Hunton Employment & Labor Perspectives

While COVID-19 may have hit the business community like a hurricane, whether the pandemic, in fact, qualifies for a natural disaster exception under the federal law requiring businesses to warn employees of impending layoffs, remains an open question.

This February, a federal judge paved the way for the Eleventh Circuit to weigh in on whether a class action can proceed against an employer who was forced to lay off employees due to COVID-19.  That case, Benson v. Enter. Leasing Co. of Orlando, LLC, is one of the first to look at the application of pandemic-related layoffs to the Worker Adjustment Retraining Notification Act of 1988, 29 U.S.C. § 2100 et seq. (“WARN Act”). Underscoring the case’s importance to the business community, the U.S. Chamber of Commerce has just filed an amicus or “friend of the court” brief asking the Eleventh Circuit to take up the case and provide “much-needed guidance” to other courts across the country.

COVID-19 presents an array of new challenges and an abundance of uncertainty for employers. Notable among them, is the possibility that communities and states will begin to issue mandatory business closures and shelter in place orders. Interpreting and complying with these orders raises a host of issues for employers to consider.

No doubt recognizing the unprecedented impact on business, Governor Gavin Newsom issued an Executive Order suspending the notice requirements under the California Worker Adjustment and Retraining Notification Act (WARN Act), Cal. Lab. Code §§ 1401(a), 1402, 1403. The Executive Order suspends existing law that could have otherwise required employers to provide 60 days’ notice before instituting mass layoffs, relocations, or terminations, and could potentially have imposed steep penalties on employers who failed to do so.  Certain notice obligations remain, however, under the Executive Order.

Employers in the difficult position of making workplace reductions because of COVID-19-related business losses should spare a moment for consideration of layoff notice obligations under the federal Worker Adjustment Retraining Notification Act of 1988, 29 U.S.C. § 2100 et seq. (“WARN”) and its state counterparts (so-called “mini-WARN” laws). The “unforeseen business circumstances” exception in federal WARN and most analogous state laws may excuse strict compliance with notification requirements, but employers should take the time now to analyze the applicability of this exception rather than make assumptions about it.

In an effort to ride out the current economic storm, many businesses find themselves downsizing, conducting mass layoffs, and even declaring Chapter 11 bankruptcy in an effort to survive.  These tough decisions inevitably lead to disgruntled former employees, whose ethics tend to take a backseat when it comes to “getting even” with their employers.