Federal and State Governments Address WARN Act Requirements During COVID-19 Pandemic

During the COVID-19 public health emergency, many employers, including higher education institutions, have been forced to implement mass layoffs, furloughs and/or close down their workplaces — whether temporarily or permanently — as the outbreak wreaks havoc on the nation’s economy. Federal and sometimes state and/or local governments require employers to notify employees and relevant government agencies within a certain time period prior to any qualifying reductions in force. The quick shutdown of operations caused by the COVID-19 pandemic, however, has made meeting those notification obligations within the specified time limits difficult. Federal and state governments have therefore issued guidance in order to help employers navigate the constantly evolving situation.

The Worker Adjustment and Retraining Notification (WARN) Act is a federal law that requires organizations with 100 or more employees to provide at least 60 calendar days’ notice of a closing or mass layoff that will exceed six months and impact at least 50 employees at a single worksite. The WARN Act obligations are also triggered by furloughs that extend longer than six months or if employees’ hours are reduced by 50 percent or more during the six-month period. Nearly all private employers are subjected to the act, including those in private for-profit businesses, nonprofit organizations and higher education institutions.

There are three exceptions to the notification requirements:

• faltering company – organizations that are facing closure but are seeking new capital or business, and where giving notice would jeopardize its ability to obtain the new capital or business
• unforeseeable business circumstances – closings or layoffs caused by circumstances that were not reasonably foreseeable at the time the notice should have been distributed
• natural disasters – closings or layoffs directly caused by a natural disaster

Employers claiming exemptions, however, still must provide as much notice as is practicable and explain the reasons for the shortened timeframe. Employers who violate the WARN Act are responsible for back pay and benefits for each employee impacted for the period of violation up to 60 days.

At the end of April, the U.S. Department of Labor (DOL) issued a Frequently Asked Questions (FAQ) guidance for employers on their WARN Act obligations during the COVID-19 outbreak. The DOL confirmed that employers who implement COVID-19-related layoffs and closures are still required to comply with the WARN Act. That said, the DOL recognized that many businesses were not required to issue WARN notices at the time of the initial layoff, furlough or closure, since employers did not believe they would last more than six months.

Additionally, many employers likely qualified for the unforeseeable business circumstances exception, due to the “unanticipated and dramatic major economic downturn” and/or the “government-ordered closing of an employment site that occurs without notice.” The DOL instructs employers, however, to continue to evaluate their economic circumstances during the pandemic and consider if any layoffs or furloughs will last beyond six months or if employees will have to be terminated permanently. Based on this review, employers should issue WARN notices as appropriate.

The DOL also clarified that it would be making decisions on whether an employer qualifies for an exception on a case-by-case basis and would not issue individual guidance to employers on whether a notice is required under their specific circumstances. The DOL’s guidance also confirmed that WARN notices can be issued via email, as long as the email addresses are specific to individual employees and the notices comply with all other requirements of the WARN Act.

In addition to the federal requirements imposed on employers, 20 states and various localities have implemented their own notification laws, referred to as “mini-WARN acts.” These laws differ from the WARN Act in various ways, including which employers must issue notices, to whom those notices should be issued and the timeframe in which notices must be distributed. During the COVID-19 public health emergency, several states have issued guidance or alerts clarifying employers’ obligations:

California

On March 17, Governor Newsom issued Executive Order N-31-20, temporarily suspending the 60-day notice requirement for employers so long as the employer provides employees with written notice about the layoff or closure with as much notice as possible, and provides an explanation for the reduced timeframe. To be eligible, layoffs must be caused by “COVID-19-related ‘business circumstances that were not reasonably foreseeable as of the time that notice would have been required.’” The temporary suspension is retroactive to March 4 and will last until the end of the emergency.

Illinois

The Illinois Department of Labor (IDOL) clarified that WARN notification requirements will apply to employers that are forced to close due to COVID-19, but IDOL will provide determinations on a case-by-case basis for employers seeking exceptions. In order to qualify, employers must provide written explanations for the shortened notification timeframe. Even if IDOL approves the request, businesses are still required to notify employees with as much notice as is reasonably possible. IDOL also clarified that for businesses that already closed or reduced their staff in response to COVID-19 and did not provide the required notice, the agency will conduct investigations as if the employer sought an exception.

New Hampshire

On April 21, New Hampshire’s labor commissioner clarified that COVID-19 is “clearly an emergent, exceptional event” that qualifies employers for exceptions. In order to be eligible, the need for the employer closure must not have been “reasonably foreseeable” at the time the notice should have been given.

New Jersey

On April 14, the New Jersey legislature amended the state’s mini-WARN act to exclude COVID-19-related employment changes; the new law excludes layoffs made in response to “national emergencies” from the definition of “mass layoff.” The changes are retroactive to March 9.

New York

The New York Department of Labor clarified that the state’s requirements are not being suspended in response to COVID-19, since the department believes the law already recognizes that “businesses cannot predict sudden and unexpected circumstances beyond an employer’s control, such as government-mandated closures, the loss of [their] workforce due to school closings, or other specific circumstances” related to COVID-19. The department clarified it will determine if employers qualify for exceptions on a case-by-case basis.

Additionally, on April 17, Governor Cuomo issued Executive Order No. 202.19. Under the order, businesses that received Paycheck Protection Program loans from the Small Business Administration, and subsequently rehired their employees but are now forced to lay off those workers again, can issue WARN notices “as soon as practicable,” rather than within the mandated 90 days. To qualify for this exception, businesses must have provided notice when it initially laid off the employees.

Philadelphia

On April 20, the city of Philadelphia issued Temporary Emergency Regulations (TER), confirming that COVID-19 qualifies as a natural disaster and national emergency, so businesses forced to implement “involuntary closures” due to government-issued lockdowns are not required to comply with the notification requirements. While the TER is in effect, and for 60 days after its repeal, any business closure will be presumed to be caused by the COVID-19 pandemic so long as the business provides WARN notices in such time as is “reasonably practicable” and the business provides an explanation in the notice that the closure is caused by the pandemic. The TER does not apply to temporary closures.

Vermont

The Vermont Department of Labor explained that it “does not intend to enforce the provisions of the [state’s act] against businesses who are forced to lay off employees due to the effects of the COVID-19 pandemic.”