WARN Act Responsibilities Furloughs were appealing options for many employers early in the pandemic since furloughed employees can be recalled quickly. Nonetheless, “best practices would suggest that notice be given if an employer is uncertain whether a furlough will exceed six months,” she said. (Note that this provision can bring furloughs within the definition of “employment loss,” even though the employees’ employment may not be terminated.). Employee Furloughs May Require Cal-WARN Notice Employers considering employee furloughs must be aware of a 2017 California Court of Appeal decision, International Brotherhood of Boilermakers, etc. The typical notice period, as defined in the Act, is 60 calendar days. Employers should check with their state Department of Labor or equivalent state agency for more information on state obligations, as they may be stricter than federal obligations and may have different notice triggers. Do mass layoffs or plant closings due to the COVID-19 pandemic fall within any exceptions under the WARN Act or state “mini-WARN” laws? An exempt employee who is furloughed must be paid his or her full salary for the workweek in which the furlough begins if the employee works any part of the workweek. Allen Wilen is a Partner and serves as the National Director of the Financial Advisory Services Group assisting the firm’s clients through the litigation and restructuring process. The federal WARN notice obligation is not triggered if employees will be laid off for fewer than six months, since those employees have not suffered an “employment loss.” The key issue with the COVID-19 pandemic is that employers do not know how long the pandemic will last. Does the WARN Act Still Apply if a Company Furloughs Employees? A furlough can cause an employee to become ineligible for benefits if the employee fails to work the required number of hours. Furloughs What’s a Furlough? Employers should take extra caution when implementing an employee furlough policy to avoid activating the WARN Act. the Implications of California’s Coronavirus Stay at Home Order for Employers, https://www.labor.ny.gov/workforcenypartners/warn/warnportal.shtm, https://www.illinoisworknet.com/LayoffRecovery/Pages/WARNLayoff.aspx. The Department of Labor (DOL) recently issued guidelines on the federal Worker Adjustment and Retraining Notification (WARN) Act as a result of pandemic-related employee furloughs and layoffs. The last week brought a wave of unprecedented government orders for non-essential businesses to close and people to stay at home. The federal WARN Act only requires notice when a furlough is more than six months. 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Not all employment loss requires 60 days' notice, Singer noted. They must also issue notice when there is a layoff that affects either: An individual or private business entity is covered by the WARN Act if it has been operated by an employer for a period longer than three years and employs 100 or more full-time employees. Any notice should be precise enough to include the following (and meet the regular notice requirements under WARN): Be Mindful of Regular Termination Protocols. Permanent or Long-term Reductions – If an employer is permanently reducing its workforce or implementing layoffs or furloughs that are anticipated to last longer than 6 months, it must comply with the WARN Act’s notice requirements if there are a sufficient number of employment losses to constitute a “plant closing” or “mass layoff.” In California, any mass layoff – which includes a furlough of any duration – affecting 50 or more employees at a covered establishment in a 30-day period triggers a 60-day notice requirement. So far, the DOL regulations describe the “natural disaster” exception as applying to a flood, earthquake, drought, storm, tidal wave, “or similar effects of nature.” Again, arguments can be made that the COVID-19 pandemic is a natural disaster, but there is no definitive authority. [6] See individual state guidelines for full details. Under this ruling, therefore, California employers are exposed to WARN Act liability for layoffs involving 50 or more employees regardless of the duration. 100 or more employees, including part-time employees, who work at least a combined 4,000 hours per week. Generally, the WARN Act requires covered employers give affected employees 60 days notice of a layoff. Since furloughs do not result in an employment termination, this pro rata exception does not apply to temporarily furloughed employees. Nonexempt (hourly) employees generally need only be paid for hours worked unless company policy, individual agreements, or collective bargaining agreements provide otherwise. Further analysis of this Executive Order and its potential impact on employers can be found here. WARN Act notices to go out to AA employees this week In a brief report published today, Reuters says notices warning of potential furloughs will be sent to employees “later this week.” In conjunction, American Airlines is actively encouraging employees to consider early retirement packages already on the table. Employees who are terminated or laid off for more than six months; Employees who have their hours reduced 50% or more as a result of the plant closing or mass layoff; Employees who may reasonably be expected to experience an employment loss as a result of proposed plant closing or mass layoff; Employees who are on temporary layoff but have a reasonable expectation of recall (such as those on workers’ compensation or medical, maternity, or other leave); Results in an employment loss at the single site of employment during any 30-day period for: At least 50 to 499 employees if they represent at least thirty-three percent (33%) of the total active workforce (excluding any part-time employees); 500 or more employees (excluding any part-time employees). N.Y. § 2101 et seq.) Also, please note that our attorneys do not seek to practice law in any jurisdiction in which they are not properly authorized to do so. A furlough may also implicate other employment laws such as the Fair Labor Standards Act, which, amongst other things, provides for the circumstances where employees may be exempt from overtime pay. Covered employers are required to provide written notice to affected employees, the union representative in the case of a unionized workforce, the state dislocated worker unit, and the local chief elected official, at least 60 days in advance of mass layoffs and plant closings. Lab. [1] The New York State Department of Labor notes that “the WARN Act already recognizes that businesses cannot predict sudden and unexpected circumstances beyond an employer’s control, such as government-mandated closures, the loss of your workforce due to school closings, or other specific circumstances due to the [C]oronavirus pandemic,” and urges employers to provide notice as soon as possible. For example, there is a provision in the case of a “disaster” to not abide by the rule under federal law; however, in many states there is no similar provision. The terms layoff, furlough, reductions in force, reorganization, and terminations are often used interchangeably although they are not necessarily the same thing. There are exceptions where the 60-day notice period may be shortened, but in those cases, employers must still provide notice as soon as is practicable. The WARN Act applies to private for-profit, private non-profit, or quasi-public entity (separately organized from regular government) employers who have: 1. The employer must pay the employee’s final pay within the deadlines set by state law. For example, eligibility under group health plans often depends on the number of weekly or monthly hours worked by an employee. In some states, such as California, final pay is due on the day of termination for any involuntary termination. What payments does an employer owe to employees if a layoff (mass or otherwise) or a plant closing occurs? Short furloughs will not trigger notice under the federal WARN Act. Typically, these payments will be limited to expenses that an employee incurs directly as a result of the COVID-19 pandemic and exclude any expense that is reimbursable by insurance or amounts that substitute for lost wages. If you are not already a client of Morrison & Foerster, do not include any confidential information in this message. is a federal statute that requires employers with more than 100 employees [1] to give a 60-day notice of any plant closing or mass layoff. While employers with self-insured plans likely have flexibility to amend any hours-worked requirements, insured plans will need approval from their third-party insurer. is a federal statute that requires employers with more than 100 employees[1] to give a 60-day notice of any plant closing or mass layoff. Private, for-profit employers and private, non-profit employers are covered, as are public and quasi-public entities which operate in a commercial context and are separately organized from the regular government. In April 2020, Employee Z, who is covered under the Plan, is furloughed, works fewer than 120 hours, and therefore loses coverage under the Plan. A mass layoff is defined as one involving more than 50 employees at a location. Regular federal, state, and local government entities which provide public services are not covered. The Worker Adjustment and Retraining Notification (WARN) Act obligates covered employers to provide advance notice of an “employment loss” to “affected employees.” The Basics Which employers are covered by the WARN Act? Generally, any amount provided by an employer to an employee is considered taxable compensation to the employee. All rights reserved. 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