A Friendly Furlough WARNing for Employers

We're all facing unusual levels of uncertainty as we deal with the wrath of the COVID-19 pandemic. Employers and employees alike are doing the best they can despite the extraordinary circumstances, but things are on the verge of getting even stranger, particularly as it relates to the federal Worker Adjustment and Retraining Notification Act (WARN) Act. We’ve touched on the WARN Act before, but we’ll refresh your memory.

The WARN Act mandates that employers with 100+ employees provide at least 60 days’ notice in certain cases of plant closings and mass layoffs – specifically closings and layoffs impacting 50+ employees at a single employment site. Employers should also be aware if their state has its own stricter counterpart, referred to as a mini-WARN. Since furloughs begin as short-term solutions, at what point does a furlough teeter into layoff territory, triggering the WARN Act? The answer is somewhat convoluted, but we'll do our best to break it down for you.

Since the WARN Act itself was designed to protect workers, their families, and communities, it’s most frequently applied to layoffs. However, with the purpose of advance notice in mind, furloughs can meet the WARN threshold if they affect employees longer than originally anticipated. Furloughs tend to be temporary, meaning employees expect to return to work [within six months] and often even know the anticipated return date. However, if conditions change and furloughs surpass the six-month mark or, even worse, become permanent, the WARN Act can come into play.

As with most laws, the WARN Act has some exceptions. Specifically, a portion of the law reads:

Extension of a layoff period

A layoff of more than 6 months which, at its outset, was announced to be a layoff of 6 months or less, shall be treated as an employment loss under this chapter unless—

(1) the extension beyond 6 months is caused by business circumstances (including unforeseeable changes in price or cost) not reasonably foreseeable at the time of the initial layoff; and

(2) notice is given at the time it becomes reasonably foreseeable that an extension beyond 6 months will be required.

Given COVID-19, most employers probably fall under this exception – for now. However, as the countdown to pre-pandemic normalcy continues to lengthen, the “unforeseen” argument loses its teeth. To remain compliant, employers need to continuously evaluate their situation to provide as much notice as possible as furloughs move beyond short-lived fixes into longer-term remedies.

Then, to muddy the water a bit more, if furloughs transition into layoffs, employers also need to analyze the make-up of the affected workers to look for adverse impacts affecting protected groups. So, while furloughs are designed to be short-lasting solutions, they can instead become long-lasting problems if employers are noncompliant with WARN requirements. Though many companies are feeling the impact of the pandemic, nobody needs the added stress of a complaint filed with the Department of Labor (DOL) or the Equal Employment Opportunity Commission (EEOC).

Heed our warning by evaluating the status of your furloughed employees and, as always, we’re here to keep you compliant. We’d love to show you how our product works!