Staffing

WARN Act warnings re: QSR COVID-19 layoffs

Photo: iStock

September 29, 2020

By Lindsey Conrad Kennedy and Brittany Stepp/
Attorneys with Eckert Seamans Cherin & Mellott, LLC

The federal Worker Adjustment and Retraining Notification, or WARN act, requires employers to provide 60 days' advance notice before employees experience certain types of employment losses. But, determining when WARN is triggered can be tricky, particularly for restaurants implementing or extending COVID-19-related furloughs of layoffs.

The first step is determining whether your restaurant is large enough to be covered by WARN. Federal WARN covers employers with 100 or more employees, excluding part-time employees who have worked fewer than 20 hours per week in the preceding 90 days, as well as certain short-term employees and seasonal workers.

However, it should be noted that many states and localities have enacted their own versions of WARN. These pieces of legislation, sometimes called "mini-WARNs," often have their own requirements.

Under federal WARN, covered employers must send WARN notices to employees (or their union representatives), as well as certain government officials at least 60 days prior to the occurrence of — according to the wording in the act — a "plant closing" or "mass layoff."

How WARN defines 'closings,' 'layoffs,' 'employment loss'

Applying terms like plant closing or mass layoff to restaurants, however, is not always intuitive. To help operators gain some understanding, the following definitions will help:

• A "plant closing" is the permanent or temporary shutdown of an entire site of employment, if the shutdown creates an employment loss during any 30-day period for 50 or more full-time employees.

• A "mass layoff" is a reduction in force that creates an employment loss at a single site of employment during any 30-day period for at least 33% of the full-time employees and at least 50 employees at the site.

Knowing the meaning of the terms doesn't stop there, however. For instance, the reference to "employment loss" includes not only terminations, but also layoffs that exceed six months. That means that an extended layoff — even if not "permanent" — can trigger WARN.

Additionally, "employment losses" is a reference to reductions of hours of more than 50% during each month of a six-month period, as well. But, note here that workers who have voluntarily resigned are not included in this group. For example, this would include workers who find new employment during short-term furlough or voluntarily decide not to return to work for COVID-19 reasons.

Importantly, if a restaurant implemented a short-term furlough near the beginning of the pandemic and later, the furlough needs to be extended due to previously unforeseeable reasons like local laws restricting in-restaurant dining, the restaurant must issue WARN notices as soon as it believes the furloughs will need to exceed six months. On top of this, the notices must explain the reason for giving fewer than 60 days' required notice.

Exceptions to the rule

Operators should take note that WARN also includes two exceptions that may excuse a restaurant from providing the full 60 days' notice in light of COVID-19. Those exceptions include:

• 'Unforeseeable business circumstances.'
• 'Natural disaster.'

Whether these these exceptions will apply to a pandemic remains unclear, much like the total economic effects of COVID-19 on the restaurant industry. But, restaurant leaders would be wise to consider these statutory exceptions in crafting any documents or communications.

Assuming an employer cannot meet one of the exceptions, the resulting penalties for violating WARN can be steep. Those include the penalty of up to 60 days' back pay and benefits for affected employees. Naturally, leaders with questions around these matters should consult with their brand's counsel.