COVID-19 and WARN Act Layoffs (as of March 18, 2020)

In reviewing whether layoffs are required, there are a number of legal factors that may come into play.  One of those is the Worker Adjustment and Retraining Notification (“WARN”) Act.  The WARN Act was designed to offer protection to workers by requiring employers to provide 60 days notification in advance of plant closings and covered mass layoffs.

Q:        Does the WARN Act still apply if are forced to suspend operations on account of the COVID-19 (coronavirus) and its aftermath?

A:        Yes, if your company is covered by the Worker Adjustment and Retraining Notification (WARN) Act. The federal WARN Act imposes a notice obligation on covered employers (those with 100 or more full-time employees) who implement a “plant closing” or “mass layoff” in certain situations, even when they are forced to do so for economic reasons. It is important to keep in mind that these quoted terms are defined under WARN’s regulations, and that they are not intended to cover every single layoff or plant closing.

Also, keep in mind, there may be mini-WARN Act requirements that are State specific as well.

Q:        What does the WARN Act require?

A:        Generally speaking, covered employers must provide at least 60 calendar days of notice prior to any covered plant closing or mass layoff.

Q:        Does the WARN Act apply to my Company?

A:        It generally applies (with a few exceptions) to businesses that have 100 or more employees (not counting employees who have worked less than 6 of the last 12 months, and not counting employees who work on average of less than 20 hours per week).

Q:        What triggers the notice?

A:        A Plant Closing or a Mass Layoff of a covered employer triggers a WARN notice if it results in the necessary loss of employment.  Note – if employees are laid off for less than six months, then they do not suffer an employment loss and, depending on the particular circumstances, notice may not be required.

Q:        Are there any exceptions to the WARN Act for situations such as this?

A:        Maybe.  In cases where its notice requirements would otherwise apply, the WARN Act provides a specific exception when layoffs occur due to unforeseeable business circumstances, or are the result of a natural disaster. These provisions may apply to the COVID-19 coronavirus. It will though require a fact-specific review.

Q:        What are the penalties if the WARN Act is violated?

A:        An Employer that violates the WARN Act by ordering a plant closure of mass layoff without providing appropriate advance notice is liable to each aggrieved employee for an amount, including back pay and benefits for the period of the violation, up to 60 days, plus reasonable attorney fees.  There may also be additional penalties for failure to properly notify applicable governmental agencies.

Q:        How can I avoid problems with the WARN Act?

A:        Although difficult in this climate, the biggest steps an Employer can take is to plan ahead, and beware of any obligations under the WARN Act prior to making a layoff decision.

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