Tag: COVID-19

WARN Notice Obligations

COVID-19 Not an Absolute Defense to WARN Notice Obligations

The COVID-19 pandemic led many employers to reduce their workforces suddenly in 2020. Often, large layoffs occurred with little or no advance notice. Consequently, many employees asserted claims under the federal Worker Adjustment and Retraining Act (WARN Act) and/or similar state laws. Though ultimate liability depends on many factors, a recent federal court decision involving the Enterprise car rental company suggests that employers can’t completely avoid WARN notice obligations just because COVID-19 introduced unprecedented business circumstances.

WARN Notice Requirements

The WARN Act requires employers with at least 100 employees to give up to 60 days’ advance notice to employees (or their unions) and various government entities before implementing certain reductions in force. Notice is required in advance of “plant closings” and “mass layoffs.”

A “plant closing” occurs where an employment site (or one or more facilities or operating units within an employment site) will be shut down, and the shutdown will result in an “employment loss” for 50 or more employees during any 30-day period.

A “mass layoff” occurs where there is to be a group reduction in force that does not result from a plant closing, but will result in an employment loss at the employment site during any 30-day period for (a) 500 or more employees, or (b) 50-499 employees if they make up at least 33% of the employer’s active workforce.

The term “employment loss” means (i) an employment termination, other than a discharge for cause, voluntary departure, or retirement, (ii) a layoff exceeding 6 months, or (iii) a reduction in hours of work of individual employees of more than 50% during each month of any 6-month period.

WARN Notice Exceptions

Employers must give the full 60 days’ notice unless a statutory exception applies.

Faltering Company

This limited exception only applies in the case of plant closings, not mass layoffs. To qualify for the faltering company exception, a company must have been actively seeking capital or business that it had a realistic opportunity to obtain with a good faith belief that giving WARN notice would have precluded the employer from obtaining the capital or business. In addition, the capital or business sought must have been sufficient to avoid or postpone the plant closing.

Unforeseeable Business Circumstances

This exception applies when business circumstances were not reasonably foreseeable when the 60-day notice would have been required.

The employer should be able to point to “some sudden, dramatic, and unexpected action or condition outside the employer’s control”. Federal regulations emphasize that foreseeability should focus on the employer’s “commercially reasonable business judgment”. A company is not required “to accurately predict general economic conditions that also may affect demand for its products or services.”

Natural Disaster

The WARN notice obligations are also mitigated in cases of natural disasters. WARN regulations define “natural disasters” to include “floods, earthquakes, droughts, storms, tidal waves or tsunamis and similar effects of nature.”

For this exception to apply, the employer must show that the reduction in force was a “direct result of a natural disaster.”

Enterprise WARN Act Litigation

In April 2020, the Enterprise rental car company began layoffs with little notice to employees. Some affected employees sued under the WARN Act in the U.S. District Court for the Middle District of Florida. (Benson v. Enterprise Leasing Co., Case No. 6:20-cv-891)

Enterprise made a motion to dismiss the case based on both the “natural disaster” and “unforeseeable business circumstances” exceptions. In January 2021, the court denied the motion, allowing the case to continue.

Notably, the court did not reach the question of whether COVID-19 qualifies as a natural disaster under the WARN Act. However, the judge reasoned that it at least wasn’t clear that the layoff was a “direct result” of COVID-19. Instead, he decided, “This is an indirect result–more akin to a factory that closes after nearby flooding depressed the local economy. Defendants’ facilities or staff didn’t disappear overnight, suddenly wiped out.”

Accordingly, the judge shifted his focus to the unforeseeable business circumstances exception. He acknowledged that the defense “may apply,” but did not warrant dismissal of the case at this early stage. He emphasized that this exception may justify a reduced notice period, but doesn’t necessarily eliminate WARN notice obligations altogether. In this case, one employee received no notice and the other only six days’ notice. Thus, it remains to be litigated whether Enterprise could have given more notice before beginning the layoffs.

