As COVID-19 Response Leads to Business Closures, Are Workers Getting the Notice They Deserve?

The COVID-19 pandemic is causing significant and fast-moving changes to the American economy, and many businesses are either already laying off employees or considering doing so in the near future. Although you may not be able to stop your employer from laying you off, workers—both unionized and non-unionized—have rights that can help cushion the blow of a layoff, including in some cases the right to notice of a coming layoff under the Worker Adjustment And Retraining Notification Act (WARN).

The Worker Adjustment And Retraining Notification Act (WARN) was enacted into law in 1988. Under WARN, you have the right to receive a written notice 60 days before the date of a mass layoff or plant closing if you meet certain conditions. If your employer does not give you the required notice, you may be able to seek damages for back pay and benefits for up to 60 days, depending on how many days’ notice you actually received. WARN covers private-sector employers with 100 or more full-time workers (not counting workers who have less than 6 months on the job and workers who work fewer than 20 hours per week) or who employ 100 or more workers who work at least a combined 4,000 hours per week.

A plant closing covered by WARN is where your employer shuts down a facility or operating unit within a single site of employment and lays off at least 50 full-time workers. A mass layoff is where your employer lays off either between 50 and 499 full-time workers at a single site of employment and that number is 33% of the number of full-time workers at the single site of employment; or where your employer lays off 500 or more full-time workers at a single site of employment.

The WARN notice you receive from your employer must include the following information:

• An explanation of whether the layoff or closing is permanent or temporary (6 months or less);
• The date of layoff or closing and the date of your separation (Your employer has some leeway in predicting the dates on which workers will be separated. Your employer may give you notice that you will be separated within a two-week, or 14-day, period after a certain date.)
• An explanation of bumping rights, if they exist; and
• Name and contact information for a person in the company who can provide additional information

For union-represented employees, the employer must provide this notice to the union.

There are three exceptions to the full 60-day notice requirement, although notice must always be provided as soon as reasonably possible. The three exceptions to providing the full 60-day notice are:

1. A “faltering company” is not required to give notice of a layoff or plant closing when, before the plant closing, it is actively seeking capital or business, which if obtained would avoid or postpone the layoff or closure, and if it reasonably believes that advance notice would hurt its ability to find the capital or business it needs to continue operating;

2. A business is not required to give a full 60-days’ notice if it could not reasonably foresee business circumstances that led to a layoff or closing at the time that the 60-day notice would have been required, (e.g., a business circumstance that is caused by some sudden, dramatic, and unexpected action or conditions outside the employer’s control like the unexpected cancellation of a major order); or

3. A business is not required to give notice if a layoff or plant closing is the direct result of a natural disaster (i.e., hurricane, flood, earthquake, tornado, storm, drought, or similar effect of nature).

Several states have enacted their own WARN laws, including Alabama, California, Connecticut, Georgia, Hawaii, Illinois, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Tennessee, Washington, and Wisconsin. They can impose stricter penalties than the federal law and could also trigger worker lawsuits against employers. For example, New Jersey recently amended its WARN statute to extend the notice requirement from 60 days to 90 days.

Although it is too soon to know how courts will apply these WARN exemptions to the COVID-19 response, it seems likely that businesses closed by government order as part of infection containment measures could successfully argue that they could not reasonably foresee such closures. But businesses laying off workers or closing for reasons other than mandatory shutdowns may quickly run out of time to use the “not reasonably foreseeable” defense as the economic and public-health situation develops and general awareness of the economic and public-health situation increases. Many commentators have also questioned whether the “natural disaster” exemption would apply to COVID-19 related layoffs, whose direct cause would most likely been seen as either the government’s mandate to shut down or the loss of business resulting from social distancing, rather than the virus itself.

For unions representing private-sector employees, the National Labor Relations Act requires an employer to bargain over the effects of a decision to close down even where it has no obligation to bargain over the decision itself.

Employees or unions facing a layoff or shutdown due to the COVID-19 pandemic may want to consider whether their employer gave appropriate notice under WARN and any related state law. Unions representing laid off employees may also want to consider whether to demand bargaining over the effects of a business closure.

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