Know state and Federal laws regarding employee layoffs to avoid unnecessary costs after a buy sell

Published on


Dealership asset sales commonly involve the termination by the seller of its employees at closing, and the rehiring of the employees by the buyer. Depending on the number of affected employees, both federal and state law may impose prior notification requirements on the seller, failing which the seller could be hit with substantial financial damages and penalties.

The Federal WARN Act (29 USC § 2101 et seq.) prohibits a “mass layoff” of 50 or more employees at a single business location, unless the employer gives the employees 60-day notice of the layoff or unless certain detailed exceptions apply.

States may have their own versions of the Act with different or additional requirements. California, for example, has its “Mini-WARN” Act (Labor Code § 1400 et seq.) that includes the same 60-day notification requirement but also differs from the Federal act.

The main difference between the California and Federal statutes is that the Federal WARN act applies to employers with at least 100 full time employees, whereas California’s law applies to employers with at least 75 full time employees. Both laws include detailed rules on the content of the statutory notice to employees if a mass layoff occurs at closing.

For more, read the rest of this article in Automotive Buy Sell Report.



Automotive Buy Sell Report is the first website and weekly report to give participants in the automotive dealership buy sell industry a place to find news and information regarding the purchase, sale and valuation of automobile dealerships, and state-by-state listings of resources.