Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
Over the weekend, the Department of Labor published Frequently Asked Questions (FAQs) addressing COVID-19 issues under the federal Worker Adjustment and Retraining Notification Act (WARN). The FAQs break little new legal ground, but highlight the challenges employers face. Here are some key takeaways:
May employers claim an exemption from WARN for terminations caused by COVID-19?
The FAQs answer this question by suggesting that employers review the “unforeseeable business circumstances” exception. That exception, when it applies, requires that WARN notice be provided as soon as practicable.
The FAQs do not mention the exception for natural disasters. The WARN regulations state the natural disasters exception applies only to the direct results of a natural disaster, and in any event WARN notice must be provided as soon as practicable. Whether that regulation is a valid interpretation of the statute is an open question. The FAQs also do not discuss any of the case law, including cases that have held that closures imposed by governmental order do not require WARN notice. For government-ordered closures, the FAQs refer only to the unforeseeable business circumstances exception.
Is WARN notice required of a temporary layoff (furlough)?
The statute provides that a temporary layoff of six months or less is not an employment loss under federal WARN, and a layoff announced at its outset as being six months or less may be extended in certain instances for unforeseeable business circumstances.
The FAQs suggest some greater leeway for employers under these provisions than do some of the cases. First, the FAQs state that if a layoff lasts more than six months, employees will be considered to suffer an employment loss “unless it was not reasonably foreseeable at the time of the initial layoff that the layoff would extend beyond 6 months” (emphasis added). Second, the FAQs state that a temporary layoff without notice is open to be extended beyond six months for unanticipated business circumstances if it was “initially expected to last six months or less” (emphasis added), thus implying that an announcement of the furlough’s length at the outset may not be required. Whether courts will find these statements in the FAQs to be persuasive is uncertain.
Is email a valid method for delivering WARN notice?
Yes, according to the FAQs, which point out that the regulations permit any reasonable method of delivery that is designed to ensure receipt. This appears to be the DOL’s first express endorsement of emailed WARN notice.
Are employers protected if they follow the DOL’s guidance?
Not necessarily. For one thing, some statements in the guidance are so simplified that they are inaccurate. For example: The FAQs state the WARN triggers are judged “during any 90-day period.” This is incorrect. The WARN triggers are judged first over a 30-day period. Only if WARN is not triggered over a 30-day period is a 90-day aggregation period used, and even then there is an exception that may apply.
The FAQs state the mass layoff trigger turns, in part, on whether “1/3” of the worksite’s total workforce is affected. The standard is 33%, not 1/3 (33.3333%). If an employer is trying to stay just under the 33% trigger, using the incorrect 1/3 standard could cause an employer to trigger WARN when it thought it was avoiding WARN.
The FAQs state that the WARN standards do not count “workers who have fewer than 6 months on the job.” This is incorrect. Workers who are not counted under the WARN tests are those employed for fewer than 20 hours per week or who have been employed for fewer than six of the 12 months preceding the date on which notice is required. (The end date for the 12-month period generally is 61 days before the termination date, but may be closer to the termination date if shortened-time WARN notice is given). This is not a complete list of the oversimplifications in the FAQs.
Employers should also be aware that the courts will not necessarily defer to statements in the FAQs. Indeed, the DOL goes out of its way to emphasize that its guidance is not binding on the courts, and that it has no role in enforcing the WARN statute. The FAQ introduction states:
[WARN] is enforced by private legal action .... Any dispute regarding the interpretation of the WARN Act ... will be determined on a case-by-case basis in the particular court proceeding. The role of the [DOL] is limited to providing guidance and information about the WARN Act; such guidance is not binding on courts and does not replace the advice of an attorney.
The DOL repeats these points six different times, at length, in the body of the FAQs.