DOL Issues FAQs on COVID-19 and the WARN Act

In the past two months, numerous employers have had to furlough or lay off sizable portions of their workforces due to COVID-19 and associated governmental shutdown orders.  In making these tough decisions, employers have had to consider many factors, including whether furloughs or layoffs trigger the federal Worker Adjustment and Retraining Notification Act (“WARN Act”).

By way of background, the WARN Act requires an employer with 100 or more employees (generally not counting those who have worked less than six (6) months in the last twelve (12) months and those who work an average of less than twenty (20) hours a week) to provide at least sixty (60) calendar days advance written notice of a “plant closing” or “mass layoff” affecting fifty (50) or more employees at “a single site of employment.”  An employer that fails to comply with the WARN Act’s notice provisions can be liable for back pay and benefits for each day of the violation (up to sixty (60) days), civil penalties, and even attorney’s fees.  In light of these severe financial consequences, employers have taken great steps to ensure that their layoffs and furloughs have not run afoul of the law.

In an effort to help employers assess their legal obligations, the U.S. Department of Labor (“DOL”) issued a Frequently Asked Questions (“FAQs”) regarding COVID-19 and the WARN Act.  Importantly, the FAQs discuss the “unforeseeable business circumstances” exception to the WARN Act, which allows an employer to provide less than sixty (60) days advance notice of a mass layoff or plant closing if it caused by business circumstances that were not reasonably foreseeable when the sixty (60) days notice was required.  The FAQs discuss that an important indicator of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by a “sudden, dramatic, and unexpected action or condition outside the employer’s control,” which can include “an unanticipated and dramatic major economic downtown” or “a government ordered closing of an employment site that occurs without prior notice.”

Although the FAQs do not have the force of law or regulation and, therefore, are not afforded the commensurate level of deference by courts, they are worthwhile for employers to review.  At a minimum, the FAQs highlight the many factors and consequences that employers must consider when implementing furloughs and layoffs and the importance of consulting with counsel before taking such actions .  For questions about this or any other labor and employment topic, please do not hesitate to contact the attorneys at Hoffman & Hlavac.  To stay on top of the latest labor and employment law developments, be sure to subscribe to our blog and follow us on social media.