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WARN Act Ruling Poses Challenge for Employers Conducting Pandemic-Related Layoffs

    Client Alerts
  • January 22, 2021

The federal Worker Adjustment and Retraining Notification (WARN) Act generally requires employers of more than 100 total employees to provide at least 60 days’ advance notice if they are terminating at least 50 employees or one-third of the workforce at a single site, whichever is greater. WARN includes two key exceptions to the notice requirement, upon which many employers hoped to rely when forced to make abrupt layoffs amid the COVID-19 pandemic. First, no notice is required “if the plant closing or mass layoff is due to any form of natural disaster, such as a flood, earthquake, or the drought currently ravaging the farmlands of the United States.” Second, if a layoff is caused by “business circumstances that were not reasonably foreseeable[,]” then the employer is not required to provide 60 days’ notice but must still provide as much notice of termination as is practicable.

In April 2020, Enterprise allegedly laid off 108 employees at its Orlando airport location and 400 employees at its Tampa airport location with no advance notice. As a result, two of those employees filed suit against Enterprise in federal district court in Florida for allegedly violating WARN. On January 4, 2021, the court issued an order denying Enterprise’s motion to dismiss, which could serve as a warning to any large employers that conducted layoffs over the past year.

First, the court cast significant doubt on whether the natural disaster defense could apply to coronavirus-related layoffs. The court explained that “while COVID-19 may be a natural disaster within the meaning of the WARN Act, the Complaint (and unfortunate experience) shows a more tenuous connection ... COVID-19 caused changes in travel patterns and an economic downturn, which affected Defendants – so the natural disaster defense doesn’t apply[.]” Second, the court held that while the unforeseeable business circumstances defense could apply, that “dismissal is not warranted because under this defense ... the WARN Act doesn’t waive the notice requirement but softens it: employers are only required to ‘give as much notice as is practicable.’”

One key takeaway from this ruling is that employers who were forced to make difficult layoffs amid the pandemic are unlikely to possess a silver bullet to dismiss WARN lawsuits. Rather, they will be forced to make the difficult decision between early settlement or costly, intrusive, and disruptive discovery.