Federal District Court Rejects Employer’s Attempt to Rely on Covid-19 Pandemic as “Natural Disaster” or “Unforeseeable Business Circumstance” To Justify a Departure from WARN Act’s Notice Requirement

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In a recent decision, the U.S. District Court for the Middle District of Florida declined to dismiss WARN Act claims asserted by employees who were laid off during the COVID-19 pandemic. Benson et al. v. Enterprise Leasing Company of Florida LLC et al., No. 6:20-cv-00891, (M.D. Fla. Jan. 4, 2021). The decision may provide a preview of how other federal courts will handle pandemic-related WARN Act claims, as employers could find it difficult to persuade courts to dismiss these claims at an early stage in the proceedings.  

The WARN Act:

The Worker Adjustment and Retraining Notification Act (the “WARN Act”) requires employers with 100 or more employees to provide at least sixty days’ notice when they intend to fire or lay off more than 50 employees. To bring a claim under the WARN Act, plaintiffs must show that the employer fired employees as part of a mass layoff or plant closing and that those employees were entitled to the statutory 60-day notice.  

The WARN Act provides employers with certain affirmative defenses that they may use to argue that they could not have reasonably complied with the Act’s notice requirements.

Pursuant to the “natural disaster” defense, businesses are not required to give any advance notice of a layoff or plant closure in the event of a natural disaster. The WARN Act defines a natural disaster as “any form of natural disaster, such as a flood, earthquake, or the drought currently ravaging the farmlands of the United States.”

Similarly, the “unforeseeable business circumstances” defense exempts employers from the normal 60-day notice requirement, stating that employers must only provide as much notice “as is practicable” when there is a “sudden, dramatic and unexpected action or condition outside the employer’s control.”

Background and Claims:

Plaintiffs Elva Benson and Patrina Moore worked for rental car companies owned by Enterprise Holdings, Inc. as a rental agent and clerk, respectively. Both employees were let go in April 2020 during layoffs at Enterprise’s Orlando and Tampa airport locations. Following their layoffs, Plaintiffs filed a proposed class action, asserting claims that Enterprise violated the WARN Act by implementing the layoffs without providing proper notice.

Enterprise’s Motion to Dismiss:

In response to the Complaint,  Enterprise filed a motion seeking to dismiss Plaintiffs’ claims based on the “natural disaster” and “unforeseeable business circumstances” defenses.  

The Court’s Decision:

The District Court rejected Enterprise’s attempt to dismiss the case under both affirmative defenses.

Discussing the natural disaster defense, the Court opined that a pandemic such as Covid-19 could qualify as a “natural disaster” under the WARN Act. However, the statute requires that a layoff or plant closing be the “direct result” of a natural disaster, which the Complaint did not allege. The Court explained, “[t]his isn’t a situation where, for example, a factory was destroyed overnight by a massive flood—that would be a ‘direct result’ of a natural disaster.” The Court further noted that the Department of Labor had provided guidance that Covid-19 may constitute an “unforeseeable business circumstance,” but the guidance failed to even reference the natural disaster exception. 

The Court was less decisive in rejecting Enterprise’s “unforeseeable business circumstance” defense.  The Court noted that, unlike the natural disaster defense, the unforeseeable business circumstance exemption only softens the employer’s notice requirement, rather than eliminating it entirely. Nonetheless, the Court declined to dismiss Plaintiffs’ claims under this defense, noting that “[n]othing in the Complaint or attached documents clarify Defendants couldn’t have given more notice, as required by statute.” (emphasis in original). The Court  added, “Exactly when Defendants had to give notice will doubtless be a hotly contested factual issue, but at this stage, taking the allegations in the Complaint as true, Plaintiff has stated a claim for a WARN Act violation.”

Takeaways:

While the decision will not bind other courts in similar cases, the ruling may dim employers’ hopes of relying on the natural disaster and unforeseen business circumstances defenses to avoid WARN Act claims stemming from pandemic-related layoffs.

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