Court: Warning! Employer may have violated WARN with mass layoff with little-to-no notice during pandemic

See what I did there? Don’t worry; I’ll be here all week.

What is WARN?

The Worker Adjustment and Retraining Notification Act (WARN) requires employers with 100 or more employees to provide at least 60 calendar days advance written notice of a plant closing and mass layoff at a single employment site.

An employer who violates the WARN provisions by ordering a plant closing or mass layoff without providing appropriate notice is liable to each aggrieved employee for an amount including back pay and benefits for the period of violation, up to 60 days.

Yes, WARN violations can get expensive.

WARN Notice Exceptions.

Remember back in March, April, and May when many companies were laying off lots of workers? Under ordinary circumstances, large layoffs like those would trigger the employer’s 60-day notice obligations. But, WARN has exceptions for unforeseeable business circumstances and natural disasters, where less notice is ok.

Would COVID-19 fall under either exception?

Let’s examine the “natural disaster” exception first. According to a recent federal court opinion (subscription required), that one’s a long shot:

This isn’t a situation where, for example, a factory was destroyed overnight by a massive flood—that would be a “direct result” of a natural disaster. This is an indirect result—more akin to a factory that closes after nearby flooding depressed the local economy. Defendants’ facilities or staff didn’t disappear overnight, suddenly wiped out. Instead, COVID-19 caused changes in travel patterns and an economic downturn, which affected Defendants—so the natural disaster defense doesn’t apply; rather, the “unforeseeable business circumstances exception” is the proper focus.

Ok, tell us more about how the “unforeseeable business circumstances exception” may apply.

[U]nlike the natural disaster defense, the WARN Act [unforeseeable business circumstances exception] doesn’t waive the notice requirement but softens it: employers are only required to “give as much notice as is practicable.”

In this particular case, one plaintiff received no notice, while another only six days. In either situation, did the employer “give as much notice as is practicable”? Consider that the court examined this issue at the motion to dismiss stage, i.e., before any discovery and where the court must accept all well-pled facts in the complaint as true. So, the court did not dismiss the complaint because it is possible that the defendant did not provide enough notice. But, the defendant may eventually win.

Or not. We’ll see.

Takeaways for Employers.

Fast forward to the present. We’re now about ten months into this pandemic. While we’ve seen some recent spikes in COVID-19 numbers, we have a vaccine and a new stimulus package. There are more blue skies ahead than gray. Presumably, with each passing day, it becomes easier to plan for a plant closing or mass layoff in 2021.

So don’t count on the “unforeseeable business circumstances exception” as a way to avoid the WARN 60-day notice requirement, let alone any similar requirements under state or local versions of the WARN Act.

If you do provide less than 60 days’ notice, you must explain why. That notice must be in writing and delivered to employees using any reasonable delivery method designed to ensure receipt of the written notice at least 60 days before separation.

To further mitigate the risk of WARN liability, employers can voluntarily and unconditionally provide 60 days of pay at the separation of employment.

There are many more WARN requirements than you’ll find in this blog post. For more information about WARN, check out these DOL resources, and consult an employment attorney before you terminate employment.

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