Large employers intending to lay off a significant number of their employees are required by the Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act") to give the targeted employees 60 days' advance notice of the layoffs. However, there are certain exceptions to the notice requirement in cases where the employer is a "faltering business" or a "liquidating fiduciary," or where "unforeseeable business circumstances" or a "natural disaster" make it impracticable or impossible to provide 60 days' advance notice of a mass layoff.
The U.S. Bankruptcy Court for the District of Delaware recently examined the scope of these exceptions in a case involving mass layoffs by a company that filed for chapter 11 protection to liquidate its assets at the beginning of the COVID-19 pandemic. In In re Art Van Furniture, LLC, 638 B.R. 523 (Bankr. D. Del. 2022), the court ruled that, although a debtor-employer did not qualify as a liquidating fiduciary because it continued operating after the petition date, the debtor was excused from full compliance with the WARN Act notification requirement due to the COVID-19 pandemic, which represented both an unforeseeable business circumstance and a natural disaster.
The WARN Act
Enacted in 1988, the WARN Act protects workers, their families, and communities by requiring most employers with 100 or more employees to provide notification of plant closings and mass layoffs 60 calendar days prior to the event. See 29 U.S.C. § 2102(a).
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