Content supplies by CCH AnswersNow exclusively to EANE members on April 30, 2020
The U.S. Department of Labor (DOL) has published frequently asked questions about the operation of the Worker Adjustment and Retraining Notification Act (WARN Act) amid the COVID-19 pandemic. The WARN Act is enforced by private legal action in federal courts, so the role of the DOL is only to provide guidance and information about the law. The DOL cautioned that this guidance is not binding in courts and does not replace the advice of an attorney.
The FAQs provide information in response to questions posed by employers, employees, and state agencies. Below is a summary of some of the information discussed.
Required notice. The DOL noted that the WARN Act requires employers with 100 or more full-time employees (not counting workers who have fewer than six months on the job) to provide at least 60 calendar days of advance written notice of a worksite closing affecting 50 or more employees, or a mass layoff affecting at least 50 employees and one-third of the worksite’s total workforce, or 500 or more employees at the single site of employment during any 90-day period.
Not all dislocations require a 60-day notice. The WARN Act includes certain exceptions where employers can show that layoffs or worksite closings occur due to faltering companies, unforeseen business circumstances, and natural disasters. In such instances, the WARN Act requires employers to provide as much notice to their employees as possible.
Temporary furloughs. A temporary layoff or furlough lasting longer than six months is considered an employment loss. A temporary layoff or furlough without notice that is initially expected to last six months or less, but later is extended past six months, may violate the WARN Act unless:
- The extension is due to business circumstances — including unforeseeable changes in price or cost — not reasonably foreseeable at the time of the initial layoff; and
- Notice is given when it becomes reasonably foreseeable that the extension is required.
Accordingly, an employer that previously announced and carried out a short-term layoff (six months or less) but later extends the layoff or furlough beyond six months due to business circumstances not reasonably foreseeable at the time of the initial layoff must give notice at the time it becomes reasonably foreseeable that the extension is required. A layoff extending beyond six months for any other reason is treated as an employment loss from the date the layoff or furlough starts.
The DOL pointed out that in court, an employer may need to prove that it could not foresee the circumstances if a WARN Act action is brought. Disputes about the interpretation of the WARN Act, including its foreseeability, are determined on a case-by-case basis.
Permanent layoffs. As to permanent layoffs and whether there is an exception under the WARN Act for COVID-19, the DOL recommended that employers review the “unforeseeable business circumstances” exception to the 60-day notice requirement (WARN Act at § 3(b)(2)(A); WARN regulations at 20 CFR 639.9), cited below:
The “unforeseeable business circumstances” exception … applies to plant closings and mass layoffs caused by business circumstances that were not reasonably foreseeable at the time that 60-day notice would have been required.
| 1. | An important indicator of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by some sudden, dramatic and unexpected action or condition outside the employer’s control. A principal client’s sudden and unexpected termination of a major contract with the employer … and an unanticipated and dramatic major economic downturn might each be considered a business circumstance that is not reasonably foreseeable. A government-ordered closing of an employment site that occurs without prior notice also may be an unforeseeable business circumstance. |
| 2. | The test for determining when business circumstances are not reasonably foreseeable focuses on an employer’s business judgment. The employer must exercise such commercially reasonable business judgment as would a similarly situated employer in predicting the demands of its particular market. The employer is not required, however, to accurately predict general economic conditions that also may affect demand for its products or services. |
Invoking an exception. When relying on an exception to the 60-day notice requirement, employers are still required to give as much notice as is practicable and to include a brief statement of the reason for giving less than 60-days’ notice, along with the other required elements of WARN notice. Whether the “unforeseeable business circumstances” exception is applicable depends on the employer’s particular business circumstances. An employer may need to prove in court that it could not foresee the circumstances 60 days in advance if a WARN Act action is brought.
Temporary closure without notice. Turning to the employee side of the equation, as to an employer’s temporary closure without notice to the employee, the DOL noted that employee protections under the WARN Act apply to those who suffer “an employment loss.” A layoff (or furlough) that is “temporary” may not be an employment loss for WARN Act purposes.
