WARN Act does not apply to pandemic: Appeals court

The COVID-19 pandemic is not a natural disaster that exempts employers from complying with the Worker Adjustment and Retraining Act, the 1989 law that requires companies to give affected employees 60 days’ notice of a plant closing or mass layoff, a federal appeals court said Wednesday.  

Crew members of Houston-based US Well Services Inc., which performs fracking services, were told they were being laid off immediately in March 2020 because of “unforeseeable business circumstances,” caused by a drop in oil prices and the pandemic, according to the ruling by the 5th U.S. Circuit Court of Appeals in New Orleans in Scott Easom; Adrian Howard; John Nau v. US Well Services Inc. 

Crew members filed a class-action complaint against the company in U.S. District Court in Houston for allegedly violating the WARN Act by terminating them without advance notice, arguing that COVID-19 was not a natural disaster and not a direct cause of their layoffs.  

The company contended the pandemic was a natural disaster, and was therefore exempt from the WARN Act’s notice requirement. 

The district court ruled that COVID-19 was a natural disaster but denied motions for summary judgment in the case on the basis the record did not show whether COVID-19 was the “but for” cause of the layoffs. 

Citing an earlier ruling, a three-judge appeals court panel ruled that the WARN Act, which was “adopted in response to the extensive worker dislocation that occurred in the 1970s and 1980s” does not qualify as a natural disaster under the law’s natural disaster exemption. 

The ruling also held that under a Department of Labor regulation, to qualify for a natural disaster exemption an employer must be able to demonstrate that its plant closing or mass layoff is “a direct result of a natural disaster.”  

The panel reversed the lower court and remanded the case for further proceedings. 

Attorneys in the case did not respond to requests for comment.