Court Rejects Pandemic As Natural Disaster Under WARN ACT

The U.S. Court of Appeals for the Fifth Circuit has determined that the COVID-19 pandemic does not qualify for the natural-disaster exception to the Worker Adjustment and Retraining Notification Act (“WARN Act”). While this court does not have jurisdiction over the federal courts in Nevada, its decision is still important to Nevada employers because of the unique nature of this legal question.

The WARN Act requires covered employers to give employees sixty days’ advance notice of certain types of large-scale business closures and reductions-in-force. WARN Act litigation, which can take the form of a class action, can be complicated and expensive.

There are certain exceptions to the WARN Act where an employer’s failure to give notice may be wholly or partially excused. Two of these exceptions – for natural disasters and unforeseen business circumstances – became relevant during the pandemic when employers faced unexpected, lengthy closings. Neither the WARN Act nor the courts had addressed the question of whether these exceptions would apply to government-ordered closures during a pandemic.

On June 15, 2022, the Fifth Circuit Court of Appeals determined that the COVID-19 pandemic does not qualify as a natural disaster under the WARN Act. The court reasoned that while the Act does not define natural disaster, the language of the natural-disaster exception uses the examples of “floods, earthquakes, or droughts.” Therefore, the court determined that this exception was meant to apply to “hydrological, geological, and meteorological events” rather than infectious diseases and pandemics.

It remains to be seen whether other federal courts will agree with or reject this reasoning. We will continue to monitor this area of the law for other decisions.

In the meantime, the Department of Labor (DOL) has now issued a guidance for employers on the WARN Act and COVID-19. While its position is not binding on the courts, the DOL believes that the WARN Act’s business necessity exception may apply to the pandemic in some situations.

We will continue to keep you updated on developments in this area. If you have questions about the WARN Act, please contact a KZA attorney.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.