-employer risk include:

  • Centralized HR or shared policies

  • A unified payroll/benefits system

  • Overlapping executives or decision-makers

  • Employees, equipment, or resources routinely shared across entities

  • Closely linked operations (one entity can’t function without the other)

• Also check state law early: Many states have mini-WARN rules that can be stricter than federal WARN—with lower thresholds, longer notice periods, or different triggering events.

Employer Recommendations

Before any RIF, site shutdown, or major hours reduction, run a quick WARN + mini-WARN check—across the full corporate group, not just the entity issuing the notices.

Map how the business actually runs (not how it looks on paper)

• Do affiliates share HR, payroll/benefits, leadership, facilities, or people/equipment?

• If operations are intertwined, WARN exposure may be shared.

Confirm who controls workforce decisions

Identify and document who truly approves:

• layoff decisions,

• headcount budgeting,

• scheduling and hours reductions.

Assess WARN risk at the group level

• Don’t limit the analysis to the “named” employer on the paycheck.

• Consider whether affiliated entities could be treated as a single employer based on integrated operations.

Check state mini-WARN rules early

If you operate in multiple states, verify:

• notice deadlines,

• trigger thresholds,

• how the state defines a “mass layoff” or “worksite closing.”

Loop in counsel during planning (not after the announcement)

Early review helps you:

• choose the right timeline,

• align internal communications,

• reduce the risk of notice errors and follow-on claims.

In October 2025, we published a practical guide to California’s WARN (SB 617) requirements. California employers can read that overview alongside this update to better understand how WARN exposure may expand across affiliated entities—and how to build a compliant notice plan before a RIF, site shutdown, or major hours reduction. Click here to read the full California WARN guide.

For guidance on employment contracts, compliance, or retention-bonus structuring, please contact the ILS Legal Team at contact@consultils.com. We provide tailored legal solutions to help employers manage compliance risks and maintain operational stability.

Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.

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As Managing Partner at ILS, Richard Liu ranks among the leading U.S. attorneys in corporate, employment, and regulatory law. He is known for crafting legal strategies aligned with clients’ business objectives and advising Fortune 500 companies, startups, and executives on corporate transactions, financing, privacy, and employment matters across the technology, healthcare, and financial sectors.

Before founding ILS, Richard practiced at top defense firms, where he developed a reputation for anticipating risks and designing strategies that balance protection with growth. He has secured favorable outcomes in contract and intellectual property disputes, represented clients in state and federal courts, and is recognized for combining large-firm expertise with boutique-firm agility. Richard is also a frequent speaker at industry and legal conferences.

Email: contact@consultils.com | Phone: 626-344-8949

Harry is a litigation associate focusing on employment disputes—including single-plaintiff claims and wage-and-hour class actions—as well as commercial litigation. He represents clients in both federal and state courts and has experience drafting pre-trial briefs, discovery motions, and other key filings.

He developed a strong foundation in public-service and pro bono work during law school, including experience with a state attorney general’s office and nonprofit legal organizations. Known for careful case preparation and sharp issue-spotting, Harry brings a practical, strategy-driven approach to helping clients navigate complex disputes.

Email:  contact@consultils.com | Phone: 626-344-8949