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Retailers will also consider broad WARN notices as a way to combat the uncertainty inherent in winding down their businesses, David Froiland, employment attorney and shareholder in Ogletree Deakins’ Milwaukee office, told Bloomberg Law March 22. “There’s lots of other cases where employers take risks, but I can’t overstate just how much uncertainty there is when you’re winding down a going concern like this,” he said. “So sending out the notices sooner rather than later preserves the flexibility to close the stores in the sequence that makes the most sense.” Predicting how quickly inventory will sell from each location and how long employees are needed is impossible. But the notices protect employees at stores a company decides to close before 60 days, while also allowing a company to extend notices if it chooses to keep a location open. An all-employee notice strategy can also prove the most administratively easy route, Froiland said. Several states have stricter notice requirements than the federal WARN Act, so an employer can choose to follow the law of the strictest state in which it operates and apply that notice to all employees without the fear of making mistakes. Froiland said the WARN Act can be “inexpensive to comply with, but expensive to violate.” The only thing a company has to do is send letters, but without warning employees of layoffs a company could be on the hook for back pay while the employee isn’t working. However, broad WARN Act notices could also come with negative consequences to companies like Toys R Us trying to sell all or part of a business through Chapter 11 bankruptcy, Scott Gautier, bankruptcy attorney and partner in Robins Kaplan’s Los Angeles office, told Bloomberg Law in a March 20 email. The retailer’s Chapter 11 reorganization filings show the company believes it could sell off its Canadian stores, and possibly 200 of its highest-performing U.S.
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