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WARN Act filings breed confusion for restaurant chains

Just ask P.F. Chang's, says RB's Reality Check.
Photograph: Shutterstock
Reality Check

Add another headache to the long list of problems being foisted on restaurants by the pandemic: Misperceptions about WARN Act filings.

P.F. Chang’s was blasted in online chatter last week after a slew of media reported the Asian chain had laid off thousands of staffers across its 200 or so restaurants. By our count, WARN filings indicated that nearly 3,000 employees had been discharged or had their hours cut by at least 50%.  In reality, the chain was back to 90% of its pre-COVID employment level, with the tally growing daily, according to Jim Notarnicola, chief talent acquisition and development officer for the casual-dining brand. But federal law requires that employees and state regulators be alerted when personnel cutbacks hit the six-month mark. Chang’s started closing its dining rooms by state order in late spring, or six months ago.

“We’re actually doing very well,” Notarnicola said in an interview. The brand is rolling out a new concept, P.F. Chang’s To Go, with five units scheduled to open this year. “That’s significant for a chain of about 200 units.” (The count of stores is actually 215, according to Chang's website.)

He stresses that Chang’s core business, its P.F. Chang’s Bistro chain, is ahead on its comeback plan, and the real personnel challenge is rehiring culinary talent in areas where competition had been stiff in pre-pandemic times, such as in parts of Michigan and Ohio.

Yet the blizzard of WARN filings provided a different impression, as Notarnicola acknowledged. The WARN Act—technically the Worker Adjustment and Retraining Notification Act—was drafted in 1988 to protect factory workers from the nightmare of showing up at their plant to find it shut down, their livelihoods disrupted. It requires companies with at least 100 full-time employees to provide workers and state officials with a heads-up 60 days before a factory or office is going to be closed. Another provision requires the same sort of alerts when employees will be laid off for at least six months or if shorter layoffs should appear likely at any point to last for at least half a year.

Because Chang’s employees who had been furloughed or had their hours cut were hitting that six-month mark, the parent company was required to send out the notices. At first, it tried to separate out the workers who’d lost at least half their schedule hours for the half-year stretch. “We tried going through the timecards of every restaurant, but that wasn’t feasible,” said Notarnicola. Instead, it sent letters to all employees of company restaurants, while filing summaries with state employment agencies for each restaurant that had furloughed personnel or cut an employee’s hours at least in half.

“The Company was over inclusive in to whom the notices were sent to ensure any necessary compliance with the law,” Chang’s said in a statement distributed during the reaction that followed the widespread filing.

To be sure, some Chang’s employees have lost their jobs. Five Chang’s Bistros were permanently closed during the pandemic, though Notarnicola said some of the shutdowns were already planned and merely accelerated by the COVID crisis, not directly resulting from it.  But the number far undershot the figures cited in the WARN filings.

Because the state filings are publicly accessible via the internet, the volume of alerts was quickly noticed. Chang’s was flooded with queries from employees, restaurant-employment placement agencies looking to expand their pool of temps, and even state governments themselves. Some thought the six-month layoffs were beginning at the point of the filing. Others suggested the layoffs were permanent. Cutbacks in hours were taken in some instance as jobs being eliminated and employees being let go.

“There was a lot of confusion,” stresses Notarnicola. He wouldn’t go as far as calling the situation a nightmare, but he doesn’t dispute that assessment, either.

The chain feared its recruitment efforts would be hampered by a public perception that new hires wouldn’t be secure in a job at Chang’s. It was braced for a drop-off in online applications, but that hasn’t happened, or at least not yet, according to Notarnicola.

It’s an experience that other chains are likely experiencing as well as they comply with the WARN Act’s six-month-notice requirement. A check of various state’s WARN filing reveals virtually every major casual restaurant chain represented among the filers.

Chang’s, meanwhile, is continuing to recruit new employees while contending with the controversy stirred up by its filings. When it distributes a statement explaining the high volume, included is a link to the chain’s online job application.

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