U.S. Department of Labor Issues Frequently Asked Questions Regarding the Worker Adjustment and Retraining Notification Act (WARN) During the Coronavirus Pandemic

The United States Department of Labor (“USDOL”) has issued “Frequently Asked Questions” (FAQs) regarding the requirements of the Worker Adjustment and Retraining Notification Act (“WARN”) for employers considering layoffs due to COVID-19. The USDOL advises, however, that the FAQs are “not binding on courts” and that the applicability of WARN is determined by courts on a “case-by-case basis.” The USDOL also notes that many states have their own WARN statutes.

Summary of Requirements Under the Federal WARN Act

Under the federal WARN Act, employers who have 100 or more full-time employees (excluding employees who have worked an average of less than 20 hours per week or less than 6 of the last 12 months) are required to provide at least 60 days’ advance written notice to employees of:

• a worksite closing resulting in the loss of employment for 50 or more employees; or
• a “mass layoff,” defined as a layoff affecting either (i) at least 50 employees and 1/3 of the worksite’s total workforce or (ii) 500 or more employees at a single site of employment

To determine whether a closing or a mass layoff covered by the WARN Act has occurred when employees are not terminated on the same date, employers must look at a rolling 90-day period to see if the number of employees terminated, in the aggregate, meets the above thresholds. The WARN Act does not require 60 days’ notice for a temporary layoff (or furlough) of less than six months.

In addition to providing notice to employees, an employer must provide written notice to any collective bargaining representative, the state dislocated worker unit in the state where the employees are located and the chief elected local government official in the area in which the closing or layoff is to occur.

The FAQs point out that the existing regulations permit employers to transmit WARN notices to employees via email, but the email notice “must still be specific to the individual employee,” so that a mass email to all employees would not be sufficient.

The Unforeseeable Business Circumstances Exception

Under § 3(b)(2)(A) of the WARN Act, the 60-day advance notice to employees is not required if the worksite closing or mass layoff is the result of “unforeseeable business circumstances.” Employers must still provide as much notice to employees as possible and must still notify any employee representative and the applicable local government officials.

In addition, while a temporary layoff or furlough that is initially expected to last six months or less does not trigger WARN Act obligations, the USDOL explains that “an employer who previously announced and carried out a short-term layoff (6 months or less) and later extends the layoff or furlough beyond 6 months due to business circumstances not reasonably foreseeable at the time of the initial layoff is required to give notice at the time it becomes reasonably foreseeable that the extension is required.”

Is COVID-19 an “Unforeseeable Business Circumstance?”

The applicable regulations state that “[a] government ordered closing of an employment site that occurs without prior notice also may be an unforeseeable business circumstance.” Nevertheless, the FAQs do not specifically state whether the unforeseeable business circumstances exception will apply to closings or layoffs caused by COVID-19. Rather, the DOL merely “recommends that employers review the ‘unforeseeable business circumstances’ exception” and advises that whether the exception will apply “rests on an employer’s particular business circumstances.” 

As the WARN Act is enforced by private lawsuits, rather than by the DOL, the FAQs advise that an employer “may have to prove that it could not foresee the circumstances 60 days in advance” in a court proceeding. In determining whether the “unforeseeable business circumstance” exception applies, the applicable regulations, 20 CFR § 639.9, state that a court must consider the following:

(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, a strike at a major supplier of 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.

What Role Does the USDOL Play with Respect to the WARN Act?

As stated in the FAQs, the WARN Act is enforced through private legal actions filed by employees in federal courts, not by the USDOL. Therefore, the USDOL explains in the FAQs that it cannot provide an employer with a letter stating that the employer has complied with the WARN Act because the USDOL “has neither investigative nor enforcement authority under the WARN Act; therefore, it cannot issue advisory opinions on specific cases.”

The USDOL also does not maintain a database of WARN notices, as employers are not required to provide WARN notices to the federal DOL. However, such information may be available from states as the WARN Act does require employers to provide notices to the state dislocated worker units. States may voluntarily publish data regarding closings and layoffs on their websites but are not required to do so.

What About State WARN Acts?

