Hunton Insurance Recovery Blog

While companies develop their return-to-office policies or decide to keep employees working remotely, they should be mindful of potential liability under the Worker Adjustment and Retraining Notification Act (“WARN Act”) in the event of future layoffs. A recent opinion from the Eastern District of Virginia provides a timely alert for companies to review their employment practices liability (“EPL”) coverage and understand their risk of future exposures. The court held that remote employees alleging violations under the WARN Act—a statute requiring sixty days’ notice before a “mass layoff” at a “single site of employment”—could receive class certification, despite the fact that class members physically worked at different locations. EPL policies can effectively mitigate the related risk by covering the cost of litigation, as well as the company’s resulting liability.

The WARN Act framework already contemplated workers who travel to different locations for their work. The relevant regulation states that “the single site of employment to which they are assigned as their home base, from which their work is [] assigned, or to which they report will be the single site in which they are covered for WARN purposes.” In the context of work-from-home arrangements, the WARN Act analysis loses clarity as to whether those employees worked at a “single site of employment.” Instead of making a determination at the early stage of litigation, the court certified the class and preserved the “single site” question for summary judgment or trial. Because this question was common among all members of the class and there were unifying features, such as the work location policy and job responsibilities, the court determined that certification was appropriate.

EPL policies can offer great value to companies enduring tumultuous times, helping them avoid large-scale exposure in the wake of a mass layoff. Even if an employer will eventually succeed on the merits of a WARN Act claim, class certification can quickly drive up litigation expenses. The EDVA opinion reminds employers to review their EPL coverage closely and determine whether they face any prospective liability under the WARN Act or similar workplace-related causes of action.

The case is styled Piron v. General Dynamics Information Technology, Inc., No. 3:19cv709, 2022 WL 363958 (E.D. Va. Feb. 7, 2022).