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COVID-19 Not Natural Disaster Under WARN Act

The Fifth Circuit Court of Appeals held that the COVID-19 pandemic does not qualify as a "natural disaster" under the Worker Adjustment and Retraining Notification Act (WARN).

WARN is a federal statute that requires certain employers to provide written notice at least 60 days before a "plant closing" or a "mass layoff." The statute defines a "plant closing" as a facility shutdown causing "employment loss" for at least 50 full-time employees for 30 days (permanent or temporary shutdowns qualify). A "mass layoff" is a reduction-in-force, not associated with a plant closing, of 50 full-time employees who constitute at least 33 percent of the active workforce. "Employment loss" under the statute is an involuntary termination (excluding those terminations for cause) exceeding six months or a reduction in more than 50 percent of employees' work hours.

Employers may be exempt from these rules, allowing them to give notice as soon as practicable, such as in cases of natural disasters. The statute states, "No notice under this chapter shall be required if the plant closing or mass layoff is due to any form of natural disasters, such as a flood, earthquake, or …drought." Employers must show that the shutdown is a direct result of the disaster.

 In this case, a provider of fracking services laid off its employees in March 2020 after oil prices went down. The employees sued, and the employer asserted WARN's natural disaster exception for failing to give the requisite notice. The appellate court ruled that the pandemic did not qualify as a natural disaster under the WARN Act exception. In addition, employers must demonstrate that the mass layoff is a "direct result" of the disaster, which it could not in this case.