Articles

Employment Law Update: Fourth Circuit Decision Highlights WARN Act Risks for Employers That Are Part of Broader Corporate Families

Date: January 16, 2026
Since the late 1980s, employers conducting large layoffs have had to seek to ensure compliance with the Worker Adjustment and Training Notification Act (WARN). WARN requires that covered employers – those with at least 100 employees – provide sixty days’ advance notice prior to implementing a plant closing or mass layoff. WARN defines a “plant closing” as a shutdown of a single site of employment or an operating unit within a single site that affects at least 50 employees. A “mass layoff” is defined as any reduction in force at a single site that affects at least thirty-three percent of employees at the site and at least 50 employees total (or one that affects at least 500 employees). WARN requires that a written notice be provided to the affected employees, as well as certain governmental offices. 
 
While doing the calculus to determine if there are WARN Notice obligations may be straightforward, typically, complications can arise when the employer is one of several entities in a group of related companies. That was the focus of the Fourth Circuit’s January 2, 2026, decision in Gautier v. Tams Management, Inc. 
 
In Gautier, the plaintiff was a mining employee who had been terminated without notice. The employee later filed a class action alleging violations of the WARN Act on behalf of a class of employees at the mine who had been terminated or had their hours reduced. Rather than sue only his nominal employer, the plaintiff asserted claims against five corporations. Following a verdict in favor of the class members, the defendants appealed on the grounds that they should not have been classified as a single employer for purposes of the litigation. 
 
In its decision, the Fourth Circuit reaffirmed the principle that distinct entities may be considered a single employer for purposes of WARN where they have functionally operated as a single business. The Court explained that the determination of whether multiple entities acted as a single employer is to be made based on a multi-factor framework that centers on the degree of each entity’s independence, with the key factors being (i) common ownership, (ii) common directors or officers, (iii) de facto exercise of control, (iv) unity of personnel policies stemming from a common source and (v) the dependency of their operations. 
 
Turning to the facts before it, the Court noted that the defendants shared a common office address and that three of them had the same officers, while two had the same directors. Critically, the Court noted that the evidence established the companies exchanged employees and machines back and forth among one another, shared management supervisors, and that the defendants shared a common payroll system. As such, the Fourth Circuit concluded that the defendants acted as a single employer and therefore affirmed the jury’s verdict. 
 
The Court’s decision underscores the need for employers to carefully evaluate the potential WARN Act consequences of layoffs, including their relationship to other entities that are part of the same corporate family or share a common owner. Employers should remember that various states, including Maryland, have adopted their own ‘mini-WARN’ statutes that may impose obligations beyond the scope of the federal WARN Act. Employers are encouraged to always consult with legal counsel regarding any planned reductions in force.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.