Initial Categorization Determines Whether Employees Were Temporarily Laid Off or Fired Under WARN

In Leeper v. Hamilton County Coal, LLC, the U.S. Court of Appeals for the Seventh Circuit held that, under the Worker Adjustment and Retraining Notification Act, whether the cessation of employment is permanent or temporary should depend on the initial categorization, and not a “hindsight-based” approach.

WARN requires 60 days’ notice of a “mass layoff,” defined as a reduction in force resulting in an employment loss at a single site of employment during any 30-day period for at 33% of the full-time employees and at least 50 employees. There are three categories of “employment loss”: termination, layoff in excess of 6 months, or at least a 50% reduction in work hours for a six-month period.

In the present case, the employer announced a temporary layoff lasting less than six months, and instructed employees to “return,” not reapply, at the end of the period. The Eighth Circuit found that, based on the language of the notice, this was clearly not a termination. As the Eighth Circuit noted, once the initial categorization is made, the duration may then be evaluated. WARN provides a layoff of more than six months that was initially announced to be less will be treated as an employment loss unless the extension was caused by business circumstances that were not reasonably foreseeable at the time of the initial announcement and notice was provided when it became foreseeable. Here, although some employees’ layoff period extended beyond six months, a sufficient number of employees returned to work within that period such that 33% of employees did not suffer an employment loss and therefore WARN was not triggered.