As the USDOL advises in the FAQs, several states have their own versions of WARN with requirements that may differ in significant ways from the federal law. For example, New York and New Jersey both have their own versions.

New York

The New York WARN Act differs from the federal law in that it applies to smaller employers (those with 50 or more employees) and requires 90 days advance written notice. The number of employees that triggers the notice requirement for a layoff is also lower than under the federal law; in New York, an employer must issue a notice when there is a plant closing that affects 25 or more employees or a layoff that affects either (1) 25 employees who comprise at least 33% of the workforce, or (2) 250 workers from a single employment site.

The New York WARN Act also includes an “unforeseeable business circumstances” exception. The applicable regulations state that to qualify for this exception, the employer must show that the closing or layoff “was caused by business circumstances that were not reasonably foreseeable when the 90-day notice would have been required.” The regulations further state:

(a) A business circumstance that is not reasonably foreseeable may be established by the occurrence of some sudden, dramatic and unexpected action or condition outside the employer’s control. Examples include a principal client’s sudden and unexpected termination of a major contract with the employer, a strike at a major supplier of the employer, an unanticipated and dramatic major economic downturn, or a government-ordered closing of an employment site that occurs without prior notice.

(b) The employer shall exercise commercially reasonable business judgment in determining whether a business circumstance is reasonably foreseeable.

The New York Department of Labor (NYDOL), like the USDOL, does not explicitly state whether COVID-19 and Governor Cuomo’s resulting stay-at-home order, is an “unforeseeable business circumstance.” Rather, the NYDOL states on its website that, under the current circumstances caused by COVID-19, “[t]he WARN Act requirement to provide 90 days’ advanced notice has not been suspended because the WARN Act already recognizes that businesses cannot predict sudden and unexpected circumstances beyond an employer’s control, such as government-mandated closures, the loss of your workforce due to school closings, or other specific circumstances due to the coronavirus pandemic.” The NYDOL advises that where layoffs result from unforeseeable business circumstances, employers must provide employees with as much notice as possible.

New Jersey

By contrast, New Jersey Governor Phil Murphy signed S. 2353/A. 3938 on April 14, 2020, specifically excluding mass layoffs that result from the COVID-19 pandemic from the notice requirements of the New Jersey Job Loss Notification Act, the New Jersey version of the WARN Act.

The NJ law defines a “mass layoff” as a “reduction in force which is not the result of a transfer or termination of operations and which results in the termination of employment at an establishment during any 30-day period for 50 or more of the employees at or reporting to the establishment.” The new legislation signed on April 14 is retroactive to March 9, 2020, and revises the definition of a “mass layoff” so that it “shall not include a mass layoff made necessary because of a fire, flood, natural disaster, national emergency, act of war, civil disorder or industrial sabotage, decertification from participation in the Medicare and Medicaid programs as provided under Titles XVIII and XIX of the federal ‘Social Security Act’ (42 U.S.C. s.1395 et seq.), or license revocation pursuant to (26:2H-1 et al.)”

In addition, the April legislation delays the effective date of recent revisions to the NJ Job Loss Notification Act, originally scheduled to take effect on July 19, 2020. These revisions will now not be effective until the 90th day following the termination of Governor Murphy’s declared state of emergency in response to COVID-19. The delayed revisions include a requirement that employers who employ 100 or more employees provide 90 days’ notice of any termination or transfer of operations or mass layoff, rather than the previously required 60 days’ notice. Under the delayed revisions, employers must also pay all terminated employees severance pay of one week for each year of employment and an employee who does not receive 90 days prior notice will also be entitled to an additional four weeks of severance.

Next Steps

Employers should not assume that advanced notice to employees is not required where a government-ordered shutdown due to COVID-19 has resulted in layoffs. Rather, employers planning on layoffs due to COVID-19, as well as employers who realize that a previously temporary furlough or layoff will likely last more than six months, should seek legal guidance to determine whether and when such notice will be required under federal and/or state WARN Acts. Employers must also remember to send notifications to any collective bargaining representative and the applicable government officials.

Please reach out to any of our attorneys if you have any questions or need assistance in determining your obligations under the federal or state WARN Acts.