A deadline under the Worker Adjustment and Retraining Notification Act (WARN Act) may be looming for many employers. This is especially true for employers that laid off or furloughed employees in or around mid-March because of COVID-19.
The federal WARN Act generally requires employers with 100 or more employees to provide affected employees with 60 days' notice of plant closings and mass layoffs. Plant closings and mass layoffs are defined as follows:
- Plant closing: A temporary or permanent shutdown of a single site of employment if the shutdown results in an employment loss for 50 or more full-time employees.
- Mass layoff: An employment loss at a single site of employment for either (1) 500 or more full-time employees; or (2) 50-499 full-time employees, provided the affected employees constitute at least 33% of the employer's active full-time workforce at the single site of employment.
So why is "six months" relevant? Under the WARN Act, "employment loss" means any layoff, other than a discharge for cause, exceeding six months or a reduction in hours of more than 50% during each month of any six-month period. When the COVID-19 pandemic arrived in the U.S. earlier this year, many employers did not foresee that their closings, furloughs, or layoffs would continue past the six-month mark. Now, however, many employers that reduced staffing levels in mid-March will cross this six-month mark in just a few weeks.
What does crossing the six-month mark mean for an employer? It means that an employer's layoffs may become a "mass layoff" for purposes of the WARN Act, provided the layoff numbers meet the thresholds above. Once an employer knows that its layoffs will continue for longer than six months, the employer must provide the affected employees with the required WARN Act notice. The 60-day notice requirement may be shortened pursuant to the "unforeseeable business circumstance" exception, but qualifying employers are still obligated to issue WARN Act notices as soon as reasonably practicable after learning that their layoffs will continue for more than six months. The unforeseeable business circumstance exception does not eliminate an employer's WARN Act notice obligation. It merely affords an employer more time to assess whether its layoffs will become a mass layoff as defined within the WARN Act.
An employer's failure to issue a timely WARN Act notice can be costly. Affected employees may seek wages for the period beginning from when the WARN Act notice should have been issued to when the notice was actually issued, up to 60 days of pay. There are also associated civil penalties, not to mention attorneys' fees. Although preparing and issuing WARN Act notices can be a burdensome task, it is almost always less expensive than the alternative.
Employers should keep in mind that some states, including New York, New Jersey, and California, have separate state-law WARN Act requirements that are slightly different from the federal WARN Act. In New York, for example, the state-law WARN Act requires 90 days' notice of a mass layoff (instead of 60 days' notice under the federal WARN Act). Accordingly, employers should evaluate their furlough and layoff decisions related to COVID-19 under both the federal WARN Act and any applicable state laws.
Employers with questions about whether their prior employment decisions constitute a mass layoff and, if so, how to prepare their WARN Act notices may contact Danielle A. Lawrence, Nicholas M. Reiter at NMReiter@Venable.com, Michael J. Volpe at MJVolpe@Venable.com, or any other Venable Labor and Employment Group attorney. Venable's Labor and Employment Group will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates on Venable's COVID-19 Resources page.