Podcast: Handling COVID-19 Plant Closing and Furlough Issues

The news has been rather bleak on the employment front of late to say the least. A record 6.6 million Americans filed unemployment benefits claims last week, after nearly 3.3 million unemployment benefits claims were filed two weeks ago, up from just 200,000 one month ago. At the heart of this has been the spiraling number of business closings and temporary shutdowns taking place amid COVID-19.

On this podcast, Ford Harrison employment attorney Amy Turci joins XpertHR Legal Editor David Weisenfeld to discuss what employers need to know about the Worker Adjustment Retraining and Notification (WARN) Act, plant closings and temporary furlough issues. Turci is a member of her firm's Coronavirus Taskforce and practices with its Jacksonville, Florida, office.

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Transcript

David Weisenfeld: I'm David Weisenfeld for XpertHR.com, published by Reed Business Information and proudly partnered with LexisNexis.

On this podcast our attention turns to COVID-19 issues that unfortunately have moved rapidly to the forefront - plant closures and furloughs. Normally, the federal WARN Act imposes strict requirements on larger employers and their need to provide 60 days' written advance notice before closing their doors or having a mass layoff.

But little is normal amid what's become the so-called 'new normal' these days, so this calls for a much closer look at not only the WARN Act but how a host of furlough-related issues apply during this coronavirus pandemic.

Joining me to share some expertise is Ford Harrison employment attorney Amy Turci, a partner in her firm's Jacksonville, Florida, office. In addition to her many years representing employers, Amy has a Master's in Business so brings a unique perspective, and she recently co-presented a webinar on coronavirus issues affecting employers. Amy, it's good to have you on the podcast. [0:01:23.6]

Amy Turci: Thank you, David. I'm happy to join you.

David Weisenfeld: Well Amy, so many people affected in so many ways on this. So I'll start by just asking on a personal level how this crisis has affected Florida where you are, and how it's affected your work. [0:01:36.9]

Amy Turci: Sure. So here in Florida our governor has declared a state of emergency in order to qualify for federal dollars. Today pretty much all of the major municipalities in Florida have issued some variation of a shelter-in-place order, and personally as part of Ford Harrison's Coronavirus Taskforce I have been working on really little else for the past three weeks except advising employers on this ever-changing landscape.

David Weisenfeld: As we record this, news broke that nearly 3.3 million unemployment benefits claims were filed last week. That was a new record. Just a few weeks ago it was scarcely 200,000 nationwide. That is an absolutely staggering increase. So I can only imagine the questions that your firm must be getting. Are you hearing a lot from clients who might have had to either shut down altogether or let a large percentage of their staff go? [0:02:31.8]

Amy Turci: Yes, we are certainly hearing from our employers who are seeking out advice on what to do with their workforce. The questions kind of started trickling in and then really we saw kind of the floodgates open right around the middle of March.

I think maybe it was the NBA shutting down and Disneyworld closing that really brought it to the forefront that this is something serious that we're having to deal with. And yes, we are seeing some employers that are forced to shut down altogether. Obviously the restaurants and travel industries are particularly vulnerable right now.

You mentioned the unemployment insurance benefit, and obviously that's a state benefit that states are applying differently, but we are seeing states waive the requirement that employees who are temporarily laid off or furloughed be actively searching for other employment in order to receive benefits.

And you mentioned the $2 trillion stimulus package, and that does include a pandemic unemployment insurance assistance benefit, which provides that individuals will receive the regular state unemployment benefit amount plus $600 for an additional 13 weeks. And that act also extends the benefit period from 26 weeks to 39 weeks, removes the one-week waiting period for benefits, and permits individuals to receive benefits without having to be actively seeking work.

