WARN Act Exceptions Coronavirus Covid Layoff
Question presented:
For permanent layoffs, may I claim an exception to the WARN Act because of COVID-19? If I do, what are my responsibilities?
The Department recommends that employers review the “unforeseeable business circumstances” exception to the 60-day notice requirement (contained in the WARN Act at § 3(b)(2)(A), and the WARN regulations at 20 CFR 639.9) set out below:
The “unforeseeable business circumstances” exception… applies to plant closings and mass layoffs caused by business circumstances that were not reasonably foreseeable at the time that 60-day notice would have been required.
(1) An important indicator of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by some sudden, dramatic, and unexpected action or condition outside the employer’s control. A principal client’s sudden and unexpected termination of a major contract with the employer… and an unanticipated and dramatic major economic downturn might each be considered a business circumstance that is not reasonably foreseeable. A government ordered closing of an employment site that occurs without prior notice also may be an unforeseeable business circumstance.
(2) The test for determining when business circumstances are not reasonably foreseeable focuses on an employer’s business judgment. The employer must exercise such commercially reasonable business judgment as would a similarly situated employer in predicting the demands of its particular market. The employer is not required, however, to accurately predict general economic conditions that also may affect demand for its products or services.
When invoking an exception to the WARN Act’s 60-day notice requirement, a covered employer is still required to:
- Give as much notice as is practicable; and
- Include a brief statement of the reason for giving less than 60-days’ notice along with the other required elements of a WARN notice.
Applicability of the “unforeseeable business circumstances” exception rests on an employer’s particular business circumstances. The WARN Act is enforced by private legal action in the U.S. District Court for any district in which the violation is alleged to have occurred or in which the employer transacts business. Thus an employer may need to prove that it could not foresee the circumstances 60 days in advance if a WARN Act action is brought.
Any dispute regarding the interpretation of the WARN Act including its exceptions will be determined on a case-by-case basis in such a court proceeding. The role of the U.S. Department of Labor 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.