With Governor Cuomo having forced the closure of “non-essential” businesses to combat the spread of COVID-19, many New York business owners are now presented with the difficult task of determining whether, when or how to reduce their workforces. New York’s WARN Act is designed to protect workers and their families, and requires employers to give ninety days’ advance notice of closures, mass layoffs and furloughs. The law is modeled after the federal WARN Act, but is stricter.
Before acting, employers must consider whether the WARN Act applies to them and whether any applicable exceptions are satisfied. The failure to comply with the law carries with it exposure to significant liability and civil penalties.
Scope of the Law
New York’s WARN Act applies to any private business that employs, within New York state, 50 or more full-time employees or “50 or more employees that work in the aggregate at least two thousand hours per week.”
Covered employers must provide 90 days’ notice to affected employees in the event of:
- A “mass layoff,” i.e., an employment loss at a single site of employment during any 30-day period which affects (a) 250 employees or (b) twenty-five employees constituting at least 33% of employees at the site.
- A “plant closing” or the “permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, that results in an employment loss for 25 or more employees during any 30-day period.”
- A relocation of the employer’s operations to a different location at least 50 miles away from the original worksite, causing 25 or more employees to suffer employment loss.
- A reduction in work hours by 50% or more for a period of six months or more, if that reduction affects: (a) 250 or more employees; or (b) 25 or more employees constituting at least 33% of the employees at the site.
Some employers incorrectly think they can avoid the WARN Act by implementing “rolling” layoffs, which are separated by a few weeks time and each involve a number of employees below the WARN Act thresholds. The “aggregation rule” prohibits this. It provides that, in determining whether the WARN Act is triggered, an employer must look back 90 days and forward 90 days and assess whether any employment actions taken or planned will, in the aggregate, reach the WARN Act thresholds.
If the WARN Act applies, the next step is to ensure that a proper notice, containing all statutorily required information, is provided to all employees who will experience employment loss at least 90 days before the loss will occur. The employer must also notify the employees’ representatives, if any, the Commissioner of Labor, and the Local Workforce Investment Board.
When writing the notice, the employer must be specific and use language the employees can understand. It must contain, among other things, the following information:
- The expected date of the first separation of employees and the date when the individual employee will be separated;
- A statement as to whether the planned action is expected to be permanent or temporary, and whether the entire plant is to be closed. If the planned action is expected to affect identifiable units of employees differently, the notice must reflect that;
- A statement as to whether bumping rights exist (for those who do not know, bumping rights determine if and when a senior employee displaces another employee during a layoff or other employment loss, and is defined in an employer policy or other agreement);
- The name and telephone number of an employer representative to contact for further information; and
- Information concerning unemployment insurance, job training, and re-employment services, including the following language:
“You are also hereby notified that, as a result of your employment loss, you may be eligible to receive job retraining, re-employment services, or other assistance with obtaining new employment from the New York State Department of Labor or its workforce partners upon your termination. You may also be eligible for unemployment insurance benefits after your last day of employment. Whenever possible, the New York State Department of Labor will contact your employer to arrange to provide additional information regarding these benefits and services to you through workshops, interviews, and other activities that will be scheduled prior to the time your employment ends. If your job has already ended, you can also access reemployment information and apply for unemployment insurance benefits on the Department’s website or you may use the contact information provided on the website or visit one of the Department’s local offices for further information and assistance.”
Section 921-2.3 of the Act contains more information as to the content that must be included in notices sent to employees, the Commission of Labor, the local workforce investment board and the employees’ representatives.
Importantly, the above notice requirements apply even where the employer chooses to pay its employees to stay home.
Exceptions to Warn Act Notice Requirements
While there are several possible exceptions to the application of the WARN Act, there are two of particular relevance to the COVID-19 pandemic: (1) natural disaster; and (2) unforeseeable business circumstances.
The statute does not define the term “natural disaster.” However, the federal version of the WARN Act lists a few examples including a flood, earthquake or drought. If the closing or layoff is a direct result of such a natural disaster, this exception may apply. However, where the closing or layoff is an indirect result of some such event, the exception for unforeseeable business circumstances is more appropriate. The Act specifies that such exception applies when “the need for notice was not reasonably foreseeable at the time the notice would have been required.”
While there is no case law addressing whether a virus or pandemic constitutes either an unforeseeable circumstance or natural disaster, the New York State Department of Labor’s website suggests that the current situation fits within the “unforeseeable business circumstances” exception. It states:
The WARN Act requirement to provide 90 days’ advanced notice has not been suspended because the WARN Act already recognizes that businesses cannot predict sudden and unexpected circumstances beyond an employer’s control, such as government-mandated closures, the loss of your workforce due to school closings, or other specific circumstances due to the coronavirus pandemic.
It is important to note that, even if this exception applies, employers must still provide employees (and the other parties entitled to receive notice) with as much notice as is practicable, as well as an explanation was to why the notice period was shortened. Moreover, if the event requiring notice is a closure, the Department of Labor requests that the employer include in the notice as much information as possible to the Commissioner about the circumstances of closure, so the DOL can determine whether any exceptions apply.
While the WARN Act does not apply to every business or every loss of employment, strict notice requirements must be met when the law is applicable. Employers who do not comply may be subject to significant damages equaling up to sixty days’ back pay and benefits, in addition to attorneys’ fees and civil penalties.