Due to the ongoing impact of the Coronavirus (“COVID-19”) pandemic, employers are considering implementing further layoffs or closures and issuing notices to affected employees in accordance with New York’s Worker Adjustment and Retraining Notification Act (“NY WARN Act”). The purpose of this memorandum is to remind and inform employers of several WARN-related issues:
i) Employers that have not yet implemented closures or layoffs may still be able to avail themselves of NY WARN’s unforeseeable business circumstances exception;
ii) Employers that have already implemented layoffs but have not yet sent WARN Act notices may now be obligated to do so; and
iii) New York Governor Andrew Cuomo has extended his Executive Order relaxing NY WARN Act notice requirements for employers that must implement a second round of layoffs after use of federal Paycheck Protection Plan (“PPP”) funds.
Unforeseeable Business Circumstances Exception to the 90-Day Notice Requirement
The WARN Act obligates New York employers with 50 or more employees to provide 90 calendar days’ advance notice of any plant closing or mass layoff. Under the law a “plant closing” occurs when a permanent or temporary shutdown, including department closures, result in the loss of employment for 25 or more full-time employees during a 30-day period. A “mass layoff” occurs when a reduction in force, not resulting from a closure, results in the loss of employment of more than six months for either at least 25 full-time employees who represent at least 33% of all employees (excluding part-time employees) at the workplace or at least 250 full-time employees. Thus, the issuance of WARN Act notices would be required upon the occurrence of either 1) a permanent or temporary closure of the business or a department or 2) a layoff if the required number of employees are affected.
As previously reported in our memorandum dated March 12, 2020, the WARN Act provides an “unforeseeable business circumstances” exception to the 90-day notice requirement. An unforeseeable business circumstance is established by the occurrence of some sudden, dramatic and unexpected action or conduct outside the employer’s control. It is our opinion that the impacts of the COVID-19 pandemic meet the circumstances for this exception. The exception does not eliminate the requirement to send out WARN notices. Rather, it renders a shortened notice period sufficient.
WARN Act notices relying on this exception must include a statement of the reason for reducing the notice period and a factual explanation of the basis for claiming entitlement to such reduced notice period. In current circumstances, the employer would point to COVID-19 and its effects as an unforeseeable business circumstance. If applicable, employers should explain the recent need to reassess the potential length of layoffs and/or reopening given the severity of the COVID-19 pandemic and its effects. Employers should advise if they were unable to provide earlier WARN Act notice because the duration was not reasonably foreseeable at the time the layoffs commenced. Remember that an employer bears the burden of proof to show that the requirements for this exception have been met and still must provide as much notice as possible. The information in the WARN Act notice must be based on the best information available to the employer at the time the notice is served.
Extension of a Mass Layoff Period
Employers that have implemented layoffs of the requisite number of employees to constitute a mass layoff under the WARN Act but did not send notices of such layoffs due to the belief that the layoffs would not extend beyond six months must send WARN Act notices now if it is reasonably foreseeable that the layoffs will extend past six months. The WARN Act allows employers to send the requisite notices to affected employees after, rather than before, the occurrence of the layoffs, but only if the layoffs are extended due to business circumstances that were not reasonably foreseeable at the time of the layoff. Therefore, as outlined above, employers must set forth in the WARN Act notices an explanation regarding the unforeseeable business circumstances that now require layoffs to extend past six months.
WARN Notices and Paycheck Protection Plan
As previously reported in our Memorandum of May 1, 2020, on April 17 2020, New York Governor Andrew Cuomo signed Executive Order No. 202.19, which eases the notification requirements under New York’s Worker Adjustment and Retraining Notification Act (NY WARN). Under NY WARN, employers generally must provide employees, government officials and unions with 90 days’ advance written notice prior to conducting mass layoffs. The executive order relaxes those requirements for employers that previously laid off employees and then rehired them after receiving federal PPP funding.
Governor Cuomo has extended this Executive Order through June 7, 2020. If an employer must lay off employees for a second time after receiving PPP funding, the employer may provide less than the full 90 days’ notice required by NY WARN. Businesses must still provide WARN notice “as soon as practicable but not necessarily within ninety days.” In order to take advantage of this exception, employers must also have complied with NY WARN prior to their initial layoffs. This executive order does not relieve employers of the obligation to provide WARN notices for the second time, but shortens the notice period.
More information regarding the New York WARN Act may be found on the NYS WARN portal. If you have any questions, please do not hesitate to contact David R. Rothfeld, Lois M. Traub, Alexander Soric, Jennifer Schmalz, Robert L. Sacks, Jaclyn Ruocco, Joseph Tangredi, or Brian Polivy.