The WARN Act and the Coronavirus Epidemic
As the coronavirus epidemic continues to impact the economy, employers are faced with the prospect of shutting down their operations or continuing operations with a significantly reduced workforce for an indeterminate period of time. Employers anticipating the need for significant workforce reductions should be mindful of whether these reductions will implicate the federal WARN Act, and companies with employees in New Jersey and/or New York must also pay attention to the WARN Acts in effect in those states. This article will first briefly outline the requirements of the federal, New Jersey, and New York WARN statutes and will then discuss those requirements in the context of workforce reductions necessitated by the current crisis.
The WARN Statutes
The WARN statutes are extremely complicated, but, as a rule of thumb, whenever a New Jersey employer is contemplating terminating at least 50 employees, the employer should seek advice from counsel familiar with the federal and New Jersey WARN statutes. Should either of those statutes apply, the affected employees must be given at least 60 days’ notice of their terminations unless a statutory exception permits a lesser period of notice. As a rule of thumb, employers in New York should seek advice from counsel when contemplating terminating at least 25 employees. Should the New York WARN statute apply, the affected employees must be given at least 90 days’ notice of their terminations unless a statutory exception permits a lesser period of notice.
The WARN Statutes and the Coronavirus
In the midst of the present crisis, an employer suddenly confronted with the need to reduce its workforce will simply be unable to meet the WARN statutes’ lengthy notice requirements, potentially incurring liability for statutory damages. As noted above, however, the statutes provide exceptions to the lengthy notice periods, some of which may apply to workforce reductions necessitated by the coronavirus epidemic.
Layoffs of Less than Six Months: Under all three WARN statutes, an employee laid off for less than six months has not suffered a loss of employment for statutory purposes and is thus not entitled to advance notice of his/her layoff. The employer must, however, notify the employee at the time of the layoff of the date (within six months) when he/she will be recalled. If, due to circumstances unforeseen at the time of the layoff, it appears that the layoff will extend beyond six months, the employer is to so notify the employee.
Unforeseen Business Circumstances: Under the federal and New York WARN statutes, the 60-day (federal) or 90-day (New York) notice period may be reduced when the reduction–in-force is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required. The employer should provide as much notice as is practicable, along with a statement of the basis for reducing the notification period.*
*Note: The New Jersey WARN statute does not provide for this exception.
National Emergency: On March 13, 2020, President Trump utilized the National Emergency Act to declare a national emergency due to the coronavirus outbreak. The New Jersey WARN statute exempts from its notice requirements employment terminations resulting from the shutting down of facilities or of operating units within a facility made necessary because of national emergency.**
**Note: The federal and New York WARN statutes do not provide for this exception.
It is important for employers to recognize that the WARN statutes and their exceptions have not been tested in the courts in the context of an epidemic or other health emergency. It is, therefore, critical for employers to consult with counsel familiar with these statutes who can provide advice as to the potential applicability of these statutes and their exceptions.
Finally, be aware that on July 19, 2020, amendments to the New Jersey WARN statute will go into effect. One amendment will increase the advance notice period from 60 to 90 days. For a thorough discussion of the amended statute, see our recent blog, “New Jersey Amends Its WARN Act to Extend Advance Notice and Require Severance Pay.”
If you have questions about the WARN Act in the context of the coronavirus crisis, feel free to contact Richard Zackin. We will continue to monitor this situation throughout the crisis and will update you as necessary.
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