Leslie Perkins
by Leslie Perkins and Karina Sargsian
With the remote work model becoming increasingly prevalent and technology continuing to reshape the way people work, certain employment laws struggle to keep up with the evolving realities of the modern workforce.
One such law causing confusion as to the extent of its reach in the remote work era is the Worker Adjustment and Retraining Notification Act (“WARN Act”). At its basic core, the WARN Act requires covered employers to provide 60 days advance notice when, among other things, a mass layoff is on the horizon. (More on the specifics below).
Karina Sargsian
The WARN Act defines a mass layoff as an employment loss of a certain number of employees at a “single site of employment.” This raises the issue as to whether layoffs of remote employees trigger the WARN Act at all.
While the WARN Act does not specifically call out remote employees as part of its analysis, this does not mean that companies with remote employees are in the clear of the WARN Act’s reach.
Several courts have taken the position that remote workers are not an excepted class outside the purview of the WARN Act, rather the issue appears to be fact-specific and requires substantive analysis. Meaning, if a company gets sued for violating the WARN Act, it is not a defense to claim that the majority of its employees were remote employees and therefore they have not met the minimum number of employees required to trigger the WARN Act at a “single site of employment.”
In addition to the courts’ position on this topic, some states have updated their state specific mini-WARN Acts to clarify that remote employees are to be included in the mass layoff analysis.
What does this mean for employers with a remote workforce?
Don’t presume that your modern remote workforce is exempt from traditional employment laws. Engage competent employment counsel to guide you through these matters. Sometimes the answer will be clear, while in other instances, the ultimate decision will need to be a business judgment. While risk is inherent in any business venture, companies should be well-informed about the potential risks at the very least.
The Birth of the WARN Act:
The WARN Act emerged during a period of economic and industrial change in the United States. As the nation experienced a wave of automation, and restructuring in the 1980s, there was widespread plant closures and mass layoffs. Many workers across various industries experienced significant job losses.
The WARN Act was enacted on August 4, 1988, by the United States Congress (in effect on February 4, 1989) in response to a growing concern over the impact of sudden plant closings and mass layoffs on workers, their families, and the communities in which they lived. The WARN Act was enacted “to provide notice of sudden, significant employment loss so that workers could seek alternative employment and their communities could prepare for the economic disruption of a mass layoff.” Meson v. GATX Tech. Servs. Corp., 507 F.3d 803, 808 (4th Cir. 2007).
The WARN Act has had a significant impact on how businesses approach workforce reductions and restructuring decisions. Employers covered by the WARN Act have had to carefully plan and execute layoffs to ensure compliance.
The Traditional Application:
The WARN Act was initially designed with a traditional employment setting in mind, where employees worked in a physical location, and layoffs were limited to specific jurisdictions.
The WARN Act requires covered employers to provide advance notice of at least 60 days to employees in the event of a plant closing, mass layoff, or sale of business. For purposes of this article, let’s focus on the first two events. Key provisions of the Act include:
Coverage: Employers with 100 or more employees are subject to the WARN Act’s requirements. It applies to both private, for-profit employers and private, nonprofit employers, as well as certain public and quasi-public entities operating in a commercial context.
Notice Requirement: Employers must notify affected workers or their representatives (e.g., labor unions), the State dislocated worker unit, and the appropriate unit of local government at least 60 days before a covered plant closing or mass layoff occurs.
Trigger of Notice: The Act defines “plant closing” as the shutdown of a “single site of employment,” or one or more facilities or operating units within a “single site of employment,” that results in an employment loss of 50 or more employees within a 30-day period. A “mass layoff” is defined as an employment loss at a “single site of employment” for either 500 or more employees or for 50–499 employees, if they constitute at least 33% of the employer’s active workforce. Part-time workers are usually not counted.
Exemptions: The WARN Act includes certain exemptions, such as closings or layoffs due to unforeseeable business circumstances or natural disasters.
Thus, to qualify as a “plant closing” or “mass layoff,” an employment loss must affect at least 50 employees at a “single site of employment.” Unfortunately, the WARN Act itself does not define “single site of employment” and this is where the dispute lies regarding the application of the WARN Act to the remote workforce.
Remote Work Challenges:
The rise of remote work has presented unique challenges when it comes to the application of the WARN Act. As technology has enabled employees to work from anywhere, the traditional understanding of a “single site of employment” has been challenged, leading to uncertainty and differing interpretations in the context of WARN Act compliance.
