5th Circuit: COVID-19 not a natural disaster under WARN Act

The U.S. 5th Circuit Court of Appeals (whose rulings apply to all Texas employers) has determined that the COVID-19 pandemic is not considered a natural disaster, thus it is not an exception to the federal law that requires businesses to give employees advance notice of mass layoffs. Employers could find themselves liable for mass layoffs that occurred two years ago.

What is the WARN Act?

Passed in 1988, The Worker Adjustment and Retraining Notification (WARN) Act is a U.S. labor law intended to protect workers. It requires most employers with 100 or more employees to provide a 60-day advance notification of mass layoffs or plant closings.

A plant closing occurs when a single site of employment temporarily or permanently shuts down, resulting in employment loss for at least 50 employees during a 30-day period. A mass layoff is a reduction in force that results in employment loss for 50+ employees, if that comprises 33% of the active workforce, or 500+ employees generally.

There are some exceptions to the WARN Act’s notification requirement, including natural disasters. The plant closing or mass layoff must be a direct result of a natural disaster for an employer to qualify and have notification requirements reduced. Covered employers that do not qualify for an exception and fail to meet the requirements of the WARN Act can be liable to affected employees for back pay and benefits.

How does the COVID-19 pandemic come into play?