Restaurants Ordered to Close Should Be Aware of the WARN Act

The federal Worker Adjustment and Retraining Notification (WARN) Act applies to your restaurant if you have more than 100 full-time employees. Additionally, a number of states – including Illinois – have mini-WARN Acts that impose additional notice requirements, including notice requirements on smaller employers. Restaurant owners are required by WARN to provide written notice 60 days in advance of closing or a mass layoff to the affected workers, as well as to the state dislocated worker unit, and to the appropriate unit of local government. Penalties can result for failing to adhere to WARN regulations, and can include backpay and benefits to each aggrieved employee for the period of violation, up to 60 days, as well as civil penalties.

The coronavirus pandemic may be an exception to the 60-day notice, given “unforeseeable business circumstances” which applies to closings and layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required. In addition, the WARN Act provides an exception for plant closing or mass layoffs that are the result of a natural disaster, which arguably could cover the COVID-19 outbreak. The employer bears the burden of proof that the conditions for the exception have been met. A government closure order probably qualifies as “unforeseeable business circumstances,” but owners with more than 100 employees should still consider giving the notice as soon as practicable, appropriately tailored to reflect the fact that the business has already closed in compliance with the Governor’s Executive Order, and the immediate effective date of that Order is the reason that notice could to be provided any sooner. Additional notification to state agencies may also be required under state mini-WARN laws.

Contact Patrick Wartan or a member of Taft’s Food & Beverage group for more information.

Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.

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