Biz groups: layoffs amid pandemic didn't require advance notice

3 minute read

The United States Chamber of Commerce building in Washington, D.C. REUTERS/Andrew Kelly

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  • Judge said COVID-19 not direct cause of Enterprise layoffs
  • Business groups say the decision was flawed
  • 5th Circuit currently considering the same issue

(Reuters) - The U.S. Chamber of Commerce and other major business groups on Thursday urged a U.S. appeals court to rule in one the first cases of its kind that the COVID-19 pandemic was a "natural disaster" excusing Enterprise Rent-A-Car from a legal requirement that it provide workers with advance notice of mass layoffs.

The Chamber, National Retail Federation and Restaurant Law Center in an amicus brief told the 11th U.S. Circuit Court of Appeals that it was unreasonable for a judge in Orlando to conclude last year that it was the economic impact of the pandemic, and not COVID-19 itself, that drove Enterprise Holdings Inc to lay off hundreds of workers at Florida airports.

The exception in the Worker Adjustment and Retraining Notification (WARN) Act for natural disasters was designed to stave off protracted litigation when it is clear that layoffs would not have occurred but for a natural disaster, the groups said.

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The WARN Act typically requires employers to give 60 days notice before engaging in mass layoffs.

Upholding the judge's ruling would expose whole swaths of the U.S. economy to "hard-to-resolve" WARN Act class actions, Angelo Amador, executive director of the Restaurant Law Center, said in a statement.

"These lawsuits are possible only because the employers survived the pandemic by making the hard choice to lay off employees," Amador said.

St. Louis-based Enterprise and its lawyers at Gibson Dunn & Crutcher and Foley & Lardner did not immediately respond to requests for comment. Nor did the plaintiffs' lawyers at Wenzel Fenton Cabassa.

The named plaintiffs claim Enterprise laid off hundreds of workers at airports in Orlando and Tampa in May 2020 with no more than a few days' notice. They said the layoffs did not come as a surprise, evidenced by the company's March 2020 decision to implement furloughs at the airports.

Enterprise in moving to dismiss the case claimed it could not have known how severe the pandemic would be, and that it qualified for exceptions in the WARN Act for layoffs conducted due to natural disasters.

U.S. District Judge Roy Dalton in Orlando denied the motion. He agreed that the pandemic qualified as a natural disaster, but said Enterprise's layoffs were only indirectly caused by it because they were triggered by a decrease in air travel and the economic downturn.

In Thursday's brief, the business groups said Dalton's ruling rested on the faulty premise that natural disasters must destroy infrastructure in order to qualify for the WARN Act exception.

"Businesses need capital, labor, and customers, and a disaster that destroys the supply of labor and the demand for many goods and services (as COVID-19 did) is no less the cause of layoffs than a disaster that destroys capital," the groups said.

The brief was penned by Philip Miscimarra of Morgan Lewis & Bockius, who was chairman of the National Labor Relations Board early in the Trump administration.

The 5th Circuit is also considering how the WARN Act's natural disaster exception applies to the pandemic in a separate case, Easom v. US Well Services Inc, involving an oil and gas company.

The case is Benson v. Enterprise Holdings Inc, 11th U.S. Circuit Court of Appeals, No. 21-11911.

For Benson: Brandon Hill of Wenzel Fenton Cabassa

For Enterprise: Jason Schwartz of Gibson Dunn & Crutcher and Christina Kennedy of Foley & Lardner

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.