Is COVID a “natural disaster” within the meaning of the WARN Act?
It is common knowledge that the COVID pandemic has forced many employers to lay off or lay off employees. Some operations have been shut down completely, while other companies have laid off employees for various periods. Often these dismissals or furloughs were longer than originally planned and, in certain circumstances, triggered the Worker Adjustment and Retraining Act 1988 (WARN Act), requiring the employer to provide employees losing their jobs with notice 60 days before their dismissal.
Calculating when and if the WARN Act is triggered can be complicated, especially when there are ongoing layoffs. This is especially true in the context of the COVID pandemic as business conditions were changing, and continue to change rapidly. Often, COVID-related closures or layoffs were necessary on short notice, and employers didn’t always have the ability to give laid-off employees 60 days’ notice. The WARN Act provides a few exceptions to the notice requirement that excuse failure to meet the 60-day notice requirement, including a “natural disaster” exception.
To that end, the United States Court of Appeals for the Fifth Circuit Court of Appeals (Louisiana, Mississippi, and Texas) recently ruled whether COVID-related layoffs qualify as a “natural disaster” under the WARN law. This case, Easom vs. US Well Services Inc., involved a company that provides fracking services to oil producers. In March 2020, the employer was forced to immediately lay off employees when its customers limited production or closed due to a drop in demand related to the COVID pandemic.
When terminated employees bought a WARN lawsuit alleging the employer failed to give them 60 days notice of termination, the employer argued in court that COVID was a “natural disaster under the law, thereby excusing the employer for providing the required 60-day notice. Under the WARN Act, even if a natural disaster is the cause of job loss, an employer must still give as much notice as possible. WARN Act regulations give examples of the types of natural disasters that would warrant full notice, stating: “[f]floods, earthquakes, droughts, storms, tidal waves or tsunamis and similar effects of nature” are considered natural disasters. In its recent opinion however, the 5th Circuit Court of Appeals disagreed with the employer, holding that while COVID could be a natural disaster within the ordinary meaning of the terms “natural” and “disaster”, it does not It was not a natural disaster within the meaning of the WARN Act. , reversing the decision of the lower court.
Although only one appeals court has issued such a decision so far, the conclusion for employers is that, if they have had layoffs or may have layoffs in the future related to COVID, the natural disaster exception will likely not be available. Instead, employers facing circumstances that may trigger the WARN Act, where 60 days notice may not be possible, should consider whether their situation falls under one of the other exceptions to the WARN Act. Depending on each employer’s circumstances and their reasons and timing of COVID-related layoffs, the Unforeseeable Business Circumstances Exception may be available. Like the natural disaster exception, the unforeseeable commercial circumstance exception does not fully excuse lack of notice. Instead, the employer is required to give as much notice as possible given the business circumstances in question. The DOL also suggested that the exception for unforeseeable business circumstances may be available for certain COVID-related layoffs.
There will likely be further litigation over COVID-related layoffs or furloughs under the WARN Act. Even two and a half years into the pandemic, there may still be COVID-related layoffs. If employers are faced with circumstances where they believe a WARN-triggered layoff may be necessary, they should consult with legal counsel early in the process to determine the best course of action.