Nevada Employers Should Consider WARN Act Obligations During Reopening

By Kamer Zucker Abbott

May 14, 2020

With equal measures of anticipation and trepidation, Nevada has entered Phase 1 of Governor Sisolak’s Nevada United: Roadmap to Recovery, beginning the process of reopening the state’s economy. As Nevada employers gear-up to meet the varied challenges associated with returning to normalcy, many are realizing the journey back will be a long one. For this reason, it is important for Nevada employers to assess whether they have notice obligations under the federal Worker Adjustment and Retraining Notification Act (“WARN Act”).

Enacted in 1988, the WARN Act provides protections to workers and their families by requiring covered employers to provide 60-calendar days advance notice of certain types of large-scale business closures and reductions-in-force. Even where companies are confronted with something completely unexpected, like a natural disaster, the WARN Act requires covered employers to provide “as much notice as practicable,” even if such notice is after the fact.

Liability for failure to issue WARN Act notices can include back pay, benefits, attorney’s fees, and civil fines. Additionally, WARN Act litigation, which can take the form of a class action, can be complicated and expensive. Unfortunately, none of the COVID-19 related legislation passed by Congress to date contains any sort of protection from potential WARN Act liability stemming from the government-ordered closures of or restrictions upon businesses. Accordingly, Nevada employers are wise to promptly assess their obligations under the WARN Act and to keep the WARN Act in mind as business and COVID-19 developments occur in the coming months.

We have outlined WARN Act basics below. If you believe the WARN Act may be applicable in your workplace, we urge you to contact a KZA attorney to discuss the WARN Act’s nuances in more detail.

Who is covered by the WARN Act?

The WARN Act applies to private businesses, including non-profit organizations, employing: (a) 100 or more employees, excluding part-time employees; or (b) 100 or more employees, including part-time employees, who in the aggregate work at least 4,000 hours per week. A part-time employee is defined as an employee who is employed for an average of fewer than 20 hours per week or who has been employed for fewer than 6 of the 12 months preceding the date on which notice is required.Employees on temporary layoff or leave who have a reasonable expectation of recall are counted.

The 100-employee test is normally measured on a “snapshot” basis on the date the WARN Act notice is required to be given. Independent contractors and subsidiaries which are wholly or partially owned by a parent company are treated as separate employers or as part of the parent or contracting company depending on the degree of their independence from the parent. Some of the factors used to make this determination are: common ownership;common directors and/or officers; de facto exercise of control; unity of personnel policies emanating from a common source; and dependency of operation.

What triggers a need for notice?

Notice under the WARN Act is triggered as a result of a “plant closing” or a “mass layoff.”

A plant closing involves either (a) a permanent or temporary shutdown of a single site of employment; or (b) a permanent or temporary shutdown of one or more facilities (buildings) or operating units within a single site of employment, which results in the loss of employment of at least 50 employees, excluding part-time employees. The term “operating unit” refers to an organizationally or operationally distinct product, operation, or specific work function within or across facilities at a single site.

A mass layoff is a reduction-in-force, which is not the result of a plant closing, that results in an employment loss at a single site of employment for either (a) 33% or more of the active employees, excluding part-time employees, but at least 50 employees; or (b) 500 employees, excluding part-time employees.An “employment loss” includes more than just employees who are terminated.Both layoffs exceeding 6 months and a reduction in hours of work(of individual employees)exceeding 50% during each month of any 6-month period also constitute employment loss.

What is the time frame for this analysis?

Typically, the level of employment loss associated with a plant closing or mass lay off is measured within a 30-day window with the date of the first employment loss within the 30-day period triggering the WARN Act’s 60-day notice requirement. Subsequent groups experiencing employment loss are also entitled to a full 60-day notice. Thus, in order to determine whether WARN Act notice is required, an employer normally looks ahead thirty (30) days and behind thirty (30) days to determine whether employment actions will, in the aggregate, reach the minimum numbers for a plant closing or mass layoff. If so, notice must be given.

Additionally, if two (2) or more employee groups suffer employment losses at a single site of employment during a ninety (90) day period, which separately are not of sufficient size to trigger the WARN Act, the groups will be aggregated. If the employment actions, in the aggregate, reach the minimum numbers for a plant closing or mass layoff, notice must be given.

Who receives notice?

Notice must be given to the affected employees (or their collective bargaining representatives) as well as the Rapid Response Unit of Nevada’s Department of Employment, Training & Rehabilitation’s Employment Security Division, as well as the chief elected local government official (typically a city’s mayor or the chairperson of the county commissioners).

What should be contained in the notice and how is it delivered?

The WARN Act and Department of Labor regulations set forth the specific information that must be included in each type of notice. In general, notices should include such information as:
• the name and telephone number of a company official from whom further information may be obtained;
• a statement as to whether the planned action is permanent or temporary and, if the entire plant is to be closed, a statement to that effect;
• the expected date when the plant closing or mass layoff will commence and the expected date when the individual employee will be separated; and
• a statement as to whether bumping rights exist.

Notice may be served using any reasonable method of delivery designed to ensure receipt of notice of least 60 days before employment loss, such as first-class mail or personal delivery with optional signed receipt.

Are there exceptions to the WARN Act’s notice requirements?

There are circumstances under which notice obligations can be wholly or partially waived, including natural disasters, unforeseen business circumstances,or the inability to secure sought-after financing or business necessary to keep a company from faltering. However, the criteria for these exceptions are complicated, fact specific, and often the subject of litigation. While the COVID-19 pandemic may arguably fit within one of the exceptions,an employer runs the risk of losing that argument especially given the absence of any specific legislative or regulatory guidance. Moreover,even if an exception applies, the WARN Act still requires covered employers to provide as much notice as practicable and explain in the WARN Act notice why it is giving fewer than 60-days’ notice.