Have You Thought About ... The Foreseeability of a COVID-19 Resurgence for WARN Act Purposes?

Have You Thought About ... The Foreseeability of a COVID-19 Resurgence for WARN Act Purposes?

Jun 08, 2020

Client Alert

Brownstein Client Alert, June 8, 2020

The federal Worker Adjustment and Retraining Notification (WARN) Act and some—but not all—companion state laws contain certain exceptions to the normal notice requirement for covered events, which is 60 days under the federal WARN Act, but can be longer under state law. One such exception under the federal WARN Act is “unforeseeable business circumstances”; i.e., where business circumstances that were not reasonably foreseeable precluded the employer from providing the full 60-day notice period with respect to covered employment losses (including furloughs and certain reductions in hours lasting more than six months). In those circumstances, employers must provide as much notice as practicable when the likelihood of job loss becomes reasonably foreseeable.

Generally, this exception covers circumstances caused by some sudden, dramatic and unexpected action or condition outside the employer’s control. For instance, a government-ordered closing of an employment site that occurs without prior notice may be an unforeseeable business circumstance. (See 20 CFR 639.9(b)(1).) Many covered employers have been justifiably relying on this exception with respect to recent layoffs and furloughs occurring as a result of the coronavirus pandemic and related governmental action, such as stay-at-home orders and facility closures. However, will this exception be available if there is—as many opine there will be—a resurgence of coronavirus in the fall?

As set forth in 20 CFR 639.9(b)(2), “[t]he 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.”

What does this mean for employers? Plaintiffs can be expected to argue that job losses resulting from a coronavirus resurgence are foreseeable, given the likely government actions that will be taken to contain the spread. Employers therefore should focus on long-range plans rather than just short-term staffing needs for reopening now.

The WARN Act’s stated purpose is to protect workers, their families and local communities by giving advance notice of anticipated layoffs. Employers are encouraged to give notice even when not legally required. And keeping employees informed of anticipated developments is generally the more conservative approach. Given these policy considerations and the difficulty of predicting the future of COVID-19, when bringing employees back to work, employers should consider providing a “conditional” WARN Act notice advising employees that, if and when there is a resurgence of coronavirus with concomitant government-imposed closures and stay-at-home orders, furloughs and/or job losses may occur (or are very likely).

The information provided in a WARN Act notice must be based on the best information available to the employer at the time the notice is provided, understanding that circumstances may change. While a conditional notice such as this effectuates the intended purpose of the WARN Act, employers still would be required to supplement that notice when the actual timing of the layoff or other covered employment loss became reasonably foreseeable. However, with careful planning, employers can ensure compliance with the nuanced requirements of federal and state WARN Acts.

(Note that there are other exemptions under the federal WARN Act that may be applicable. In addition, employers must review state WARN Act requirements, which can vary significantly, where applicable.)  

Information is changing daily and some of the content included in this alert may have changed or been updated since publication.

Click here to read more Brownstein alerts on the legal issues the coronavirus threat raises for businesses.

This document is intended to provide you with general information regarding updates related to coronavirus. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions.

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