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WARN Act Considerations for Employers Facing Layoffs

The COVID-19 coronavirus epidemic is forcing employers across the area to face the difficult decision of reducing hours and laying off employees.  While these decisions may be in the best interest of employees and the public, employers must ensure they are following the Worker Adjustment and Retraining Notification (“WARN”) Act when taking such actions.

The WARN Act is a federal law generally requiring employers to provide 60 days’ advance notice of a temporary shutdown or closing.  Covered employers under the WARN Act are businesses that employ either 100 or more employees, excluding part-time employees, or 100 or more employees, including part-time employees, who in the aggregate work at least 4,000 hours per week, exclusive of overtime.  Sixty days’ advance notice must be provided under the Act if a decision affects 50 or more employees (excluding part-time workers) at a single site of employment and results in layoffs of at least six (6) months or at least a 50% reduction in work hours during each month of any six-month period of the shutdown. 

Whether the WARN Act applies to an employer’s layoffs comes down to the nature of the employer’s action, including its duration and number of employees affected.  If fewer than 50 full-time employees are laid off or the layoff or reduction in work hours does not last six (6) months, then this WARN Act notice does not have to be provided.  However, if the layoff is extended beyond six (6) months, then notice must be given once it becomes reasonably foreseeable that an extension is required.  Such considerations should be reviewed due to the uncertainty surrounding the coronavirus. 

The rapid spread of the coronavirus can make providing 60 days’ advance notice a seemingly impossible burden to overcome for employers that qualify under the WARN Act.  Although the WARN Act does not explicitly consider the impact of viral outbreaks, it does waive the advance notice requirement if a closure or shutdown is due to a “natural disaster” or “unforeseeable business circumstances.” 

Though there is no case law addressing whether a viral outbreak meets these exceptions, it may be reasonable for employers to justify the coronavirus as an unforeseeable business circumstance requiring shutdown without 60 days’ advance notice.  An employer must still give as much notice as possible and a statement providing the basis for reducing the standard notice period, however. 

In addition to the federal WARN Act, employers need to be aware that some states have adopted their own “mini” WARN Act with additional requirements.  Indiana and Kentucky have not adopted their own WARN Acts. The WARN Act adopted by Illinois reduces the number of full-time employees required for an employer to provide notice from 100 to 75.

Employers with union-represented employees should also review any applicable collective bargaining agreement to determine if such employees have greater notice requirements under the contract. 

Please contact your KDDK attorney or any of the following KDDK labor and employment law professionals for additional information and individualized guidance on this or any related topic.

Jake R. Fulcher
Partner
jfulcher@KDDK.com
(812) 423-3183, ext. 2263
Mark A. McAnulty
Partner
mmcanulty@KDDK.com
(812) 423-3183, ext. 2233
Carrie Mount Roelle
Partner
croelle@KDDK.com
(812) 423-3183, ext. 2286
Olivia G. Robinson
Attorney
orobinson@KDDK.com
(812) 423-3183, ext. 2217
Nicholas J. Golding, Labor and Employment Law Attorney, KDDK
Nicholas J. Golding
Attorney
ngolding@KDDK.com
(812) 423-3183, ext. 2216
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