Fifth Circuit Finds The COVID-19 Pandemic Is Not A Natural Disaster Under The WARN Act

By Gerald L. Maatman, Jr., Alex W. Karasik, and Aaron A. Bauer

Seyfarth Synopsis:  In Easom v. US Nicely Servs., No. 21-20202, 2022 U.S. Application. LEXIS 16556 (5th Cir. June 15, 2022), the employer defendant invoked the Alert Act’s “natural disaster” exception when it carried out mass layoffs in its Texas workforce, due to the sudden financial downturn triggered by the COVID-19 pandemic in March 2020.  The Fifth Circuit held that the COVID-19 pandemic could not be regarded a “natural-disaster” under the Alert Act, and that an employer invoking the “natural-disaster” exception must verify that the party was the proximate result in of the layoffs.  

The Fifth Circuit’s selection demonstrates the relevance of watchful evaluation when selecting whether to invoke an exception to the Warn Act observe prerequisites and preparing these layoffs.

Track record

In March 2020, oil producer US Perfectly was compelled to perform mass layoffs in its Texas workforce thanks to the sudden steep decline in oil need, precipitated by the COVID-19 pandemic.  Later on that summertime, the laid off staff submitted a course action in a Houston federal district court docket from the company, alleging that it violated the Federal Alert Act, 29 U.S.C. § 2102(a), et seq, by failing to present them with at the very least 60 days-detect in advance of conducting the mass layoffs.  Id. at 5.

The Warn Act gives an exception to this 60-working day detect need for mass layoffs that are “due to any form of organic-disaster, such as a flood, earthquake, or [] drought…”  29 U.S.C. § 2102(b)(2)(B).  Defendant US Nicely argued that this statutory exception utilized to it simply because the COVID-19 pandemic was a “natural-disaster” which compelled it to perform mass layoffs.  Id.  The District Court agreed, and also held that US Nicely would only have to verify that COVID-19 was the ‘but-for’ cause of it having to carry out mass layoffs in order to effectively invoke the Alert Act ‘natural-disaster’ exemption.  The terminated staff appealed the District Court’s determination to the U.S. Court docket of Appeals for the Fifth Circuit.  Id.

The Fifth Circuit Holdings

A three choose panel on the Fifth Circuit unanimously held that: (1) COVID-19 is not a natural disaster under the Alert Act’s natural-catastrophe exception and that (2) the Alert Act’s pure-disaster exception necessitates that the employer establish proximate, not only ‘but-for,’ causation.  Id. at 2.

To attain its 1st holding, the Fifth Circuit applied basic principles of statutory interpretation to decide that when Congress handed the Warn Act in 1988, it did not intend to include pandemics and infectious health conditions in just the which means of ‘natural-catastrophe.’  Id. at 12.  For its second keeping, the Fifth Circuit determined that a regulation of the U.S. Division of Labor (“DOL”) – interpreting the Warn Act’s provisions concerning the all-natural-catastrophe exception – presents that a organic catastrophe will have to be the proximate induce of an employer’s mass layoffs, in get for the employer to invoke the exception.  Id. at 16.

The Fifth Circuit used common principles of statutory interpretation.

The Fifth Circuit very first famous that at the time the Alert Act went into effect in 1988, top dictionaries in publication experienced not outlined the time period “natural-disaster.”  Because of this, it could not deduce a ‘plain meaning’ of the expression primarily based on a dictionary definition.  Id. at 8-9.  So the Fifth Circuit then seemed to the language in the Act encompassing ‘natural-disaster,’ in order to establish what sorts of ‘natural events’ Congress experienced intended to include things like inside the term’s indicating.  Employing this contextual looking at of the Act, the court docket identified that Congress experienced selected to limit the which means of the time period “natural-disaster” to “hydrological, geological, and meteorological events” not pandemics and infectious health conditions.  Id. at 9-10.

The Fifth Circuit more reasoned that Congresses determination to exclude pandemics and infectious ailments from the which means of ‘natural-disaster’ was a deliberate decision, since “[b]y the late 1980’s, Congress was familiar with pandemics and infectious health conditions.”  Id. at 11.  Moreover the courtroom observed that supplied the wide remedial objective of the Alert Act to handle in depth employee dislocation that occurred in the 1970’s and 1980’s, it ought to narrowly construe any exceptions to Act’s application.  Consequently, the court docket held that “COVID-19 does not qualify as a all-natural catastrophe underneath the Warn Act’s all-natural-disaster exception.”  Id. at 12.

The Alert Act needs ‘proximate’ causation evaluation

The Fifth Circuit also reviewed how an employer ought to show that a “natural-disaster” caused it to conduct mass layoffs.  The defendant employer argued, and the decreased court held, that it must only have to establish it would not have performed mass layoffs ‘but-for’ a pure-disaster in other text, that the layoffs would not have happened in the absence of a natural catastrophe.  Id. at 4.  The plaintiff appellants disagreed, arguing that the employer really should have to verify that a pure-catastrophe was also the ‘proximate cause’ of its layoffs in other text, that the all-natural-catastrophe was sufficiently linked to the layoffs.  Id. at 12.

The Fifth Circuit sided with the plaintiff appellants.  It appeared to the DOL regulation decoding the Alert Act, which claims that a purely natural-disaster have to be the “direct-cause” of an employer’s layoffs.  It reasoned that, simply because past courtroom precedents have interpreted ‘direct’ and ‘proximate’ causation to be synonymous phrases, an employer invoking the normal disaster exception need to also confirm that a organic catastrophe was the ‘proximate cause’ of its mass layoffs.  Id. at 13-14.  The Fifth Circuit disagreed with the employer’s argument that such a keeping would preclude companies from invoking the recognize exception for normal-disasters this sort of as hurricanes, in which the hurricane may well lead to gentleman-designed levies to split, triggering flooding, which would drive enterprises to shut down.  In accordance to the Fifth Circuit, mass layoffs brought on by these types of a normal catastrophe would not automatically “foreclose the natural-catastrophe exception” underneath proximate-cause assessment.  Id. at 14-16.

Implications for Businesses

At to start with glance, the Fifth Circuit’s holdings in Easom may well surface to have limited software, because pandemics have ordinarily been considered as multi-generational functions.  However, whether we are thoroughly past COVID-19 shutdowns remains to be noticed, and the Fifth Circuit’s determination serves as a warning to employers who may or else be tempted skirt the Alert Act’s 60-working day discover requirement throughout a COVID-19 shutdown.

Additional importantly, the Easom conclusion exhibits the relevance of thoroughly examining the Alert Act necessities in advance of conducting reductions in pressure.  As the Fifth Circuit famous, exceptions to the Warn Act prerequisites are to be “narrowly construed.”  This usually means that companies really should perform thorough evaluation when contemplating no matter if Warn Act exceptions apply to their reductions in power.