Cautionary Tale for Employers

The Enterprise case in Florida will turn on the facts and circumstances of that case. However, the denial of a motion to dismiss serves as a reminder to employers. Litigation is costly and often unpredictable. It is best to carefully consider, with legal experts, the applicability of any potential exception before undertaking reductions in force that could trigger the WARN Act.

COVID-19 might reduce some employers’ WARN notice obligations, but it likely does not eliminate them entirely. The unforeseeable business circumstances exception probably has become harder to rely on now that the pandemic is so far underway. Unfortunately, the adverse economic impact, including layoffs and business closings, is likely to continue, meaning further WARN Act implications.

 

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Top Posts of 2020

Top Posts of 2020

As 2020 (finally?) comes to an end, we again look at the most viewed New York Management Law Blog posts from this year. Did you miss any of the top posts of 2020?

These posts reflect some topics that most interested New York employers in 2020. Do they also suggest what will be top of mind in 2021?

Curious about last year? Click to see what posts made the list in 2019.

Coronavirus

We never saw this coming, but most of 2020 was spent addressing issues related to the COVID-19 pandemic. This generated numerous posts on closing and reopening requirements specific to various industries. But the most viewed were those that applied across the board.

Both the federal government and New York State implemented COVID-19 related leave laws in March. We discussed them here:

Congress: Some Employers Must Give Paid COVID-19 Leave

New York State Creates COVID-19 Quarantine Leave for Employees

Once non-essential businesses were able to reopen in New York, they had to have a COVID-19 safety plan. This requirement remains in place as of year-end. Here’s our popular Closer Look at the COVID-19 New York Safety Plan Template.

2021 New York Minimum Wage

Our annual post reminding employers of increases to both minimum wage and the salary threshold for overtime exemptions under state law remained a must-read.

Remember, these changes take effect on December 31, 2020, not January 1st. If you haven’t adjusted accordingly yet, now’s the time!

Some required pay levels will continue to rise in the coming years. This post includes charts showing those planned increases.

New York Paid Sick Leave

Perhaps spurred by the coronavirus pandemic, New York passed a universal sick leave law affecting all private-sector workplaces in the state. The law grants all non-government employees sick leave starting January 1, 2021. Many will be eligible to receive paid leave of up to 40 or 56 hours based on company size.

This post provides the basics of the new leave obligations.

The New York State Department of Labor provided initial guidance on the law through FAQs, discussed here. The DOL recently proposed regulations that are subject to a 60-day comment period. We plan a follow-up post when the regulations become final.

We also presented a webinar for employers on the New York Paid Sick Leave law. You can watch the recording here:

Other New York Developments

Our readers were also interested in more targeted New York employment law changes.

In 2019, the State expanded its paid voting leave requirements. Apparently perceiving the shift as too burdensome on employers, the law was amended back in 2020.

The NYS DOL also took action to reduce and eventually eliminate tip credits toward minimum wage outside of the hospitality industry. The phaseout will be complete as of the end of 2020. Read more here.

How Far Will New York Go?

In the 2019 top posts article, I predicted that New York would continue to regulate the workplace more in 2020. I couldn’t have predicted the COVID-19 outbreak and related restrictions, but the paid sick leave law alone was a gamechanger.

Two items I mentioned a year ago that didn’t get enacted in 2020 may be back on the table sometime in 2021.

In 2019, the Legislature passed a bereavement leave bill that Governor Cuomo vetoed. The Legislature now has enough Democratic votes to override a veto if they want to,

And after previous close calls, might workplace bullying get over the hump next year?

Plus, New York City is eliminating at-will employment for fast-food workers. Could that development spread statewide? Beyond the fast-food industry?

Don’t Stop at the Top Posts of 2020!

I hope you find it helpful to look back at what happened last year, but you should also look forward. For some of the reasons stated above, and others, 2021 could be another big year in employment law. Please continue to follow the New York Management Law Blog for updates.

