If Coronavirus Causes Mass Layoffs: NYS and Fed Law May Require Warnings be Issued

 If your company is covered by the Worker Adjustment and Retraining Notification (WARN) Act, (Federally, you have more than 100 employees, NY you have more than 50 employees) you may have to take certain steps to warn your employees about potential coronavirus-induced layoffs. 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 extensively under WARN’s regulations, and that they are not intended to cover every single layoff or plant closing.  Under Federal law, a plant closing is defined as 50 or more countable employment losses at a single site of employment in a 90-day period that results from ceasing operations in one or more operating units.  A mass layoff is defined as 50 or more countable employment losses at a single site of employment in a 90-day period that also involves 33% of the active workforce at the site. 

Employees with less than 6 months of service in the prior 12 months, or who work less than 20 hours per week, are not countable.  Notably, temporary layoffs of less than 6 months are not counted as an employment loss under Fed WARN.   

Generally speaking, employers must provide at least 60 calendar days (90 days in NY) of notice prior to any covered plant closing or mass layoff. Note, however, that 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. Unfortunately, in situations like this, it is hard to know how long the layoff will occur so providing notice is usually the best practice.

Fortunately, even in cases where its notice requirements would otherwise apply, the WARN Act provides a specific exception when layoffs occur due to unforeseeable business circumstances. This provision may apply to the COVID-19 coronavirus. But due to the fact-specific analysis required, this exception is often litigated.  It is unclear whether a court would consider pandemics to be “similar effects of nature” to “floods, earthquakes, droughts, storms, tidal waves or tsunamis…” as referenced in the Fed WARN regulation relating to natural disasters.

Moreover, this exception is limited, in that an employer relying upon it must still provide “as much notice as is practicable, and at that time shall give a brief statement of the basis for reducing the notification period.” In other words, once you are in a position to evaluate the immediate impact of the outbreak upon your workforce, you must then provide specific notice to “affected employees.” You must also provide a statement explaining the failure to provide more extensive notice, which in this case would obviously be tied to the unforeseeable nature of the outbreak and its aftermath.

The WARN Act has specific provisions requiring notice to employees, unions and certain government entities. The Act further specifies the information that must be contained in each notice. Keep in mind that some states have “mini-WARN” laws that may apply.

NYS State Law

The New York State Worker Adjustment and Retraining Notification (WARN) Act requires businesses to give early warning of closing and layoffs. Businesses must give notice to:

  • All affected employees
  • Any employee representative(s)
  • The New York State Department of Labor (DOL)
  • The Local Workforce Investment Board (LWIB)

Notice by employers to the Department of Labor should be mailed or emailed to:

Richard Grossi
New York State Department of Labor
Building 12, Room 425
State Office Campus
Albany, New York 12240

Email: WARN@labor.ny.gov

The WARN Act applies to private businesses with 50 or more full time workers in New York State. It covers:

  • Closings affecting 25 or more workers
  • Mass layoffs involving 25 or more full-time workers (if the 25 or more workers make up at least 33% of all the workers at the site)
  • Mass layoffs involving 250 or more full-time workers
  • Certain other relocations and covered reductions in work hours

This means that covered businesses must provide all employees with notice 90 days prior to a:

  • Plant closing
  • Mass layoff
  • Relocation
  • Other covered reduction in work hours

Businesses that do not provide notice may be required to:

  • Pay back wages and benefits to workers
  • Pay a civil penalty

Early warning gives the DOL and the LWIB the chance to work with the business early on and provide employees with information about:

  • Unemployment Insurance (UI)
  • Workforce Programs
  • Resources designed to get employees back to work quickly

Early warning also benefits the business. It can shorten the time that workers are on UI. It therefore may lower the UI charges associated with the layoff or closing.

With respect to the coronavirus pandemic, there are only two exceptions that might be applicable to employers: (i) the natural disaster exception; and (ii) the unforeseen business circumstance exception. Under the natural disaster exception, an employer can provide reduced notice in the event the job losses are due to a “natural disaster” such as a flood, earthquake, or drought. Whether this exception applies to the coronavirus pandemic is unclear as pandemics are not necessarily similar to floods, earthquakes or droughts. Further, it is unclear whether the job losses have to be a direct result of the natural disaster (e.g., the establishment closed because it was destroyed by an earthquake) or whether they can be an indirect result of the natural disaster (such as the current situation).

The unforeseen business circumstance exception allows an employer to provide notice as soon as practicable, rather than 90 days in advance, if the employment losses are caused by business circumstances that were not reasonably foreseeable. 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 that directly prevents the employer from providing the required 90 days’ notice. While this exception is construed narrowly, it is very likely to apply to New York business that have to take employment actions that produce job losses triggering NY WARN as a result of the coronavirus pandemic.

If a New York employer has to take the unfortunate step of laying off employees, closing establishments and/or greatly cutting back on worker hours, such employment actions may trigger NY WARN. Therefore, if a New York employer is contemplating such employment actions, the employer should consult with counsel to determine what notice, if any, needs to be provided to the impacted employees as well as the government and others.

Federal law

The Worker Adjustment and Retraining Notification Act (WARN) protects workers, their families, and communities by requiring employers with 100 or more employees (generally not counting those who have worked less than six months in the last 12 months and those who work an average of less than 20 hours a week) to provide at least 60 calendar days advance written notice of a plant closing and mass layoff affecting 50 or more employees at a single site of employment. WARN makes certain exceptions to the requirements when layoffs occur due to unforeseeable business circumstances, faltering companies, and natural disasters. Advance notice gives workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain other jobs, and if necessary, to enter skill training or retraining that will allow these workers to compete successfully in the job market. Regular federal, state, local, and federally-recognized Indian Tribal government entities that provide public services are not covered.

Employees entitled to notice under WARN include managers and supervisors, as well as hourly and salaried workers. WARN requires that notice also be given to employees’ representatives, the local chief elected official, and the state dislocated worker unit.

DOL’s Employment and Training Administration administers WARN but has no enforcement role in seeking damages for workers who did not receive adequate notice of a layoff or received no notice at all. Some states have plant closure laws of their own.

Employers considering a layoff can contact the State Dislocated Worker Unit to find out more information on notice requirements in their state.

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