David Weisenfeld: Yeah, it's amazing how fast this has all come about. As you noted, literally Disneyworld closing, the NBA and all the sports shutting down in about 24 hours' time and then all the workplaces pretty much following suit where now everybody or most people are working remotely. [0:04:11.3]

Amy Turci: Yeah, definitely. I mean, here in Duval County on Monday afternoon our mayor announced an executive order would be forthcoming that mandated that employers direct employees to work from home if they were able to perform their work remotely, and that that was going into effect Tuesday morning at 8am. So I didn't personally even receive a copy of it until I think 8pm on Monday night, and here we're having to implement it by Tuesday at 8am.

David Weisenfeld: It seems like a lot of those all across the country. Amy, I also wanted to ask you about people who've been temporarily furloughed or gig workers. Will they be covered by that $2 trillion stimulus bill that you mentioned? [0:04:55.0]

Amy Turci: In the private sector there isn't really a true distinction between a furlough and a temporary layoff, but yes the temporary layoff or furloughs, the benefits are being extended in that those individuals are not being required to actively seek out work. So yes, they're able to receive unemployment benefits.

David Weisenfeld: Again we're speaking with Ford Harrison employment attorney Amy Turci, who's a member of her firm's Coronavirus Taskforce. And Amy, I wanted to shift gears to the WARN Act because that's silent as to whether a pandemic qualifies as an exception to its notice requirement. But there was big news in California recently, not normally known as a pro-employer state to say the least, but they recently suspended their 60-day notice requirement if a layoff is COVID-19-related. What did you make of that? [0:05:46.1]

Amy Turci: So for a covered employer, which in general is employers who have 100 or more employees, the federal WARN Act requires that a 60-day notice be given of a plant closure or a layoff affecting 50 or more employees at a single site or a mass layoff, which will extend for six months. And you're correct that the WARN Act has never been construed by courts in the context of anything remotely similar to the COVID-19 pandemic.

The Act does provide for an unforeseeable business circumstances exception that is likely applicable to what we're going through right now. So under this exception an employer may order a plant closing or a layoff before the conclusion of the 60-day notice period in the event of a business circumstance that was unforeseeable at the time that notice would have normally been required. So the key in this situation is that the employer is not absolved of giving notice, but rather employers are required to provide notice only as soon as it becomes reasonably foreseeable that temporary layoffs or closures are likely to extend for six months.

And as you mentioned, prior to last week California's mini-WARN Act did not have an unforeseen business exception for providing a full 60 days' worth of notice. So Governor Newsom obviously recognized that this was an issue, given what we're going through, so his executive order temporarily permits employers operating in California to utilize that unforeseen business circumstances exception. So that 60-day notice provision is suspended, but employers are still required to give the written notices that are specified in California's mini-WARN Act.

David Weisenfeld: And many other states have these mini-WARN Acts as well, which in a number of cases go further than the federal WARN Act. Do you expect that other states are going to follow California's lead here? [0:07:35.8]

Amy Turci: So California was pretty unique in its mini WARN Act in that it did not previously allow for that unforeseen business circumstances exception, but we are seeing other states such as New York specifically post on their Department of Labor website language that acknowledges that the unforeseen business circumstances exception does apply to the COVID-19 pandemic.

David Weisenfeld: Well as we record this nearly 200 million people in more than 20 states have been ordered to stay at home, and we already were alluding to that a bit earlier. What do these shelter-in-place directives mean for the state mini-WARN Acts in general, because it would seem that they might throw them out the window because it's tough to give notice if the government is ordering you to close down? [0:08:23.4]

Amy Turci: So under those circumstances the federal WARN Act and mini-WARN Acts would likely come into play again under that unforeseen business exception, which is evidenced by the language that's currently on the New York State Department of Labor site. So if an employer is forced to shut down certain operations, such that those actions would fall into the plant closing or layoff definitions under WARN due to a government-mandated closure, then an employer would be required to provide notice to the affected employees as soon as it becomes reasonably foreseeable that those layoffs or closings are likely to extend for six months.

