New York’s WARN Act Changes Are Creating a Perfect Storm: How 2024’s Mass Layoffs Are Driving Unprecedented Bankruptcy Filings

The economic landscape of 2024 has been marked by a devastating combination of mass corporate layoffs and soaring bankruptcy filings, with New York State’s strengthened WARN Act regulations playing a crucial role in how these events unfold. As companies struggle with post-pandemic economic pressures, the enhanced worker protection laws are providing critical safety nets while simultaneously highlighting the scale of financial distress affecting both businesses and individuals across the state.

Understanding New York’s Enhanced WARN Act Requirements

New York State strengthened its WARN Act regulations to address the post-pandemic employment climate. The regulations clarify how remote work impacts WARN Act compliance and simplifies language to ensure businesses better understand their obligations. Employers covered by the New York WARN Act must provide a 90-day notice period to affected employees. This is an extension from the federal requirement of 60 days, providing additional time for employees to prepare for impending changes.

The WARN Act applies to private businesses with 50 or more full-time employees in New York State. It covers mass layoffs involving 25 or more full-time employees (if the 25 or more employees make up at least 33% of all the employees at the site) Mass layoffs involving 250 or more full-time employees. The law now includes significant changes that reflect the modern workplace, particularly regarding remote workers.

The 2024 Mass Layoff Crisis

The scale of layoffs in 2024 has been staggering. At least 95,000 workers at U.S.-based tech companies were laid off in mass job cuts in 2024, according to our tally, and the cuts have continued into 2025. Beyond the tech sector, For 2024 alone, private equity-related bankruptcies have resulted in at least 65,850 layoffs.

Major companies across various industries have been forced to make dramatic workforce reductions. Zachry Holdings laid off over 4,000 workers after filing for bankruptcy. The San Antonio-based construction firm pursued the measure after experiencing financial issues as the lead contractor on the Golden Pass LNG export terminal project in Sabine Pass, Texas. Similarly, LL Flooring closed nearly 100 of its 442 stores earlier this year and filed for Chapter 11 bankruptcy. As a result of the closures, around 2,000 employees will lose their jobs.

The Bankruptcy Filing Surge

The connection between mass layoffs and bankruptcy filings has become increasingly evident throughout 2024. According to Newsweek, 446 large companies filed for bankruptcy during the first seven months of this year. That is the highest total that we have seen since 2010. This represents a dramatic increase in corporate financial distress.

U.S. bankruptcy filings surged 14.2% year-over-year by the end of 2024. Bankruptcy inquiries are surging to their highest level since early 2020, signaling a potential wave of filings in 2025. The ripple effects of mass layoffs are creating a cascading crisis where job losses lead to personal financial distress, ultimately resulting in individual bankruptcy filings as workers struggle to maintain their financial obligations without steady income.

How WARN Act Changes Provide Critical Protection

The New York State Department of Labor (DOL) has adopted amendments to the New York State Worker Adjustment and Retraining Notification Act (WARN or Act) regulations to “address the post-pandemic employment climate.” One of the most significant changes involves remote workers. NY WARN applies to employers with 50 or more full-time employees “within New York State.” In a nod to the post-pandemic workplace, the regulations now clarify that individuals “who work remotely but are based at the employment site” will be counted toward this threshold. However, the regulations do not elaborate on how to determine whether employees are “based at” a particular employment site in the state.

The enhanced regulations also include a significant change under the new regulations, an employer may avail itself of an exception to the Act only if the employer submits certain documentation to the DOL commissioner and the DOL commissioner concludes the employer qualifies for an exception. In other words, while it was previously up to a court to determine whether an exception applied, it is now up to the DOL.

The Financial Domino Effect

When companies announce mass layoffs, the financial consequences extend far beyond the immediate job losses. These mass layoffs can have devastating effects on the workers who relied on their paychecks. In the case of San Diego-based Rubio’s Coastal Grill, which filed for bankruptcy in June, employees not only lost their jobs but were also reportedly unable to cash in their final checks.

The timing of these layoffs in relation to bankruptcy filings creates a particularly challenging situation for affected workers. If employers violate the act, they must provide 60 days of back pay and benefits to their employees. New York WARN violations require employers to pay 60 days of back pay and benefits. However, when companies file for bankruptcy, collecting these penalties becomes significantly more difficult.

Seeking Legal Protection in Uncertain Times

For individuals facing the dual crisis of job loss and mounting financial obligations, understanding their legal options becomes crucial. The enhanced WARN Act protections provide some relief, but many workers find themselves needing comprehensive legal assistance to navigate both employment law violations and potential bankruptcy proceedings.

When facing overwhelming debt following a layoff, consulting with a qualified Bankruptcy attorney New York can provide essential guidance on available options, from Chapter 7 liquidation to Chapter 13 reorganization plans that can help individuals regain financial stability.

Looking Ahead: Preparing for Continued Economic Challenges

Many American households may reach a breaking point in the first half of 2025 as they deal with new tariffs, rising prices, increased debt and sustained elevated interest rates. Record consumer debt and new tariffs could push financially strained households past their breaking point.

As economic pressures continue to mount, New York’s enhanced WARN Act regulations provide a crucial framework for protecting workers during mass layoffs. However, the unprecedented scale of both corporate bankruptcies and individual financial distress suggests that 2025 may bring even greater challenges. Workers and families affected by layoffs should be aware of their rights under the WARN Act while also understanding that bankruptcy protection may offer a path to financial recovery when other options have been exhausted.

The intersection of employment law and bankruptcy law has never been more relevant for New York residents. As companies continue to struggle with financial pressures and workforce reductions, having knowledgeable legal representation can make the difference between financial ruin and a successful fresh start. The enhanced WARN Act protections represent an important step forward in worker protection, but they are just one piece of the puzzle in navigating today’s challenging economic landscape.