In the weeks and months following the start of the COVID-19 pandemic, many employers were faced with the need to quickly conduct substantial reductions in force.  In making these decisions, the question frequently arose around whether an employer had to provide 60 days advance notice of a plant closing or mass layoff under the Workers’ Adjustment and Retraining Notification (“WARN”) Act or whether COVID-19 constituted a natural disaster giving rise to the natural-disaster exception to the notice provision.  Two years later, we have an answer –at least in Texas, Mississippi and Louisiana.

On June 15, 2022, the Fifth Circuit Court of Appeals held that the COVID-19 pandemic is not a natural disaster under the WARN Act.  The WARN Act requires covered employers to give affected employees sixty days’ notice before conducting a plant closing or mass layoff.  One exception to the sixty day notice requirement is the natural-disaster exception.  When this exception applies, shorted notice or no notice is required.

In Easom v. U.S. Well Services, Inc., U.S. Well Services, Inc., an oil and gas producer, experienced a substantial loss of business beginning in March 2020.  This loss of business was caused by a combination of factors including a price conflict between Russia and Saudi Arabia and a precipitous drop in the price of oil resulting from the reduced demand for travel, oil and gas caused by the COVID-19 pandemic.

U.S. Well Services laid off a substantial number of its crews sufficient to qualify for WARN Act notification.  Rather than providing any period of advance notice, the company terminated the employees with no notice and told them:

Your termination of employment is due to unforeseeable business circumstances resulting from a lack of available customer work caused by the significant drop in oil prices and the unexpected adverse impact that the Coronavirus has caused.

The laid off employee filed suit alleging violations of WARN.  U.S. Well Service defended that it was not required to provide any advance notice under the natural-disaster exception.  The employee countered that COVID-19 was not a natural disaster and even if it was, it was not the direct cause of the layoffs.

The district court certified two questions for interlocutory appeal to the Fifth Circuit.  First, does COVID-19 qualify as a natural disaster under the WARN Act’s natural-disaster exception?.  Second, does the WARN Act’s natural-disaster exception incorporate but-for or proximate causation?  For the reasons explained by the Court, it held that the COVID-19 pandemic is not a natural disaster under the WARN Act and that the natural-disaster exception incorporates proximate causation.

And employer’s beware (and mass action attorneys rejoice), the statute of limitations for a WARN Act claim is at least two years.  Thus if there was a  plant closing or mass layoff caused by COVID-19 where the employer failed to provide 60 days advance notice of the employment action believed the pandemic was a natural disaster, there may still be time for employees to bring claims over those actions.

You can download Easom v. U.S. Well Services, Inc. here.