The COVID-19 pandemic has raised questions as to the application of the Worker Adjustment and Retraining Notification Act (“WARN” or “the Act”), 29 U.S.C. §§ 2101-2109, where the pandemic has caused the closure of businesses and/or the layoff of employees.
WARN’S REQUIREMENTS
Generally speaking, WARN requires private-sector (and some semi-public) employers who employ 100 or more full-time employees to provide 60 days’ advance notice to employees and governmental agencies of a “plant closing” or a “mass layoff.” A “plant closing” is defined as a temporary or permanent shut down of a single site of employment involving an employment loss of 50 or more full-time employees. A “mass layoff” is a reduction in force of 50 or more full-time employees constituting at least 33% of the full-time workforce at a facility. In turn, an “employment loss” does not occur unless the employee is permanently separated, or is on a layoff for more than six months (or has had his/her hours reduced by more than 50% for a six-month period).
EXCEPTIONS TO THE 60-DAY NOTICE PERIOD PERTAINING TO COVID-19 RELATED CLOSURES AND LAYOFFS
Unforeseen Business Circumstances
A covered employer can provide less than 60 days’ advance notice of a closure or mass layoff due to business circumstances that “were not reasonably foreseeable” at the time notice would have had to been provided. The regulations defining WARN further state, regarding this exception, that:
“[u]nforseen business circumstances” include “an unanticipated and dramatic major economic downturn” or “a government-ordered closing of an employment site.”
CFR 639.9(c)(1).
Natural Disasters
A covered employer can also provide less than 60 days’ advance notice where the covered closure or layoff is due to “any form of natural disaster, such as a flood, earthquake, or a drought…” While the Act does not reference a “pandemic” as an example of a “natural disaster,” one could reasonably argue that it is. That said, there is no current guidance in relying on this natural disaster exception.
As to both of these aforementioned exceptions, WARN requires the employer to give as much notice as possible. Moreover, the regulations suggest that notice should be provided, under the “natural disaster” exception, even if the employment loss has already occurred. CFR 639.9(c)(3). (It is worth noting that the Act also states that no notice is required for the “natural disaster” exception. Therefore, an inconsistency exists within the Act and regulations in that regard).
Extending the Layoff Period
The Act also allows for a layoff that was presumed to be of less than six months in duration (for which no notice needed to be provided), to be extended beyond six months, where business circumstances were not reasonably foreseeable at the time of the initial layoff.
SPECIFIC ADVICE TO EMPLOYERS EXPERIENCING COVERED CLOSURES OR MASS LAYOFFS
Employers should initially determine if their closure, shut-down or layoff is a covered circumstance. As noted, permanent separations of less than 50 employees or layoffs of less than 50 employees or less than six months in duration do not invoke WARN.
Where a covered event does occur, employers potentially can rely upon the exceptions defined under WARN due to the unprecedented nature of the COVID-19 pandemic.
More specifically, if an employer has had to permanently close its business, it is highly likely that such would qualify as an “unforeseen business circumstance” or “natural disaster.” As for mass layoffs, they likewise would likely be considered as the result of these above-referenced unpredictable and extraordinary circumstances, for which 60 days’ notice would have been impossible. Of further note regarding mass layoffs, those employers who have had to lay off their employees will likely have done so with the reasoned expectation that they would recall their employees prior to the expiration of six months. Therefore, if the layoff extends beyond six months, those employers potentially can rely upon WARN’s defined exception, allowing them to extend the layoff period.
In sum, if the current COVID-19 pandemic has not triggered WARN’s notice exceptions, then it is hard to imagine what would. However, irrespective of some of the contradictory language in the Act and regulations pertaining to the need to provide some amount of notice, the safest route for employers to follow is to provide as much notice as possible – whether due to a closure, mass layoff, or if extending a layoff beyond six months.
*Jon Dileno regularly advises clients on all labor related matters, including WARN. If you have questions about the WARN Act or any labor law questions, please contact Jon at jmd@zrlaw.com or (216)696-4441.