Under the Act, an employee who is laid off does not suffer an employment loss unless the layoff lasts beyond six months. Accordingly, a temporary layoff of six months or less does not trigger the need for the employer to issue a WARN Act notice.
However, if the layoff lasts for more than six months, employees would be considered to have experienced an employment loss and would have been entitled to notice before the layoff unless it was not reasonably foreseeable at the time of the initial layoff that the layoff would last more than six months. If a layoff lasts longer than six months due to business circumstances, notice is required when it becomes reasonably foreseeable that the extension is required.
Permanent closure without notice. Where the employer has permanently closed due to COVID-19 but did not provide a 60-day notice stating that the loss of business from the virus was an unforeseen business circumstance, the DOL discussed whether this action violates employee WARN Act rights. The unforeseeable business circumstances exception to the advance notice requirement applies to worksite closings and mass layoffs caused by business circumstances that are not reasonably foreseeable at the time that 60-day notice would have been required.
An important indicator of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by a sudden, dramatic and unexpected action or condition outside the employer’s control, according to the DOL. This can include:
- An unanticipated and dramatic major economic downturn;
- A government-ordered closing of an employment site that occurs without prior notice; or
- Sudden, dramatic and unexpected action outside the employer’s control, announced and implemented swiftly, such that the employer is unable to provide 60 days’ notice.
When invoking an exception to the WARN Act’s 60-day notice requirement, employers are still required to:
- Give as much notice to employees — or their representative(s) — and state and local government officials as is practicable (which may, in some circumstances, be notice after the fact); and
- Include a brief statement of the reason for giving less than 60-days’ notice, along with the other required elements of a WARN notice.
Notice by email. As to whether an employer is permitted to send notice by email because the business is currently closed, the DOL noted that the regulations implementing the WARN Act state: “Any reasonable method of delivery … which is designed to ensure receipt of notice” is an acceptable form of notice (20 CFR 639.8). However, a WARN notice sent via email must still be specific to the individual employee and comply with all requirements of the WARN Act statute and regulations on written notifications.
Temporary closure. As to temporary closures, the DOL explained that generally, WARN Act notice requirements apply to employers of 100 or more workers. A WARN Act covered employer is one that employs:
| a. | 100 or more employees (not counting workers who are part-time); or |
| b. | 100 or more employees (including part-time workers) who, in the aggregate, work at least 4,000 hours per week (excluding overtime hours). |
Under the WARN Act, a “part-time” employee is someone who has worked an average of less than 20 hours per week or less than six of the last 12 months.
Notably, WARN Act notice requirements apply to private for-profit businesses, nonprofit organizations, and quasi-public entities (organized separately from regular government).
WARN Act liability. Employers that violate WARN Act provisions may be found liable for an amount equal to the amount of wages and benefits for each day of the period of violation, up to 60 days. In its discretion, the court may award prevailing parties reasonable attorneys’ fees as part of the costs.
More on notice by email. Employers are permitted to issue WARN notices by email to employees, State Rapid Response Coordinators, and Chief Elected Local Officials, although the same requirements for the content of the notices remain in place (20 CFR 639.7). Given the COVID-19 pandemic-related guidelines and orders issued by many states, email may be a preferred method of notifying state and local government personnel since many state officials are working from home. The DOL encouraged employers to reach out to these offices for more information on the preferred method of delivery and also suggested that states carefully review policies and procedures to ensure they can receive electronic notices.
State WARN logs. Where a state learns of a major dislocation (worksite closing or mass layoff) resulting from the COVID-19 pandemic, whether the state should add it WARN logs before receiving WARN notices from the employer is a state-level decision, the DOL said. While the COVID-19 pandemic does not excuse employers from issuing WARN notices to employees, states, and Chief Local Elected Officials, the fast-moving nature of the pandemic may require certain worksite closings and mass layoffs to be implemented before completion of the 60-day notice requirement. Such closings and mass layoffs may fall under one of the exceptions to the 60-day notice requirement.
States should continue to follow their policies and procedures for logging WARN notices and may wish to track layoffs due to COVID-19, as well as whether notices are received concerning such layoffs, according to the DOL.