Coronavirus - Update for Employers
As the rapidly evolving Coronavirus (“COVID-19”) pandemic continues to unfold, employers face many challenges. Employers must be aware of their obligations under certain statutes, including the federal Worker Adjustment and Retraining Notification Act (“WARN Act”), 29 U.S.C. §§ 2101–2109, and its New Jersey counterpart, the Millville Dallas Airmotive Plant Job Loss Notification Act, N.J.S.A § 34:21-1 to -7 (the “NJ WARN Act” or the “New Jersey statute”). This alert provides an overview of both statutes and their requirements, exceptions, and other considerations for employers during this uncertain time.
What is the federal WARN Act?
The WARN Act requires that employers provide their employees and certain governmental officials 60 days’ written notice prior to ordering a plant closing or a mass layoff.
- A “plant closing” is “the permanent or temporary shutdown of [at least one facility or operating unit within] a single site of employment” that “results in an employment loss . . . during any 30-day period for 50 or more” non-part time employees. 29 U.S.C. § 2101(a)(2).
- “[A]n employee who is employed for an average of fewer than 20 hours per week or who has been employed for fewer than 6 of the 12 months preceding the date on which notice is required” is a “part-time employee.” 29 U.S.C. § 2101(a)(8).
- A “mass layoff” is a “reduction in force” that “is not the result of a plant closing” and “results in an employment loss at the single site of employment during any 30-day period for” 500 or more non-part time employees or “at least 33 percent of the [non-part time] employees” and 50 or more non-part time employees. 29 U.S.C. § 2101(a)(3).
Employers must provide the required notice to employees (or their representatives, if any) who reasonably risk facing an “employment loss” —a non-voluntary termination other than for cause or retirement, a layoff for longer than 6 months, or “a reduction in hours of work of more than 50 percent during each month of any 6-month period.” 29 U.S.C. § 2101(a)(6). Employers must also provide 60 days’ written notice to the state or its designated entity, as well as “the chief elected official of the [applicable] unit of local government.” 29 U.S.C. § 2102(a)(2).
Does the federal WARN Act’s notice requirement apply to my business?
The WARN Act applies to employers with 100 or more non-part time employees or “100 or more employees who in the aggregate work at least 4,000 [non-overtime] hours per week.” 29 U.S.C. § 2101(a)(1)(A), (B). Should such an employer order a plant closing or mass layoff, the 60-day notice obligation is triggered.
However, the statute allows the reduction of the 60-day notification period if:
- 60 days before the shutdown, “the employer was actively seeking capital or business” that “would have enabled [it] to avoid or postpone the shutdown and the employer reasonably and in good faith believed that giving the notice required would have precluded [it] from obtaining the needed capital or business,” 29 U.S.C. § 2102(b)(1);
- “[T]he closing or mass layoff is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required,” 29 U.S.C. § 2102(b)(2)(A); or
- “[T]he plant closing or mass layoff is due to any form of natural disaster, such as a flood, earthquake, or . . . drought,” 29 U.S.C. § 2102(b)(2)(B).
Under any of those circumstances, an employer need not give 60 days’ notice, but it must “give as much notice as is practicable,” along with “a brief statement of the basis for reducing the notification period.” 29 U.S.C. § 2102(b)(3). There is certainly an argument that the COVID-19 pandemic could be considered a “natural disaster” or an “unforeseeable business circumstance” for purposes of the WARN Act.
The notice requirement also does not apply to a layoff for longer than six months that was initially “announced to be a layoff of 6 months or less,” where its increased duration “is caused by business circumstances . . . not reasonably foreseeable at the time of the initial layoff,” and the employer gave notice of the extension “at the time it bec[ame] reasonably foreseeable that [it] will be required.” 29 U.S.C. § 2102(c).
What are the consequences of noncompliance with the WARN Act’s notice requirement?
Employers who fail to comply with the WARN Act’s notice requirement face harsh sanctions. First, the statute provides a private right of action to employees, with the potential to recover back pay and benefits for the period of the violation (capped at 60 days, and not “for more than one-half the number of days the employee was employed by the employer”). 29 U.S.C. § 2104(a)(1).
Second, an employer who fails to provide the requisite notice to the local government may be liable for up to $500 for each day of the violation. 29 U.S.C. § 2104(a)(3). It can avoid that penalty, however, if the employer “pays to each aggrieved employee the amount for which [it] is liable to that employee within 3 weeks from the date [it] orders the shutdown or layoff.” 29 U.S.C. § 2104(a)(3).
Finally, the federal court adjudicating a suit brought against the employer by (or on behalf of) employees or the local government has the discretion to award reasonable attorney’s fees to the prevailing party. 29 U.S.C. § 2104(a)(6).
What is the NJ WARN Act?
New Jersey employers also need to be cognizant of New Jersey’s counterpart to the WARN Act.
Broadly speaking, the New Jersey statute in its current form is similar to the WARN Act in that it requires employers with “100 or more full-time employees,” N.J.S.A. § 34:21-2(a), to provide employees and government officials advance notice of mass layoffs and cessations of operation. However, the two statutes do have their differences. To begin, the NJ WARN Act speaks of mass layoffs, terminations of operations, and terminations of employment, rather than mass layoffs, plant closings, and employment losses.
