The WARN Bells Are Ringing: WARN Act Considerations in the Age of Remote Work as Recession Looms | Venable LLP
Another period of financial uncertainty is looming. Given the recent mass layoffs in the tech industry, rising inflation, and other economic challenges expected to arise over the coming months, savvy employers should refresh themselves regarding notice requirements for mass layoffs and plant closures under the Federal Worker Adjustment and Retraining Act. (WARN Act) and analogs of related state laws. They should also consider whether their pandemic-era remote employees could ultimately benefit from protection under these laws, in the event of a sudden financial downturn. A recent decision by a federal court in Virginia may prove instructive as courts increasingly grapple with the implications of remote work for an employer’s statutory obligations.
What does federal WARN law generally require? Initially, the law applies to private for-profit companies, private not-for-profit organizations, or quasi-public entities with (1) 100 or more employees, excluding “part-time employees” who have spent less than six months at work in the past 12 months and those who work less than 20 hours per week; and those with (2) 100 or more employees in total, who work a minimum of 4,000 combined hours per week.
With few exceptions, these covered employers must provide specific notice to any employee affected by one (1) “plant shutdown”, defined as the “permanent or temporary cessation” of a “single job site, or one or more facilities or operating units within a single job site” that results in the loss of 50 or more employees during a 30-day period; and (2) a “mass layoff” that results in loss of employment at “a single job site” for any 30-day period for (i) at least 50 employees, the percentage of loss totaling at least 33 % of employees on site, or (ii) at least 500 employees in total. Part-time employees are excluded from these employee thresholds.
What does this mean for remote employees? At first glance, the WARN Act’s use of the phrase “single job site” might suggest that it does not apply to and does not count remote employees, who often perform work from their own homes, as opposed to a centralized job site. That said, US Department of Labor (DOL) guidelines state that – for employees who are “displaced” or “whose primary duties involve working outside of one of the employer’s regular employment sites” – their “single job site” is the place “to which they are assigned as a home base, from which their work is assigned or to which they report.” The impact of these regulations on remote workers is evolving, as the question begins to arise due to the increase in telecommuting in the age of the pandemic.
For example, the Eastern District of Virginia faced the issue of the WARN Act’s applicability to remote employees earlier this year, in a case involving a motion to certify a class of plaintiffs. In Piron v General Dynamics Information Technology, Inc., the proposed category was made up of employees who were working remotely in accordance with the employer’s flexible workplace policy, which allowed them to work from a home office. These employees all reported and received assignments from managers located in the employer’s Virginia office. When the remote employees were fired, they filed a class action lawsuit against the employer under the WARN Act, claiming they had not received the required notice for the “mass layoffs” occurring at a “worksite”. ‘single job’. They filed a lawsuit for back pay and benefits, alleging they were on one job site because they showed up and received assignments from a physical office in Virginia.
In response, their employer argued that the remote class should not be certified, because the individual employees did not work at a “single workplace” and therefore could not demonstrate that the common legal and factual issues prevailed. on matters affecting only individual members of the class. In finding otherwise, the district court reasoned that because the flexible workplace policy applied to all employees, it would be able to assess the group collectively to determine whether they met the requirement. of “single job site” for purposes of WARN Act liability. Although the Court has not ruled at this stage on the question of whether teleworkers did in fact, all operate from a single location for WARN Act purposes, the decision reflects a judicial willingness to consider the possibility that DOL’s “offshore” regulations may apply to dispersed remote employees receiving instructions from a single head office.
As future litigation arises, courts across the country will continue to make a variety of factual determinations regarding the applicability of the WARN Act to remote workers under the DOL Regulations. For example, what does it mean to “show up” at a particular place? If a remote employee logs their working time in an office where the central human resources operations are located, but then must regularly attend virtual group meetings hosted from another, to what place does it” for the purposes of assessing a collective redundancy? These and other considerations merit prior consultation with labor counsel when reviewing effective reductions that may affect remote employees.
Beyond the federal WARN law, what additional obligations might employers have under state law? Some jurisdictions impose their own WARN Act requirements, which are often more stringent than those provided by federal law. The New York version of the WARN Act, for example, has lower employee thresholds than its federal counterpart. It applies to private businesses with 50 or more full-time employees in New York State, compared to 100 under the federal WARN law. Among other qualifying events, New York law requires that employees and other specified beneficiaries receive notice if a layoff from a single job site affects either 33% of the workforce, for a total of at least 25 employees (as opposed to the federal government’s 50), or 250 total employees (down from the federal threshold of 500). It also requires employers to provide notice of a covered event 30 days earlier than under federal WARN law. If a Michigan employer with a large workforce allows its employees to work remotely from any location, and 50 or more end up working in New York State, that employer will need to assess whether to comply with the New York State WARN law requirements if a layoff affects these individuals.