At the beginning of the pandemic, we blogged about the Worker Adjustment and Retraining Notification (WARN) Act, which requires employers to give advance notice to employees before they are terminated, laid off, or have their hours reduced. In our previous blog, we noted that there are 3 exceptions that could potentially be invoked in the time of COVID-19. These exceptions the:
- The Unforeseen Business Circumstance Exception
- The Natural Disaster Exception
- The Faltering Company Exception
We noted that while these exceptions might be available during the pandemic, it remained an open question. Now, early litigation on the subject has shed some light on the issue. On January 4, 2020, the U.S. District Court for the Middle District of Florida ruled that neither the “natural disaster” exception nor the “unforeseeable business circumstance” exception warranted dismissal of a WARN Act class action. The court held that the furloughs in question were merely an indirect result of the pandemic, and the direct cause was the economic turmoil resulting from the pandemic. Moreover, dismissal wasn’t warranted under the “unforeseeable business circumstance” because even if the exception applied, the employer was still required to give some notice to the laid off employees. The court held that “exactly when Defendants had to give notice will doubtless be a hotly contested factual issue,” and therefore denied the employer’s motion to dismiss.
Although this case is not binding in Maryland, DC, or Virginia, employers in these states should still take note. This decision suggests that it might be more difficult for employers to use the pandemic to escape liability under the WARN act than was previously thought.