What is a Dislocated Worker?

Definition: A dislocated worker is an individual that, due to circumstances beyond his control, became unemployed. Simply put, it is someone that lost his job for reasons outside his power or willingness.

What Does Dislocated Worker Mean?

Dislocated workers are normally the consequence of collective lay-off performed by companies under adverse financial situations or on the process of being restructured or taken over. These lay-offs are beyond the employee’s control and that is why they are considered dislocated. An individual will become a dislocated worker in any of these scenarios: termination of the job contract due to permanent closure of the business or a substantial layoff, a self-employed job situation severely affected by a natural disaster or adverse economic conditions or an already announced business closure situation.

Displaced homemakers (individuals that perform stay-at-home activities) are also classified as dislocated workers. Any of these situations will meet the criteria established by the Workforce Investment Act of 1998 and they will allow the individual to be eligible for unemployment benefits. Nonetheless, it would be important to add, that an individual that resigns from his job or has been laid off because of negligence or poor performance of his duties will not be considered a dislocated worker.

Let’s take a look at this example.


Mr. Wagner is a plan operator at RTE Products Co. which is a company that sells canned food to the retail market. There has been an economic downturn on the canned food market and the company has suffered a severe reduction in their product’s demand. The company announced that they will be closing the factory where Mr. Wagner works. Does this means that Mr. Wagner will become a dislocated worker?

According to our definition, Mr. Wagner will fall into the first category established by the Workforce Investment Act of 1998, which refers to workers that have been laid off due a business closure. This means that he will be entitled to unemployment benefit after his current job gets terminated.