David Weisenfeld: Nobody truly knows, of course, how long this crisis is going to last. So putting on our hats and looking into the crystal ball a little bit, looking down the road, what should employers do if they must extend a layoff that they originally expected was going to be temporary, or much less than, say, five or six months, and all of a sudden it looks like it's going to have to be longer? [0:09:25.6]

Amy Turci: You know at this time the federal WARN Act notices and the mini-WARN Acts are depending upon what the requirements are of each of those individually, are likely not required at this time for temporary layoffs. Employers will be required to provide that notice as soon as it becomes reasonably foreseeable that temporary layoffs affecting 50 or more full-time employees at any single site of employment are likely to extend for six months.

So the safest approach from a perspective of just limiting risk of liability under the WARN Act would be to provide notice to affected employees at the time of temporary layoffs, but really employers have to balance that against business considerations. It might not be the best business decision, balancing it against the risk of losing key employees or losing a large number of your workforce once you issue WARN notices.

David Weisenfeld: And I'd imagine good faith is important too because you may well not be able to give 60 days or even 30 days or even 15 days, but if you communicate with your employees and have an open dialogue I would think that that would go a long way as well. [0:10:26.4]

Amy Turci: Right. Really under the WARN Act it anticipates issuing multiple notices as the business landscape changes. So the safest thing is to issue the notice as soon as it becomes reasonably foreseeable that a closing could extend to that six-month mark. It doesn't mean that obviously you have to close it then. You would just provide rolling notices.

David Weisenfeld: Shifting gears a little bit just for a moment, Amy, I was wondering if employers can keep employees on their group health plan during a furlough, because I'd imagine that's something that you might be getting a question or two about. [0:10:59.9]

Amy Turci: Definitely, and that's really a question for employers to address with their benefits providers or to consult with employee benefits counsel in connection with a review of their summary plan description, because in many instances furloughs or temporary layoffs can be considered qualifying events for COBRA notices depending on the length of the layoff or furlough.

David Weisenfeld: And one other one that I wanted to ask has to do with employees lucky enough not to be let go. They're not part of a furlough or shutdown, but maybe their hours were reduced and they're facing the likelihood of pay cuts. May an employer reduce a salaried employee's pay when it reduces their hours? [0:11:38.5]

Amy Turci: Under the Fair Labor Standards Act an employer may reduce the salary of an exempt employee during an economic slowdown, and this will not result in the loss of the exemption as long as the employee still receives a salary of at least $684 per week. And it's important to note many states also have wage change notice requirements that employers need to be sure that they're meeting prior to reducing salaries or even hourly wages.

Also, employers do need to be mindful that if an exempt employee works at all during the workweek he's entitled to receive his full salary for that week.

David Weisenfeld: Okay, well we've just got a little over a minute or so left, Amy, so any final thoughts or perhaps questions that you're hearing a lot of from clients on the frontlines that perhaps we haven't addressed yet? [0:12:27.5]

Amy Turci: Sure, well as you alluded to there's a lot of information coming out on this very quickly and these are incredibly stressful times. So I would just encourage everyone to reach out virtually to those who can offer assistance and guidance, whether for a business question or personal advice. And make sure your employees have the contact information for your employee assistance program so that we can all support each other in getting through this.

David Weisenfeld: Well we'll let that be the last word. Amy Turci is a partner with Ford Harrison's Jacksonville, Florida office, where she represents employers. Amy, I know a tough time for everyone. Thanks for taking a few minutes out of your day to share your insights. [0:13:05.1]

Amy Turci: Thank you so much, David. I enjoyed talking to you.

David Weisenfeld: I'm David Weisenfeld. For more on this issue check out XpertHR.com's Editor's Choice on COVID-19 furloughs and temporary layoffs, and you won't want to miss another recent podcast of ours, How Employers Should Handle Coronavirus Concerns.

The opinions expressed in this program do not represent legal advice, nor should they necessarily be taken as the views of XpertHR or its employees. XpertHR.com is published by Reed Business Information, and is proudly partnered with LexisNexis.

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