WARN Act Compliance and the Coronavirus Pandemic
As the coronavirus pandemic unfolds, federal, state, and local governments continue to rush out legislation, regulations, and executive orders aimed at mitigating the impact that the mass closure of non-essential and non-life sustaining businesses has on employers and employees alike. While employers are wise to pay close attention to this flurry of activity, they should not lose sight of obligations that are indirectly impacted by recent events, including plant closing, mass layoff, and other advance notice requirements for employers covered under the federal Worker Adjustment and Retraining Notification (WARN) Act.
Most employers with 100 or more employees are covered under the WARN Act. Ordinarily, these employers must give affected employees at least 60 days’ advance notice when there is a “plant closing,” meaning a temporary or permanent shutdown at a job site resulting in job losses for 50 or more employees, or a “mass layoff,” meaning a reduction-in-force that is not caused by a plant closing but nonetheless creates job losses for 50+ employees. Other qualifying events include layoffs of 500 or more full-time workers at a single job site in a 30-day period and layoffs between 50 and 499 full-time workers that constitute 33% of the employer’s total active workforce at a single job site.
If an employer announces a temporary layoff of less than six months that meets any of the above criteria but then extends the layoff for more than six months for reasons that were reasonably foreseeable at the time the layoff was originally announced, the employer will be found in violation of the Act if it did not provide 60 days’ advance notice. If reasons for extending the layoff were not reasonably foreseeable, the employer need only provide notice when the need to extend the layoff becomes known. Employers are also generally subject to WARN Act notice requirements if they reduce the hours for 50 or more workers by 50% or more for each month in any six-month period.
However, employers impacted by “unforeseeable business circumstances,” caused by sudden, dramatic, and unexpected conditions outside the employer’s control, only need to notify workers of impending plant closings, mass layoffs, and other qualifying events “as soon as practicable.” This may be the first time in the WARN Act’s 30+ year history that a global pandemic, or any worldwide series of unfortunate events, has triggered this exception for such a broad swath of employers regardless of size, industry, and geographic location.
Employers must remember that the right to give less than 60 days’ notice comes with additional responsibilities. This includes providing affected employees with a statement of the reason for reducing the notice requirement. Depending on the nature of the business, and the specific impact that the pandemic and any ensuing orders or legislation may have upon operations, this could be as simple as citing a governor’s executive order closing all non-life sustaining businesses until further notice. The 60-day notice workaround does not relieve employers of other key WARN Act requirements, like notifying chief elective local governmental officials and state rapid response dislocated worker units, as well as union representatives for bargaining unit employees.
Nor should employers lose sight of state and local “mini-WARN” Acts that may also cover their businesses. Some mini-WARN Acts impose heightened obligations upon covered employers, even in the midst of the coronavirus pandemic. This includes New Jersey’s WARN Act. As we previously reported, the Act has recently been strengthened in legislation signed by Governor Phil Murphy in January. Effective July 19, 2020, covered employers will be subject to 90-day notice requirements. Each terminated employee will be owed one week of severance pay for each full year of employment and, if the employer did not provide 90 days’ advance notice, an additional four weeks of pay.
Covered employers are (and will continue to be) exempt from New Jersey WARN Act requirements if they completely cease operations due to a “national emergency.” Irrespective of the coronavirus, employees affected by mass layoffs short of a shutdown remain entitled to 60 days’ advance notice (90 days effective July 19, 2020). Notice must also be provided to the New Jersey Commissioner of Labor and Workforce Development, the chief elected official of the municipality where the business is located, and any collective bargaining units of employees at the business’s establishment. The notification must also be issued on a form provided by the New Jersey Department of Labor and Workforce Development.
Other mini-WARN Acts, like Philadelphia’s WARN Act, may not apply at all. The Philadelphia WARN Act, which predates the federal WARN Act by three years, excludes plant closings caused by “an involuntary closing of an establishment,” including “a national emergency.” Unlike the federal and New Jersey WARN Acts, the Philadelphia Act does not cover mass layoffs alone.
Stay tuned to Stevens & Lee’s Alerts and Newsletters and COVID-19 Resource Center for further updates as coronavirus-related developments impacting employee rights and employer obligations continue to develop under the WARN Act and other federal, state, and local laws. In the meantime, if you have any questions about how this, or any other, labor and employment law development may affect your business, please contact Daniel J. Sobol, Harry A. Horwitz, Alexander V. Batoff or the Stevens & Lee attorney with whom you regularly work.
This News Alert has been prepared for informational purposes only and should not be construed as, and does not constitute, legal advice on any specific matter. For more information, please see the disclaimer.