Another period of financial uncertainty is looming. Considering recent mass layoffs in the tech industry, rising inflation, and other economic challenges that are projected to surface during the coming months, savvy employers should refresh themselves regarding the notice obligations for mass layoffs and plant closings under the federal Worker Adjustment and Retraining Notification Act (WARN Act) and related state law analogs. They also should consider whether their pandemic-era remote employees may ultimately qualify for protection under those statutes, in the event that a sudden financial downturn strikes. A recent decision from 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 the federal WARN Act require generally? As an initial matter, the Act applies to private for-profit businesses, private nonprofit organizations, or quasi-public entities with (1) 100 or more employees, excluding "part-time employees" who have spent less than six months on the job in the last 12 months and those who work fewer than 20 hours per week; and those with (2) 100 or more employees total, who work at least a combined 4,000 hours per week.
With certain exceptions, these covered employers must provide particular advance notice to any employees affected by a (1) "plant closing," defined as "the permanent or temporary shutdown" of a "single site of employment, or one or more facilities or operating units within a single site of employment" that causes 50 or more employees to lose their jobs during any 30-day period; and (2) a "mass layoff" that results in an employment loss at "a single site of employment" during any 30-day period for (i) at least 50 employees, with the percentage loss totaling at least 33 percent of the employees at the site, or (ii) at least 500 employees 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 term "single site of employment" 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 one centralized job site. That said, guidance from the U.S. Department of Labor (DOL) provides that—for employees who are "outstationed" or "whose primary duties involve work outside any of the employer's regular employment sites"—their "single site of employment" is the location "to which they are assigned as their home base, from which their work is assigned, or to which they report." The impact of this regulation on remote workers is evolving, as the issue begins to come to the fore due to pandemic-era increases in telework.
For example, the Eastern District of Virginia confronted the issue of WARN Act applicability for remote employees earlier this year, in a case that involved a motion to certify a class of plaintiffs. In Piron v. General Dynamics Information Technology, Inc., the proposed class consisted of employees who worked remotely pursuant to the employer's Flexible Work Location policy, which allowed them to operate from a home office. These employees all reported to and received assignments from managers who were situated in the employer's Virginia office. When the remote employees were laid off, they filed a class action lawsuit against the employer under the WARN Act, asserting they were not provided with the advance notice required for "mass layoffs" occurring at a "single site of employment." They sued for back pay and employee benefits, alleging that they were part of a single site of employment because they reported to and received assignments from one 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 site of employment," and therefore could not demonstrate that common questions of law and fact would predominate over any questions affecting only individual class members. In finding otherwise, the District Court held that because the Flexible Work Location policy applied to all employees, it would be able to assess the class collectively to determine whether they satisfied the "single site of employment" requirement for purposes of WARN Act liability. Although the Court took no position at that stage as to whether the remote employees did in fact all operate from a single site for WARN Act purposes, the decision reflects a judicial willingness to consider the possibility that the DOL's "outstationed" regulation may apply to dispersed remote employees who receive direction from a single corporate office.
As future litigation arises, courts around the country will continue to make a variety of fact determinations regarding WARN Act applicability for remote workers under the DOL regulation. For example, what does it mean to "report" to a particular location? If a remote employee records his or her time worked at one office location where central Human Resources operations are located, but then has to regularly attend virtual group meetings hosted from another, to which location does he or she "report" for purposes of assessing a mass layoff? These and other considerations merit advance consultation with employment counsel when considering reductions in force that stand to affect remote employees.
Beyond the federal WARN Act, what additional obligations might employers have under state law? Certain jurisdictions impose their own state WARN Act requirements, which are often more stringent than those under the federal law. New York's 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, as opposed to 100 under the federal WARN Act. Among other qualifying events, the New York statute requires that employees and other specified recipients receive advance notice if a layoff from a single site of employment affects either 33 percent of the workforce, for a total of at least 25 employees (as opposed to the federal law's 50), or 250 employees in total (down from the federal threshold of 500). It also mandates that employers provide notice of a covered event 30 days sooner than under the federal WARN Act. If a Michigan employer with a large workforce permits its employees to work remotely from any location, and 50 or more ultimately work in New York State, that employer will need to evaluate whether it must comply with New York State's WARN Act requirements should a layoff affect those individuals.