Federal And State WARN Act Notice Requirements And COVID-19

The sudden and dramatic effects of COVID-19 in the United States have left employers grappling with unprecedented lockdown orders from state and local governments, in addition to government-mandated closures of certain businesses and establishments. As a result, many employers are faced with the reality that layoffs, furloughs, and/or closures have occurred or may soon become necessary.

Depending on its size, an employer may have obligations under the federal Worker Adjustment and Retraining Notification Act (WARN Act) and similar state statutes known as "mini-WARN Acts." Employers should be aware of these requirements and the exemptions that may be applicable to layoffs and closures resulting from COVID-19.

Overview of the WARN Act

Employers with (1) 100 or more employees, excluding part-time employees, or (2) 100 or more employees, including part-time employees, who in the aggregate work more than 4,000 hours per week, exclusive of overtime, are subject to the WARN Act.1 The WARN Act generally requires covered employers to give written notice to employees or their representative, as well as the state, at least 60 days prior to a plant closing or mass layoff.2

A "plant closing" is defined as the permanent or temporary shutdown of "single place of employment" or "one or more facilities or operating units within a single place of employment" that results in an employment loss3 during a 30-day period for 50 or more employees, excluding part-time employees.4 A "mass layoff" occurs when there is an employment loss at a single site of employment for (1) at least 33 percent of active employees (excluding part-time employees), and (2) at least 50 employees.5 When 500 or more employees are impacted, the 33-percent requirement does not apply, provided the other criteria are met.6

As a practical matter, if the event will not result in the loss of employment (or reduction in hours of more than 50 percent) for at least 50 employees for a six-month period, then the WARN Act will not apply. In other words, even if the event will affect more than 50 employees and could constitute a plant closing or mass layoff at the outset, if the employer recalls enough of the employees before the end of the six-month period so as to avoid having at least 50 employees suffer a loss of employment, the WARN Act requirements will not have been triggered.

An employer that fails to give the required notice may be subject to significant penalties and litigation by impacted...