The Federal Worker Adjustment and Retraining Notification Act (“WARN Act”) generally requires large employers to provide 60 days’ advance notice to employees before instituting a “plant closing” or “mass layoff” affecting 50 or more people at a single site of employment. However, there are various other provisions of the WARN Act that relax this notice requirement under certain circumstances. Two exceptions commonly relied upon to institute pandemic-related layoffs with less than 60 days’ notice are the so-called “natural disaster” and “unforeseeable business circumstances” exceptions.
The “natural disaster” exception applies if the plant closing or mass layoff is “a direct result of a natural disaster.” Applicable regulations define “natural disaster” to include “floods, earthquakes, droughts, storms, tidal waves or tsunamis and similar effects of nature.” In such a case, an employer need not give any advance notice of the employment loss, and notice may instead be given after the event.
The “unforeseeable business circumstances” exception applies where the plant closing or mass layoff is “caused by business circumstances that were not reasonably foreseeable at the time that 60-day notice would have been required.” In such cases, an employer must provide as much notice “as is practicable” even if it is unable to provide the full 60 days’ notice normally required.
In a recent decision, Judge Roy B. Dalton of the U.S. District Court for the Middle District of Florida ruled that neither of these exceptions warranted dismissal of a WARN Act class action brought by former employees of Enterprise Holdings (the parent of car rental firms Enterprise, Alamo and others) who were laid off in April, at the outset of the pandemic. (One of the named plaintiffs in the case alleges she was given no notice before being laid off, and the other alleges she was provided six days’ notice.) See Benson v. Enterprise Leasing Company of Florida, LLC, 6:20-cv-00892 (M.D. Fla., Jan. 4, 2021).
With respect to the natural disaster exception, the employer argued that COVID-19 is a natural disaster and that therefore, the WARN Act’s normal notice requirements did not apply. Based on the facts alleged in the complaint, however, the judge found that the layoffs were not the “direct” result of COVID-19, but only an “indirect” result. The judge stated that a factory’s immediate destruction by a flood is a core example of a layoff that is the “direct result” of a natural disaster. The pandemic, by contrast, caused changes in travel patterns and an economic downturn, which only “indirectly” caused the layoffs at issue.
As for the unforeseeable business circumstances exception, the judge also found that dismissal at the pleading stage was not appropriate. As noted, this exception requires “as much notice as is practicable.” One plaintiff alleged no notice and the other alleged six days’ notice. The judge concluded that, without a more developed evidentiary record, he could not tell whether the employer could have actually given more notice than what was provided, and therefore could not determine at the early stage of the case whether the company provided “as much notice as [was] practicable,” which it was required to do in order to properly rely on this exception.
It is important to note, particularly with respect to the unforeseeable business circumstances exception, that the judge considered only the facts alleged by the plaintiffs themselves in the complaint, and did not issue his rulings on the basis of an evidentiary record. The Court’s ruling does not eliminate the company’s opportunity to establish that it properly complied with the WARN Act after development of a full evidentiary record.
The Enterprise decision suggests that an employer’s decisions surrounding layoff notice to employees will be subject to close judicial scrutiny, and that employers will not be able to win swift dismissal of WARN Act claims alleging non-compliance with the law’s notice requirements—even under the extreme and unexpected pressures wrought by the early days of the pandemic. The decision also suggests that former employees alleging WARN Act notice violations will not have a particularly hard time defeating motions to dismiss their complaints, and will be permitted to proceed to costly and burdensome discovery on such claims, so long as they are able to allege that their former employer should have provided more notice of the impending layoff.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.