On June 15, 2022, the U.S. Court of Appeals for the Fifth Circuit held that COVID-19 does not qualify as a “natural disaster” under the federal Workers’ Adjustment and Retraining Notification (“WARN”) Act, effectively foreclosing one important argument used by employers in defense of COVID-19-related WARN lawsuits.  As this is the only appellate court to affirmatively interpret WARN’s “natural disaster” exception, barring a split by other circuits, this case sets an important precedent in ongoing COVID-19-related WARN litigation, as well as WARN suits related to future pandemics.

In the case before the Fifth Circuit, employees of a Texas oil “fracking” company filed a class action alleging that the company violated the WARN Act after the company terminated them without any advance notice.  The employees were terminated on March 18, 2020, due to the crash in the price of oil after the declaration of the COVID-19 pandemic as national emergency caused widespread COVID-related lockdowns and a precipitous drop in the demand for oil.  The employees were provided with written notice on the date of their termination invoking the WARN “unforeseeable business circumstances” exception, and the company also filed WARN notices with the Texas Department of Labor.

In an effort to bring the matter to quick conclusion, the company moved for summary judgment on the basis of the “natural disaster” exception to WARN, arguing that the COVID-19 pandemic was a form of “natural disaster” that caused the layoffs.  Under the “natural disaster” exception, WARN effectively does not apply to the situation as an employer is not responsible to provide any WARN notice at all.  This is unlike the “unforeseeable business circumstances” and “faltering company” exceptions, under which the employer bears the burden of not only proving that the exceptions apply, but that the employer has otherwise complied with WARN notice requirements.

Although WARN does not explicitly define “natural disaster”, the statute cites the following examples, “such as a flood, earthquake, or drought”. [1] Relying on principles of statutory construction, the Fifth Circuit disagreed with the district court’s analysis that the examples cited in the statute were illustrative, not exhaustive, and declined to expand the definition of “natural disaster” beyond the examples given (i.e. hydrological, geological, and meteorological events).  The court reasoned that Congress was familiar with pandemics at the time of the WARN Act’s passage and could have included terms like “disease,” “pandemic” or “virus” in the examples listed.  According to the Fifth Circuit, Congress choosing not to do so justified the inference that those terms were deliberately excluded.  The decision was in sharp contrast to the district court’s interpretation and analysis, which suggested that COVID-19 qualified as a “natural” disaster because, among other reasons, human beings did not start or consciously spread it.

Relatedly, the Fifth Circuit also found that for the “natural disaster” exception to apply, employers need to show that the “natural disaster” was merely a proximate, rather than the “but for”, cause of the layoffs.  In so holding, the court relied on U.S. Department of Labor (“DOL”) regulations and binding precedent.

The question of the application of the “unforeseeable business circumstances” exception was not before the Fifth Circuit on this interlocutory motion for summary judgment.  Therefore, the case will now head back to the district court for further proceedings to determine if the drilling company can avoid liability under WARN’s “unforeseeable business circumstances” exception defense. As noted in our previous blog on COVID-19-related WARN Act FAQs issued by the DOL, such a defense, while potentially viable, will require the employer to prove that the layoffs were not reasonably foreseeable at the time WARN notices would have been required and that the company otherwise complied with WARN notice obligations.

[1] 29 U.S.C. sec. 2102(b)(2)(B).

Back to Workforce Bulletin Blog

Search This Blog

Blog Editors

Authors

Related Services

Topics

Archives

Jump to Page

Subscribe

Sign up to receive an email notification when new Workforce Bulletin posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.