Philadelphia Clarifies City’s WARN Act to Account for COVID-19-Related Closures

Late on April 20, 2020, the City of Philadelphia issued Temporary Emergency Regulations to the Philadelphia Notification of Intention to Close or Relocate Operations ordinance (Philadelphia WARN Act), continuing the trend of changes to state and local WARN obligations in light of the COVID-19 pandemic.1  

The Philadelphia WARN Act covers Philadelphia-based employers with 50 or more employees.  Similar to federal WARN, the Philadelphia Act requires companies to give 60 days’ notice of permanent closures or transfers of their business to impacted employees, employee representatives, if any, and city government.2 The Philadelphia WARN Act does not apply to “involuntary closings” such as closings pursuant to court order, natural disaster, national emergency, acts of war, civil disorder or industrial sabotage.  Further, it does not apply to temporary closings or closings due to bankruptcy or the discharge of employees due to strikes and lockouts. Unlike federal WARN, the Philadelphia law is not triggered by mass layoffs that are not the result of a plant closing, and is not triggered by temporary closures.

The Temporary Regulations issued this week confirm officially that the COVID-19 pandemic is a “natural disaster” and a “national emergency,” as those terms are used in the Philadelphia WARN Act, such that the Act will not apply to any closure caused by COVID-19.  It also affirmed for Philadelphia businesses impacted by COVID-19 that their closure pursuant to a public order, such as those issued by the mayor of Philadelphia and governor of Pennsylvania closing many Philadelphia businesses, also do not trigger the Philadelphia WARN Act because they constitutes an “involuntary closure” for the duration of time those orders remain in effect. 

The Temporary Regulations also create a presumption that certain business closures were caused by the COVID-19 pandemic, provided that the business provides a Philadelphia WARN notice on a shortened time basis.  During the period that the Temporary Regulations remain in effect, and for 60 days after their repeal, any business closure will be presumed to be caused by the COVID-19 pandemic, provided that:

  1. The business provides the notifications required by Philadelphia WARN within such time as is “reasonably practicable under the circumstances after the decision to close is made;” and
  2. The business includes in the notifications the basis for contending that the closure was caused by the pandemic.

Importantly, unlike the traditional notice requirements under the Philadelphia WARN Act, notice is not required 60 days before the closure.  Instead, it is sufficient if the notice is given within such time as is reasonably practicable after the decision to close is made.

These temporary changes to the Philadelphia WARN Act have not changed the requirement that it applies only to the “permanent shutting down of operations at any establishment.”  Thus, Philadelphia businesses that merely implement temporary closures are not required to provide notice.  The city has provided companies with an opportunity, however, to obtain a presumption that the ordinance does not apply, by providing notice during the pandemic if they determine a permanent closure is necessary.  This shortened notice option gives city employers an opportunity to obtain additional assurance that a permanent closure caused by the pandemic will not trigger penalties under the Act.

See Footnotes

1 See Amber Spataro, Lauren Marcus, Dan Thieme and Bruce Millman, New Jersey WARN Act COVID-19 Amendment: Pending Radical Expansion of the Law Delayed, and Exception for Disasters and National Emergencies Clarified, Littler ASAP (Apr. 16, 2020); New Jersey WARN Act Radically Expanded, Littler ASAP Jan. 21, 2020); Shawn Matthew Clark, Robert C. Long, Bruce R. Millman, Daniel L. Thieme, and Michael J. Lotito, WARN Act Risks Loom for Employers Re-Hiring or Un-Furloughing Employees to Receive Paycheck Protection Program Funding, Littler ASAP (Apr. 19, 2020); and Kerry Notestine and Dan Thieme, Furloughs and Other Temporary Responses to Coronavirus (COVID-19) Disruptions, Littler Insight (Mar. 11, 2020).

2 The required written notices must be provided to the Director of Commerce of the City of Philadelphia, the impacted employees and, where applicable, any union representation, and must include the following:

(a) The nature of the establishment affected by the closing or relocation of operations; (b) The reasons for the proposed closing or relocation; (c) An impact statement which shall include information concerning the:

(1)   employer's payroll.

(2)   number of employees to be affected by the proposed action.

(3)   wages and other remunerations paid to those employees.

(4)   the employer's efforts, if any, to find suitable employment for affected employees.

(5)   amount of local tax revenue that will be lost as a result of the proposed action.

(d) The proposed date of closing or relocation; (e) The employer's intentions, if any, to continue production at a new location; (f) Any plans the employer might have to sell the establishment, including a statement as to whether the employees have been given first right of refusal to buy and operate the establishment.

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.