Pandemic Makes Application of WARN Act More Complex

​Employers must comply with federal and state laws on alerting employees about impending layoffs, but the aftermath of the COVID-19 pandemic and the rise of remote work are making compliance more difficult. Appellate court rulings, changes in state law and district court rulings all are coming into play.

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Federal Appellate Court Ruling

On June 15, a federal appellate court ruled that the COVID-19 pandemic is not a natural disaster that would relieve employers of their duty to give adequate warning before mass layoffs. In Easom v. US Well Services, former employees filed a class-action lawsuit after the company laid them off in 2020 without giving 60-days' notice.

The federal Worker Adjustment and Retraining Notification Act (WARN Act) requires employers with 100 or more full-time workers to provide written notice at least 60 days before implementing a plant closing or mass layoff, unless the layoff is a direct result of a natural disaster or unforeseeable business circumstances.

The court found that the COVID-19 pandemic did not qualify as a natural disaster because Congress did not include words like "disease," "pandemic" or "virus" in the statutory language of the WARN Act. The court did not address the extent to which the "unforeseeable business circumstances" exception to the notice rule is available for COVID-19-related layoffs.

The employer bears the burden of proof that an exception has been met under the WARN Act. Floods, earthquakes, droughts, storms, tidal waves and tsunamis qualify as natural disasters for legal purposes.

Employers that violate the federal WARN Act must pay affected employees back pay for each day of violation.

The law applies when an employer closes a facility or discontinues an operating unit permanently or temporarily, affecting at least 50 employees at one worksite. A mass layoff occurs when a company lays off 500 or more workers at one worksite during a 30-day period, or when laying off 50-499 workers constitutes one-third of the employer's total active workforce at one worksite. However, the WARN Act does not apply if the layoffs last for less than six months.

The law "does not require an entire facility to be shut down to trigger. Rather, it can be triggered by the closure of one or more departments, teams, product lines or other organizationally distinct units, which results in employment losses of at least 50 full-time employees at the site," said Joshua Ditelberg, a lawyer with Seyfarth Shaw in Chicago.

The WARN Act does not cover:

• Part-time workers.
• Workers who retire, resign or are terminated for cause.
• Workers who are offered a transfer to another site of employment.

Update to New Jersey WARN Act

New Jersey passed amendments to its state WARN Act in 2020. Because of the pandemic, the effective date of these amendments was put on hold. New Jersey employers should stay attuned to any updates or changes to the effective date.

The law will apply to employers with at least 100 employees, regardless of whether they are full time or part time. It will apply to mass layoffs of 50 or more employees. Employers will have to give 90-days' notice before a mass layoff.

Affected employees will be entitled to one week of severance pay for each year of service, regardless of whether they were part time or full time. Four additional weeks of severance pay will be required if the employer didn't give adequate notice. However, employers won't have to pay any severance to workers if the mass layoff was a result of the COVID-19 pandemic.

Other States' WARN Laws

State WARN laws often have stricter requirements than the federal WARN Act, but they differ in their thresholds and definitions. "Most of them have at least some more pro-employee/easier-to-trigger provisions than federal WARN, but they are a hodgepodge," Ditelberg said.

Unlike New Jersey, Hawaii and Maine don't require severance pay under their state WARN laws, unless a company fails to give adequate notice.

The pandemic and subsequent economic downturn have impacted the outlook for these state laws.

"A number of states that had such statutes prior to the COVID-19 pandemic have considered making them easier to trigger, and in some cases have done so," Ditelberg said. "While we thus far have not seen a significant movement on the part of states that never have had a state WARN Act to enact one, with an economy that may be heading toward a recession, it would not be surprising for states to try to impose various costs of worker displacement on employers."

"Some states that had no enforcement mechanism, and therefore compliance with the state WARN statute was voluntary, are adding teeth to those statutes through mandatory compliance requirements and enforcement mechanisms, including administrative enforcement, private rights of action, [and] ability to recover lost wages and benefits, as well as attorney's fees and penalties," said Penny Ann Lieberman, an attorney with Jackson Lewis in White Plains, N.Y.

Remote Work and Extensive Travel

It may be confusing to know how to count your remote workers and those who travel extensively, such as salespeople and truck drivers. The U.S. Department of Labor's guidance states that such workers should be counted as part of the worksite from which their work is assigned or to which they report.

For example, let's say a company is headquartered in Seattle with 50 workers physically there. It has 300 remote employees throughout the country. All 350 workers must be counted as part of the Seattle worksite for the purposes of the federal WARN Act.

This stipulation is increasingly important for employers as the number of remote workers continues to grow.

On Feb. 7 in Piron v. General Dynamics Information Technologies, a U.S. district court found in favor of a group of remote workers who sought class-action certification, claiming their former employer violated the federal WARN Act by not giving them 60-days' notice before laying them off in 2019. The remote workers reported to and received assignments from a business unit in Falls Church, Va. The lead plaintiff worked at home in North Dakota, and several other plaintiffs worked at home in Virginia.