Can Discharging Remote Workers Trigger the WARN Act at a ‘Single Site of Employment’?

To say that COVID-19 has presented numerous challenges to employers would certainly be an understatement. One of the changes and challenges that has entered the workforce is the proliferation of work-from-home arrangements. With remote workers, employers have had to alter the ways they recruit, pay, manage, and even discharge employees.

In the last twelve years prior to the onset of the pandemic, remote work witnessed a 159 percent growth, and it is estimated that 36.2 million Americans will work from home by 2025, according to recent surveys. While employers may want to consider relevant wage and hour issues and other potential issues (e.g., tax issues) when considering remote-work arrangements, working from home also presents one issue that is usually not considered until it is forced to be spoken about: the Worker Adjustment and Retraining Notification (WARN) Act. The WARN Act is something that employers typically do not like to think about. Thinking about a large reduction in force is not pleasant. It is even less pleasant to implement large reductions in force. But with the increase in remote work, employers may want to think about the potential WARN Act implications of such arrangements.

The WARN Act

The WARN Act requires an employer to provide notice at least sixty days before a covered plant’s closing or mass layoff. A covered plant’s closing occurs with the shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss during any thirty-day period at the single site of employment for fifty or more employees, excluding any part-time employees.

Generally, a mass layoff occurs when during any thirty-day period employment losses at a single site of employment amounts to (i) at least 33 percent of the active employees, excluding part-time employees, and (ii) at least fifty employees, excluding part-time employees. (Where 500 or more employees [excluding part-time employees] are affected, the 33 percent requirement does not apply.) For both definitions, the concept of single site of employment is crucial. Employees are aggregated at single sites of employment for WARN Act purposes. What is the single site of employment for remote workers?

The WARN Act and Remote Workers

The WARN Act’s regulations address remote workers. In frequently asked questions (FAQ) guidance, the U.S. Department of Labor clarified 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 (for example, railroad workers, bus drivers, salespersons), the single site of employment” for WARN Act purposes will be a single site of employment

• “to which they are assigned as their home base”;
• “from which their work is assigned”; or
• “to which they report.”

For many employers, this framework may produce bizarre results in the current (and expected) remote-work environment. As a hypothetical example, let’s say a company is headquartered at a single site of employment in Dallas, Texas, where twenty-five full-time employees work. The company has 250 full-time employees working remotely from their homes across the country. All 250 of these remote workers are assigned to and managed from the Dallas headquarters. If the company conducts a reduction in force of ninety-five full-time employees—all of whom work remotely—are WARN Act requirements triggered, even though none of the employees impacted is physically present at the Dallas single site? According to the regulations, this event could trigger the WARN Act, even though no employee physically present at the relevant single site of employment is being impacted by the reduction in force.

There are interesting public policy arguments as to why this should not trigger the WARN Act—namely, the public policy behind the WARN Act was to give state and local governments notice that a large number of local employees would soon be looking for work. This advance notice of employment terminations gives local governments time to help employees look for jobs and lets governments know that there is about to be a large number of people who may soon be collecting unemployment compensation. These public policy goals are not achieved when only remote workers trigger a WARN Act event.

Public policy aside, with the number of remote-work arrangements expected to increase, the WARN Act is one of those statutes employers may want to add to the list of issues to be addressed with regard to remote-working arrangements.