WARN Act COVID-19 Lawsuits on the Rise

Published: February 4, 2021

Recently, the attorneys responsible for filing a much-publicized Florida class action against Enterprise Rental Car alleging violations of the Worker Adjustment and Retraining Notification Act (“WARN”) struck again; this time the suit is against a chain of hotels in Florida. Rosen Hotels and Resorts, Inc. (“Rosen Hotels”) is now defending a proposed class action arising out of a “temporary furlough” of approximately 1,000 employees on April 10, 2020, during the early weeks of the pandemic. Plaintiff states that the layoff has now exceeded six months, and employees have not received any notice as to their employment status since the furlough. Under WARN, an employee does not suffer an “employment loss,” in a layoff scenario, unless the layoff exceeds six months.

The class complaint focuses on nine Rosen Hotels facilities in the Orlando area. In total, Rosen Hotels allegedly had 4,500 employees, with at least 50 employees and 33% of the workforce laid off at each facility. The WARN Act requires employers of 100 or more employees to provide 60 days advance notice of a “plant closing” or “mass layoff.” The onset of the pandemic found some employers, especially those in the hospitality industry, in a difficult position with the country shutting down so quickly. That left them with little to no time to issue WARN notices before either laying off their employees in what they hoped would be “temporary furloughs” or shuttering their businesses entirely.

The pandemic also found employers in the position of having to rely on two possible exceptions within the Act that would allow for less than 60 days’ notice: the natural disaster exception and the unforeseeable business circumstances exception. The Enterprise case, also out of Florida and brought by the same attorneys, is the nation’s test case on these exceptions. The federal judge handling the case denied Enterprise’s motion to dismiss after analyzing these exceptions. The case will proceed through discovery to determine if the unforeseeable business circumstances defense applies to “soften” WARN’s notice requirements. With regard to the natural disaster exception, Enterprise has requested to appeal the court’s ruling that it does not apply to COVID-19 layoffs. It argues that the 11th Circuit Court of Appeals should review the threshold issue of whether this exception may be asserted as a defense in WARN litigation.

We will continue to watch these cases as they move through the system. While Florida and 11th Circuit law may not directly apply to your operations, the reasoning of these courts is likely to be considered by other courts facing these same issues. If these cases are any indication, a WARN Act claim will not be immediately dismissed under either of these exceptions, so expect some time in court if a claim is made against your business. Finally, if you’ve got employees out on layoff or furlough status, you should be watching the clock as it approaches the six-month mark. You may still have time to cure any WARN violations.

If you have questions about how the WARN Act might affect your business, please contact the author of this alert.

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