The WARN Act and COVID-19

  • Mar 18, 2020
  • COVID-19
  • Dennis J. Merley

Discussions about furloughs and temporary business closures are an unfortunate reality in our current environment. As a result, employers may be wondering whether the law requires them to provide advance notice of layoffs (even if temporary) associated with a temporary business closure due to the COVID-19 pandemic.

When Does WARN Apply?

Under the federal Worker Adjustment and Retraining Notification Act (“WARN Act”), a covered employer must generally provide at least 60-days’ notice prior to a plant closing or mass layoff. “Mass layoff” is defined as any reduction in force that is not the result of a plant closure that results in “employment loss” at a single site of employment during a 30-day period for (a) 500 or more employees or (b) between 50 and 499 employees when they make up at least 33 percent of the employees. Part-time employees are excluded from this calculation. Under the WARN Act, a part-time employee is an employee who averages less than 20 hours per week or who has been employed for fewer than six of the previous twelve months.

Importantly, in the context of a mass layoff, “employment loss” includes layoffs of more than six months or reduction in hours of work by more than 50% during each month of any 6-month period. Thus, if the mass layoff does not last more than six months, no notice is required under the WARN Act. However, if a mass layoff extends more than six months, it will constitute employment loss, triggering the notice requirements under the WARN Act. Of course, as indicated above, employers also need to be attentive to any forced reductions in its employees’ hours during this time. If the reduction rises above the 50% level during each month for six months, the reduction in hours will constitute employment loss, triggering the notice requirements under the WARN Act.

But We Didn’t Get 60 Days Notice of COVID-19?

Notably, there are circumstances when the full 60-day advance notice under the WARN Act is not required. For instance, when a mass layoff is caused by “business circumstances that were not reasonably foreseeable as of the time that notice would have been required,” the full 60-day notice is not required. If this occurs, the employer must still provide “as much notice as is practicable.” Similarly, the full 60-day advance notice is not required if the layoff was precipitated by any form of natural disaster—e.g., floods, earthquake, or drought.

While it is unclear whether these exceptions apply to pandemics similar to the current COVID-19 pandemic, it is likely reasonable to conclude that the impact of the COVID-19 pandemic was not reasonably foreseeable. That said, employers still need to be mindful of their WARN Act (and state mini-WARN Act) obligations for notice purposes if, for instance, extended layoffs become reasonably foreseeable, or separate layoffs due to financial concerns, for instance, are contemplated.

Remember too that Minnesota and several other states have enacted mini-WARN Acts that are similar to (but not the same as) the WARN Act. These state laws often impose additional obligations on employers. Furthermore, they often define terms differently. For instance, Minnesota’s mini-WARN Act does not exclude employees who have been employed for fewer than six of the previous twelve months in determining employment loss for a plant closing. Consequently, employers always need to analyze any applicable mini WARN Acts in addition to the WARN Act in determining their notice obligations.

Bottom Line 

If you have been or are soon forced into the situation where you must layoff part, or all, or your workforce because of the COVID-19 pandemic, there are a number of factors to consider to determine whether and, if so, when you need to provide the requisite notices under the WARN Act and/or any applicable state mini-WARN Acts. Though, for many employers, the temporary nature of the layoffs associated with temporary business closures will not trigger notice obligations, employers must always understand and be mindful of the obligations imposed under the WARN Act and all applicable mini-WARN Acts to ensure affected employees and others receive required notices.