Sudden Downturn in Economy May Be Considered "Unforeseeable Business Circumstance" Under WARN Act

Author: James M. Moakley

In United Steel Workers of America Local 2660 v. United States Steel Corporation, +2011 U.S. Dist. LEXIS 91633 (D. Minn. 2011), the United States District Court for the District of Minnesota addressed whether an employer violated the Worker Adjustment and Retraining Notification Act (WARN Act) by providing insufficient notice to its employees of a mass layoff following a sudden economic downturn.

The WARN Act, which applies to businesses that employ 100 or more full time employees, requires an employer to provide its employees or their union representatives with at least 60 days' advance notice of any plant closing or mass layoff. An employer may be excused from the 60-day period if the plant closing or mass layoff is caused by business circumstances that were not reasonably foreseeable at the time notice would have been required. The employer is still required to give as much notice as practicable and must provide a brief statement of the reasons for reducing the notice period. An employer that violates the 60-day notice requirement may be liable for back pay and benefits to each affected employee for each day that the required notice was not provided.

In this case, the court held that the employer did not violate the WARN Act when it failed to comply with the 60-day notice requirement, finding that the sudden economic downturn triggered the unforeseeable business circumstances exception of the statute.