One great way to keep up with emerging topics in New York labor and employment law is to subscribe to our monthly email newsletter. If you want more frequent news and insights, be sure to follow us on LinkedIn!

See you in 2021!

Orange Zone

Erie County Becomes Orange Zone

On November 18, 2020, New York Governor Andrew Cuomo announced that much of Erie County would become an “Orange Zone” micro-cluster. This designation has implications for area schools and businesses under the State’s COVID-19 micro-cluster strategy. Governor Cuomo established this framework to combat coronavirus spread through Executive Order 202.68, signed on October 6, 2020.

Transition from “Yellow Zone”

The most populated portions of Erie County, including the City of Buffalo, were declared to be in a precautionary “Yellow Zone” on Monday, November 9, 2020. In Yellow Zone status, the affected towns faced limitations on non-essential gatherings, capacity limits for houses of worship, table size restrictions for restaurants, and testing requirements for schools. The shift to an “Orange Zone” imposes more extensive restrictions, including mandatory closing of some categories of businesses and schools.

Geographic Scope of Erie County “Orange Zone”

The Erie County Orange Zone includes all of the following cities and towns (including villages within them):

  • Amherst
  • Aurora
  • Buffalo
  • Cheektowaga
  • Clarence
  • Eden
  • Elma
  • Evans
  • Grand Island
  • Hamburg
  • Lackawanna
  • Lancaster
  • Orchard Park
  • Tonawanda (City)
  • Tonawanda (Town)
  • West Seneca

Except for the Towns of Eden and Evans, the above locations were part of the Erie County Yellow Zone.

Based on 2018 population estimates, the towns in Orange Zone account for 93% of the people in Erie County. 

The remaining towns in Erie County, listed below, now move into a Yellow Zone:

  • Alden
  • Boston
  • Brant
  • Colden
  • Collins
  • Concord
  • Holland
  • Marilla
  • Newstead
  • North Collins
  • Sardinia
  • Wales

Together, these 12 towns account for only 7% of the Erie County population,

The neighboring Towns of North Tonawanda and Wheatfield in Niagara County were also designated as Yellow Zones.

Orange Zone Micro-Cluster Restrictions

Under current New York State guidance, areas in the Orange Zone micro-cluster are subject to the following restrictions.

Houses of Worship

Houses of worship of any denomination are limited to the lesser of 33% capacity or a maximum of 25 people.

Mass Gatherings

Gatherings of more than 10 people, whether indoor or outdoor, are prohibited.

Businesses

Most businesses can remain open, subject to existing New York State Department of Health (NYSDOH) restrictions.

The following businesses must close:

  • Indoor On-Premises Dining
  • Gyms
  • Fitness Centers/Classes
  • Barbers/Hair Salons
  • Spas
  • Tattoo/Piercing Parlors
  • Nail Technicians/Salons
  • Cosmetologists
  • Estheticians
  • Laser Hair Removal/Electrolysis
  • “All other personal care services”

Restaurants may remain open for takeout and delivery. On-premises dining is limited to outdoor tables, with a maximum of 4 people per table.

Schools

Public, private, and charter schools must close for in-person learning. Schools must operate under remote instructional models.

Under current NYSDOH guidelines, schools may be able to reopen after being closed for at least 4 calendar days. To do so, however, a school would have to meet stringent COVID-19 testing requirements. One condition is that only students and staff members who have received a negative COVID-19 test may return to school in person.

Effective Date

These new designations take effect Friday, November 20, 2020, except that schools can remain open until Monday, November 23, 2020.

The duration of these restrictions depends on health statistics over the next week(s).

Reminders & Future Developments

New York businesses must continue to follow all State requirements for operating during the coronavirus pandemic. Any business that is open for in-person operations must satisfy safety requirements established by the NYSDOH. If conditions worsen and your area moves into Red Zone status, then all non-essential businesses must close.

Follow Horton Law on LinkedIn for continuing updates on the latest developments.