The Department of Labor (“DOL”) has shed some light on this issue through its regulation (see 29 U.S.C. § 2107) which provides that “[a] single site of employment can refer to either a single location or a group of contiguous locations,” (20 C.F.R. § 639.3(i)(1), (3)). This same regulation contains an exception set out in 20 C.F.R. 639.3(i)(6) (“Subpart 6”):
The Subpart 6 exception provides that: “[F]or workers whose primary duties require travel from point to point, who are outstationed, or whose primary duties involve work outside any of the employer’s regular employment sites (e.g., railroad workers, bus drivers, salespersons), the single site of employment to which they are assigned as their home base, from which their work is assigned, or to which they report will be the single site in which they are covered for WARN purposes.”
Thus, Subpart 6 defines the site of employment for workers who are outstationed as the location where they are assigned as their home base, from which their work is assigned, or to which they report.
For remote employees, this has led to debates over whether their home base or their actual physical location should be considered their single site of employment. The lack of specific guidance in the original text of the WARN Act and the evolving nature of work arrangements have contributed to differing court interpretations on this matter.
Legal Dilemma – Courts’ Interpretations:
Litigation surrounding the application of the WARN Act to remote employees has led to differing outcomes in various courts. Some courts have ruled that remote employees can be considered under the Act, while others have reached the opposite conclusion.
Hoover v. Drivetrain LLC, No. 20-50966, 2022 Bankr. LEXIS 2312, at *16 (Bankr. D. Del. Aug. 19, 2022) and Meson v. GATX Tech. Servs. Corp., 507 F.3d 803 (4th Cir. 2007) are two cases that highlight the differing interpretations and challenges courts face when determining whether remote employees should be considered “outstationed” for the purposes of the WARN Act.
In Meson, the Fourth Circuit construed Subpart 6 narrowly, holding that it “was intended to apply only to truly mobile workers without a regular, fixed place of work.” 507 F.3d at 809–11 (emphasis added). It deemed the provision therefore unavailable to employees with a “fixed workplace or office,” even if they purportedly “report[] to” some remote corporate headquarters. Id. at 804, 808–10. It further made clear that even duties requiring “significant travel” do not, without more, transform an employee into a “truly mobile worker” when that individual also maintains a “fixed workplace” for use when not traveling. Id. at 804, 809–11
In Hoover v. Drivetrain, the court concluded that remote employees fall within the definition of “outstationed” employees as outlined in the WARN Act’s regulations. The court’s decision supports the notion that remote workers’ single site of employment is determined by their home base, the location from which their work is assigned, or the place to which they report. This interpretation implies that remote workers could trigger WARN Act requirements if they are part of a mass layoff or plant closing, even if they are not physically present at the impacted location.
These cases underscore the complexity and ambiguity surrounding the application of the WARN Act to remote work scenarios. The lack of a specific definition of “outstationed” in the WARN Act itself contributes to differing interpretations by different courts. Additionally, the evolving nature of remote work arrangements and the rapid changes in technology make it challenging for courts to establish clear and uniform standards for remote employees under the WARN Act.
Amendments to Mini-WARN Acts:
State laws may further complicate matters, as some states, like New York, have amended their mini-WARN Acts to specifically clarify that remote employees should be counted for the purposes of determining whether the state’s mini-WARN Act applies.
A mini-WARN Act is a state-level version of the federal WARN Act. It typically applies to employers with a smaller workforce than the federal WARN Act’s threshold and provides similar requirements for providing advance notice to employees in the event of mass layoffs, plant closings, or certain other significant employment actions.
The amendments to the New York State Worker Adjustment and Retraining Notification Act (NY WARN Act) were adopted in June 2023 by the New York State Department of Labor (NY DOL) and brought significant changes. The most notable change is the inclusion of remote workers in determining whether the numerical thresholds for coverage under the NY WARN Act have been met. The revised regulations consider employees who work remotely but are “based out of” a site of employment as part of that site for the purposes of triggering the WARN Act. However, the regulations do not explicitly define how to determine where a remote employee is “based.” Factors that may be taken into account include the location of the employee’s supervisor or the location from which the employee receives work assignments.
Conclusion
As technology continues to reshape the employment landscape, the WARN Act’s applicability to remote employees remains an evolving and complex issue. Companies with remote workers must avoid complacency and must assess the potential impact of the WARN Act on their workforce. Legal guidance and thorough analysis of the WARN Act and state mini-WARN Acts’ statutory language are essential before implementing mass layoffs that may trigger their notice requirements. Only by staying informed and proactively adapting to the changing employment landscape can companies navigate the complexities of the WARN Act and safeguard both employee’s rights and their own interests in this remote work era.
