US appeals court holds that companies may not use COVID as excuse to initiate mass layoffs without notice News
© WikiMedia (Battenbrook)
US appeals court holds that companies may not use COVID as excuse to initiate mass layoffs without notice

The US Court of Appeals for the Fifth Circuit Wednesday issued an opinion in which the Court held “that the COVID-19 pandemic is not a natural disaster under the Worker Adjustment and Retraining Notification Act (WARN Act)” and that employers are not allowed to initiate mass layoffs without notice due to pandemics.

Oil producers hired the employer US Well for fracking services. During the COVID-19 pandemic, oil prices dropped in addition to declines in travel and a decreased demand for oil and gas. As a result of the pandemic, US Well’s customers cut back or completely shut down fracking on multiple Texas well sites. When crew members “returned from the well sites to their respective headquarters after shutting down operations, they were immediately informed that they were laid off.”

As a result of termination, employees brought a lawsuit and argued “COVID-19 was not a natural disaster and was not a direct cause of their layoffs.” In response US Well argued COVID-19 qualified as “a natural disaster under the WARN Act, and consequently, that it was exempt from the WARN Act’s notice requirement pursuant to the natural-disaster exception.”

The WARN Act is violated if employers terminate employees without sixty days advance notice of mass layoffs. However, the WARN Act provides three notice requirement exceptions, which includes the natural disaster exception. Under the natural disaster exception, no advance notice is required by employers.

The Fifth Circuit stated that Congress indicated that “natural disaster” included events such as floods, earthquakes, and droughts.” Further, “Congress knew how to, and could have, included terms like disease, pandemic, or virus in the statutory language of the WARN Act.” However, Congress chose not to, and thus “those terms were deliberately excluded.”