- Under the NJ WARN Act, a “mass layoff” is “a reduction in force which is not the result of a transfer or termination of operations and which results in the termination of employment at an establishment during any 30-day period for 500 or more full-time employees or for 50 or more of the full-time employees representing one third or more of the full-time employees at the establishment.” N.J.S.A. § 34:21-1.
- A “termination of operations” (similar to the WARN Act’s “plant closing”) is “the permanent or temporary shutdown of [at least one facility or operating unit within] a single establishment.” N.J.S.A. § 34:21-1.
- A “termination of employment” (like the WARN Act’s “employment loss”) is “the layoff of an employee without a commitment to reinstate [him] to his previous employment within six months of the layoff,” but it does not include, inter alia, “a voluntary departure or retirement or a discharge or suspension for misconduct . . . connected with the employment or any layoff of a seasonal employee.” N.J.S.A. § 34:21-1.
- The New Jersey statute excludes from the definition of “termination of employment” a layoff for more than six months, so long as the layoff was initially announced to be for six months or less, the extended duration of the layoff “is caused by business circumstances not reasonably foreseeable at the time of the initial layoff, and notice is given at the time it becomes reasonably foreseeable that the extension beyond six months will be required.” N.J.S.A. § 34:21-1.
How does the NJ WARN Act’s notice requirement differ from the WARN Act’s notice requirement?
The differences highlighted above affect the application of the NJ WARN Act’s notice requirement. To begin, although the NJ WARN Act also requires 60 days’ notice before conducting a mass layoff or a qualifying termination of operations at an establishment, it also requires such notice upon a qualifying transfer of operations, or a “permanent or temporary transfer of [at least one facility or operating unit within] a single establishment . . . to another location.” N.J.S.A. § 34:21-1, 2.
The notice must be provided “to the Commissioner of Labor and Workforce Development, the chief elected official of the municipality where the establishment is located, each employee whose employment is to be terminated and any collective bargaining units of employees at the establishment.” N.J.S.A. § 34:21-2(a) (emphasis added).
Finally, the two statutes differ in the employer actions they exclude from the notification requirement. As explained, the WARN Act sometimes permits a reduced notification period for “faltering compan[ies]” that close a plant, plant closings or mass layoffs caused by “unforeseeable business circumstances,” and mass layoffs or plant closings due to “natural disasters.” 20 C.F.R. § 639.9(a)–(c). On the other hand, the NJ WARN Act does not include the first two types of exclusions. It does, however, exclude terminations of operations — not mass layoffs — “made necessary because of . . . natural disasters” from the definition of “termination of operations” altogether, as well as terminations made necessary by “a fire, flood, . . . national emergency, act of war, civil disorder or industrial sabotage,” among other things. N.J.S.A. § 34:21-1.
What are the consequences of noncompliance with the NJ WARN Act’s notice requirement?
The penalties for not complying with the New Jersey statute’s notice requirement are steep. The NJ WARN Act mandates that an employer who fails to provide the required notice pay “each full-time employee whose employment is terminated . . . severance pay equal to one week of pay for each full year of employment,” “in addition to any severance pay . . . pursuant to a collective bargaining agreement or for any other reason.” N.J.S.A. § 34:21-2(b). The employer does, however, receive a credit for any back pay provided as a result of a WARN Act violation. N.J.S.A. § 34:21-2(b).
The New Jersey statute, like the WARN Act, provides a private right of action for employees or their representatives. N.J.S.A. § 34:21-6. However, unlike its federal counterpart, which provides courts the discretion to award a prevailing party attorney’s fees, the NJ WARN Act mandates that state courts award reasonable attorney’s fees to an employee (along with costs of the action) upon finding a violation of the act. N.J.S.A. § 34:21-6.
Finally, because the New Jersey statute does not limit or modify provisions in collective bargaining agreements regarding notification, severance payments, or other benefits that may be more favorable to employees, employers must comply with those agreements as well.
How do the amendments to the NJ WARN Act affect my business?
- Amendments to the New Jersey statute that largely enhance the scope of the NJ WARN Act in favor of employees were signed into law in January 2020 and will become effective on July 19, 2020. Under the new amendments:
- The NJ WARN Act will apply to “employer[s] who employ 100 or more employees,” regardless of whether they are full- or part-time employees, S. 3170;
- The notice requirement will be triggered if a transfer or termination of operations, or a mass layoff results “in the termination of employment of 50 or more employees,” regardless of whether those employees are full- or part-time employees, S. 3170;
- The notice period will be increased from 60 to 90 days;
- Employers will be required to pay “severance pay equal to one week of pay for each full year of employment” to any “employee whose employment is terminated,” not just employees to whom the employer failed to provide the requisite notice, S. 3170; and
- Those employees who were provided “with less than the number of days of notification required” will be entitled to “an additional four weeks of pay,” S. 3170.
The statute will also prohibit the “waiver of the right to severance provided [therein] . . . without approval . . . by the commissioner or a court of competent jurisdiction.” S. 3170.
Please note that application of the WARN Act and the NJ WARN Act, and the exceptions to their notice requirements, require a fact-sensitive analysis. This Alert is not intended to be legal advice for any particular situation, and it should not be construed as such.
Riker Danzig is here to help if you need assistance of any kind. The Firm is operating and fully functional. Our attorneys continue to monitor the impact of COVID-19 on the business community. Please do not hesitate to contact Scott Ohnegian, Adam McInerney, or any member of Riker Danzig’s Labor & Employment Group regarding any specific legal issue affecting your business.
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