The U.S. Department of Labor (DOL) released guidance regarding business closures due to COVID-19 and the implications of the federal Worker Adjustment and Retraining Notification (WARN) Act. Because of the fact-specific inquiry under the WARN Act, if you have any specific questions regarding your business closure or layoff, please contact our office and we can help you make the best decision for your business.

  1. What is the WARN Act?

The WARN Act requires employers with 100 or more full-time employees (or employers with 100 or more employees including part-time employees who in the aggregate work at least 4,000 hours per week) to provide at least 60-day advance notice of 1) a worksite closing which affects 50 or more employees; 2) a mass layoff affecting at least 50 employees and 1/3 of the worksite’s total workforce; or 3) 500 or more employees laid off at a single site of employment during any 90-day period. There are several exceptions to the notice requirements, such as unforeseen business circumstances and natural disasters. If an exception applies, the WARN Act simply requires that employers provide as much notice as possible.

  1. Do the effects of COVID-19 fall within the “unforeseeable business circumstances” exception to the 60-day notice requirement?

The Department has not expressly stated that the economic downturn due to COVID-19 falls under the “unforeseeable business circumstances” exception. However, the test under the exception is whether the employer exercised reasonable business judgement, and acted as a similarly situated employer in predicting the demands of the market. WARN Act § 3(b)(2)(A)(2). The employer must demonstrate that it could not foresee the circumstances in advance of 60-days to provide such notice.

It is important to remember that even if the exception applies, employers are still required to give as much notice is as reasonable practicable and the employer must give a brief statement for failing to give a 60-day notice.

  1. What about furlough?

A WARN Act notice is required when there is employment loss. A temporary layoff or furlough lasting longer than 6 months is considered an employment loss. However, a temporary layoff without notice that is initially expected to last six months or less, and is extended beyond 6 months violates the Act if both of the following apply: 1) the extension is due to business circumstances not reasonably foreseeable at the time of the initial layoff, and 2) notice is given when it becomes reasonably foreseeable that the extension is required. Thus, the employer will need to demonstrate that it could not foresee the extension.

  1. What else do I need to know?

Employers may issue WARN notices by email due to the COVID-19 pandemic, however, some states may have different requirements. A WARN notice has several requirements, and you may fail the notice requirement if you do not fulfill all the requirements. Please contact our office for further questions.