WARN Act Ruling Potential Cause of Concern for Larger Employers

January 15, 2021

A recent ruling by a Florida judge in a lawsuit involving pandemic-related mass layoffs could signal problems for larger employers forced to make similar reductions during the COVID-19 pandemic. 

The case involves Enterprise’s decision to terminate hundreds of Florida workers this past spring, which the lawsuit alleges occurred in violation of the Worker Adjustment and Retraining Notification Act (WARN Act).  The federal WARN Act prohibits employers with 100 or more employees from firing 50 or more workers within a short period of time without giving at least two months’ notice. 

Employers are exempt from the WARN Act’s notice requirements in two circumstances:  Where the layoffs are caused by the occurrence of a natural disaster, the employer is not required to give any advance notice, while with layoffs resulting from “unforeseeable business circumstances” – “sudden, dramatic and unexpected action or condition outside the employer’s control” – employers only need to give as much notice “as is practicable.” 

Many employers expected that the COVID-19 pandemic might provide them cover from the WARN Act under either of these two exemptions.  However, in the case brought against Enterprise, a Florida judge was unconvinced, ruling that the circumstances caused by the pandemic did not necessarily exempt Enterprise from its notice requirements when it fired hundreds of employees.

U.S. District Judge Roy B. Dalton said that the U.S. Department of Labor’s guidance on the WARN Act and COVID-19 made no mention of whether the pandemic could be considered a natural disaster, and that COVID-19 only indirectly caused the Enterprise layoffs—thus the natural disaster exemption was inapplicable.  Judge Dalton acknowledged that the “unforeseeable business circumstances” exception could apply, but that even so Enterprise still had an obligation to provide as much notice as practicable under the Act, and that it was unclear whether Enterprise complied with this obligation.  Accordingly, Dalton ruled that the case could not be dismissed and had to move forward. 

Outlook:  The decision should serve as a signal to employers in similar situations that they may be unable to quickly dispense with WARN Act lawsuits by linking the COVID-19 pandemic to the Act’s two exemptions.  While the ruling is certainly not binding precedent on other federal districts, it nevertheless provides a reasonable blueprint for other judges to follow.  Employers forced to conduct significant layoffs due to the circumstances created by the pandemic should to the extent possible ensure they are in compliance with the WARN Act’s notice requirements.