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Navigating WARN Act Issues During COVID-19

As COVID-19 continues to affect the entire country, many states, counties, cities and localities have enforced measures, such as “New York on PAUSE”, to help decrease the transmission of COVID-19. These efforts to slow the transmission of COVID-19 have left many employers to face uncertainty and now forces those employers to consider alternative business contingency measures. While employers’ immediate outlook on the economy is grim, many anticipate that our local economy is only going to get worse before it gets better. This is forcing many employers to make the difficult decisions whether closures, reduction of hours, furloughs or layoffs will be necessary to keep their businesses viable during these trying and uncertain times. Employers must be informed about their obligations under the New York Worker Adjustment and Retraining Notification Act (“NY WARN Act”) regarding the intricate consequences of mass-layoffs, plant closures and reductions of hours.


The NY WARN ACT


Under the NY WARN Act, private sector employers in New York are required to provide a WARN notice 90 days before:

· Permanently or temporarily shutting down a single site of employment resulting in employment losses of 25 or more full-time employees in a 30-day period;

· Implementing a layoff affecting 250 workers from a single employment site during any 30-day period;

· Implementing a layoff affecting 33% of its workforce (at least 25 full-time employees) during any 30-day period;

· Reducing work hours of more than 50% during each month of any consecutive six-month period that impacts 33% of tis workforce (at least 25 employees) or at least 250 employees at an employment site; or

· Removing all or substantially all of the industrial or commercial operations of an employer to a different location 50 miles or more away, for at least 25 employees.


The NY WARN Act defines a “private sector employer” as a private sector business with (i) 50 or more employees (excluding part-time employees) within New York State, or (ii) 50 or more employees that work in the aggregate at least 2,000 hours per week within New York State.


Employers should note that an employer’s obligations under the NY WARN Act are generally not triggered for short-term furloughs that are less than six months. The NY WARN Act generally considers a furlough exceeding six months to be considered an “employment loss”, unless the extension beyond the six-month period was caused as a result of business circumstances that were not reasonably foreseeable at the time of the initial furlough. Employers should provide the required WARN notice at the time it becomes reasonably foreseeable that the extension of the furlough will exceed six months.


If notice is required under the NY WARN Act, it must be provided to the following:

· The affected employees;

· The affected employees’ collective bargaining representative (if any);

· The New York State Department of Labor; and

· The applicable local workforce investment board.


Businesses that fail to provide the required WARN notice under the NY WARN Act may be required to pay back wages and benefits to workers in addition to paying a civil penalty for each day the employer was in violation of the NY WARN Act.


The NY WARN Act and COVID-19

On April 17, 2020, Governor Andrew Cuomo signed Executive Order No. 202.19 (the “Executive Order”), which relaxes the stringent notification requirements under the NY WARN Act between April 17, 2020 and May 17, 2020. The Executive Order eased those requirements for employers that had previously laid of employees and then proceeded to rehire those employees after receiving federal Paycheck Protection Program (“PPP”) funding. Under these limited circumstances, the Executive Order required that employers need not comply with the 90-day WARN notice requirement, if an employer must lay off those rehired employees for a second time after receiving PPP funding, so long as the employer complied with the required WARN notice when it initially laid off the employees. The Executive Order further required employers to provide as much notice as possible to those employees being laid off for a second time.


Employers must note that the Executive Order is no longer in effect and thus, all employers subject to the NY WARN Act must still comply with the stringent NY WARN Act obligations and notice requirements.


Exceptions to the NY WARN Act

Employers should be aware of the exceptions the NY WARN Act provides, which excepts employers from complying with the 90-day WARN notice requirements. It is imperative that employers understand that the employer bears the burden and is responsible for proving that an exception exists. However, it is still good practice for an employer to provide as much notice as possible to employees even if the employer can prove one of the limited exceptions listed below can be satisfied.


· Unforeseeable Business Circumstances. A mass layoff or closing was the result of business circumstances that an employer deems were not reasonably foreseeable as of the time that notice would have been required.

· Faltering Company. The employer was actively seeking business or capital that, if obtained, would have enabled the employer to postpone or avoid the shutdown and the employer in good faith, reasonably believed that giving the WARN notice required would have precluded the employer from obtaining the needed capital or business.

· Natural Disasters. The mass layoff or closing was the result of a natural disaster, such as a flood, earthquake or a drought.

Employers should note that the New York Department of Labor (the “NY DOL”) has issued guidance stating that the NY WARN Act requirement to provide 90 days’ notice has NOT been suspended due to COVID-19. Consequently, the NY DOL has advised employers to provide the required WARN notices and include as much detailed information as possible to enable the NY DOL to determine if an exception under the NY WARN Act applies to the situation. Employers should also note that they will have to comply with the Federal WARN Act as well.

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