With the recent onset of COVID-19 causing rapid closures of businesses, including layoffs of employees, many employers wonder if the federal Worker Adjustment and Retraining Notification Act (“WARN Act”) applies. The short answer is, yes. However, the exigent circumstances of COVID-19 may affect these restrictions.

What Employers are Covered by the WARN Act?

Employers of 100 or more full time employees are covered. For purposes of determining coverage only, you do not count (i) employees who have worked less than 6 of the last 12 months or (ii) employees who work an average of less than 20 hours per week.

What Circumstance Trigger the WARN Act?

The WARN Act imposes an obligation to provide notice when an employer implements a “mass layoff” or “plant closing” in certain situations. Specifically, WARN provides that employers must provide written notice under the following circumstances resulting in an “employment loss.”

1. a plant closing, or discontinuance of an operating unit, that affects 50 or more full-time employees during any 30-day period;

2. a mass layoff of 500 or more full-time workers at a single site of employment during a 30-day period;

3. a mass layoff of between 50 and 499 full-time workers at a single site of employment during a 30-day period, if that affects at least 33% of the employer’s active full-time work force at the site; or

4. extension of a temporary layoff affecting the number of employees in (2) or (3) at a single site of employment. Employers must look to a rolling 90-day window to see if their aggregate numbers will trigger the WARN Act.

The “employment loss” could mean an involuntary termination, a layoff exceeding 6 months, or a reduction of the employee’s hours of more than 50% in each month of any six-month period.

With the current COVID-19 pandemic, employers may struggle with or even be unable to provide the WARN Act notice as circumstances change daily. Further complicating matters is the employers’ uncertainty as to how long some layoffs will last.

The WARN Act provides that employees who are laid off for less than 6 months do not suffer an employment loss, and depending on those circumstances, may not require notice. Due the aforementioned uncertainty as to the length of layoffs though, and the fact that notice may not be given retroactively, it was historically the best advice that employers still provide notice.

Are There Any Exceptions for COVID-19?

Thus far, there has been no legislation specifically addressing COVID-19. So we look to the language of the WARN Act as it has existed for years.

A specific exception in the WARN Act to the notice requirements exists when layoffs occur because of unforeseeable business circumstances or are the result of a natural disaster. It is entirely possible that these exceptions may apply to the COVID-19 pandemic. Unfortunately, exceptions to the notice requirement often require specific analysis and years of litigation before an answer is truly known.

Even if one or both exceptions are found to apply, an employer must provide “as much notice as is practicable, and at the time shall give a brief statement of the basis for reducing the notification period.” Essentially, as soon as the employer evaluates COVID-19’s impact on their business and begins to make decisions about layoffs or terminations which would implicate the WARN Act, the employer must at that time provide specific notice to those employees who will be adversely affected by these decisions. Further, the employer must provide a statement to the employees explaining why it was unable to provide more extensive notice. Here, this may be accomplished by explaining the unforeseeable nature of the pandemic, its impacts on the business and industry, and the aftermath of the same.

What Notice Must Be Given?

The WARN Act requires that 60 days’ advance written notice be given to the affected employees (or their elected officer if they are represented). Notice must also be given to the chief elected official of the local government, such as your town’s Mayor, and to the state unemployment office.

While it is not clear the extent to which the U.S. Department of Labor will focus on enforcement of the WARN Act in the aftermath of the COVID-19 pandemic, employers do not want to rely on COVID-19 as an excuse for failing to comply with the WARN Act requirements. Failure to comply with the law can cost you an amount equal to back pay and benefits for the period of the violation, up to 60 days, as well as civil penalties.

For more information about the WARN Act’s general requirements, see the DOL’s WARN Act Fact Sheet. (Note: Be aware that some states may have additional requirements. If you operate in states outside of Oklahoma, you may be subject to other similar notification requirements.)

If you have questions about your specific circumstances as an employer, you should consult qualified employment counsel.

By Lauren R. Myers and Kristen L. Brightmire
lmyers@dsda.com and kbrightmire@dsda.com