The WARN Act and COVID-Related Lawsuits
Another one that can be filed under “Least Surprising News of All Time…” The pandemic and its ensuing restrictions on the workplace have led to a surge in employment-related lawsuits.
As of last week, according to law firm Littler Mendelson’s Employment Litigation Tracker, there have been 2,314 lawsuits (including 186 class actions) filed since March 12, 2020 against employers due to alleged labor and employment violations related to COVID. California leads the way with 581, with New Jersey (274), Florida (181), New York (169), Ohio (148), Texas (106) and Pennsylvania (102) all registering triple digits.
Industries seeing the highest incidence of lawsuits include Healthcare, Manufacturing and Retail.
Looking at the nature of the cases, again, it is the usual suspects, Wage and Hour and Safety that are leading the way. Of particular interest though is the rise in WARN-related claims. Over the past few months many employers have had to make difficult decisions regarding duration or permanence of furloughs and temporary shut downs. In part because of the often significantly constricted time frame available to make the initial decisions last spring, we are now beginning to see the impact of those actions in litigation.
Please continue to our blog for an insightful article on the root causes and current status of some of these lawsuits. Also, for a very detailed overview of the WARN Act and the California WARN Act from our website, please click here: UNDERSTANDING THE WARN ACT_2021
WARN Act Lawsuits on the Rise Because of Pandemic
COVID-19 lawsuits and claims are on the rise, especially because of the Worker Adjustment and Retraining Notification (WARN) Act. Recently, the attorneys responsible for filing a much-publicized Florida lawsuit against Enterprise Rental Car struck again. This time, the proposed WARN Act class action is targeting a Florida hotel chain.
Hospitality Businesses Hit Hard
The new WARN Act complaint focuses on nine Rosen Hotels and Resorts, Inc., facilities in the Orlando area. On April 10, 2020, during the early weeks of the pandemic, the company “temporarily furloughed” approximately 1,000 employees. At least 50 employees and 33 percent of the workforce were furloughed at each facility.
In temporary layoff scenarios, an employee doesn’t suffer an “employment loss” under the WARN Act unless the layoff exceeds six months. The proposed class action claims the Rosen Hotels layoff has now exceeded 6 months, and the employees have received no notice about their employment status in the interim.
The WARN Act requires employers with 100 or more employees to provide 60 days’ advance notice of a plant closing or mass layoff. The onset of the COVID-19 pandemic left some employers, especially those in the hospitality industry, in a difficult position with the country shutting down so quickly. As a result, they had little to no time to issue WARN Act notices before either (1) laying off their employees in what they hoped would be “temporary furloughs” or (2) shuttering their businesses entirely.
2 Possible Exceptions to Providing WARN Act Notice
During the pandemic, employers have tried to rely on two possible exceptions within the WARN Act that would allow for less than 60 days’ notice: the natural disaster exception and the unforeseeable business circumstances exception. The Enterprise Car Rental case, also out of Florida, is the nation’s test case for the two exceptions.
After analyzing the exceptions, the federal judge handling the Enterprise case denied the company’s request to dismiss the claims. The case will proceed through discovery (pretrial fact-finding) to determine if the unforeseeable business circumstances defense applies to “soften” the Act’s notice requirements.
With regard to the natural disaster exception, Enterprise has asked to appeal the court’s ruling that it doesn’t apply to COVID-19 layoffs. The employer has argued the U.S. 11th Circuit Court of Appeals (which covers Florida employers) should review the threshold issue of whether the exception may be raised as a defense in WARN Act litigation.
We’ll continue to watch the Enterprise and Rosen Hotels cases as they move through the system. While Florida and 11th Circuit law may not directly apply to your operations, other courts facing the same issues are likely to consider the reasoning and the outcomes. If the cases are any indication, a WARN Act claim won’t be dismissed immediately under either exception, so expect some time in court if a charge is made against your business.
Finally, if you’ve got employees out on layoff or furlough status, you should be watching the clock as it approaches the 6-month mark. You may still have time to cure any potential WARN Act violations.
Article courtesy of content partner BLR. The author, Vanessa L. Towarnicky is an attorney with Steptoe & Johnson PLLC in Morgantown, West Virginia. She represents clients in various employment cases, including disability discrimination, workers’ compensation retaliation, sexual harassment, deliberate intent, and other wrongful discharge and employment-related torts.