Last week, we updated you on the employment law implications of the Families First Coronavirus Response Act, but as the COVID-19 crisis continues to unfold, more issues develop and more regulatory responses to the crisis are implemented. This First Alert updates employers on a new regulatory initiative to ease the burden of complying with employee eligibility verification procedures and also discusses an issue about which many employers have raised questions in recent weeks – the availability of exceptions to the Worker Adjustment Retraining Notification ("WARN") Act’s advance notice requirements for plant closings and mass layoffs.
Temporary Relaxation of
Form I-9 “Physical Presence” Requirement
As part of the onboarding process for a new employee, employers are required to verify the individual’s eligibility for employment through a review of documentations submitted by the prospective employee in accordance with procedures set forth on The Department of Homeland Security’s ("DHS") Form I-9. That form identifies certain documents that an employer may rely upon to establish such eligibility and requires the employer to review those documents in the “physical presence” of the prospective employee.
That physical presence
requirement has created compliance challenges for employers taking physical proximity precautions as a result of the COVID-19 pandemic. In recognition of these challenges, the DHS announced on March 20, 2020, that such employers will not be required to review a prospective employee’s identity and employment authorization documents in the employee’s physical presence.
However, employers will be required to inspect the employee’s documentation remotely (e.g., via email, fax or video) within three business days for purposes of completing the Form I-9. A physical inspection of the documents will be required after normal operations resume for all employees onboarded remotely, and once those
documents have been so inspected, the employer should add the phrase “documents physically examined” and the date of the inspection to the Section 2 “additional information” field on the Form I-9 or to Section 3 as appropriate.
The relief from the physical presence requirements applies only to employers and workplaces that are operating remotely, and having any employees physically present at a workplace will disqualify an employer from relying upon it. Employers availing themselves of this relief are required to provide written documentation of their remote onboarding and telework policy for each employee.
The relaxation of the in-person verification requirements is effective for a period of 60 days from the date of the notice (March 20), or for three days following the termination of the COVID-19 national emergency as declared by the President, whichever comes first.
For more information about the temporary remote verification process, see this news release from U.S. Customs and Immigration Enforcement.
What About WARN Notices?
The disruptions caused by the sudden emergence of the COVID-19 crisis have raised many questions among employers about whether exemptions from advance-notice obligations imposed by the WARN Act may be available for reductions in force that the pandemic may compel them to make. As discussed in greater detail below, while certain exceptions from the 60-day advance-notice requirement may potentially be available, they are generally narrowly construed, do not
provide complete exemptions from compliance with the notice requirement, and are subject to second guessing with the benefit of hindsight.
Ohio follows federal requirements under the WARN Act, which requires covered employers to provide written notice at least 60 calendar days in advance of covered plant closings and mass layoffs to the affected employees and Ohio Department of Job and Family Services Dislocated Worker Unit. Generally, the WARN Act requires employers of 100 or more to provide 60 days advance notice of closings of facilities or “operating units” of 50 or more, or of a “mass layoff” affecting at least 50 employees and one-third of the workforce at a work site, or 500
employees at the site.
The WARN Act contains three exceptions to the 60-day advance notice requirement:
- The first exception is known as the “faltering company” exception, which is narrowly construed and applies in situations where a company has sought new financing or business to stay open and where it reasonably believes that providing notice would preclude it from obtaining the new financing or new business.
- The second exception applies in the case of “unforeseeable business circumstances,” and it applies in cases involving closings and layoffs that were not reasonably foreseeable at the time that the WARN Act would have otherwise required notice to be provided.
- The final exemption applies to natural disasters, where the event requiring compliance with the WARN Act’s notice
requirements is the direct result of a natural disaster, such as an earthquake, flood or hurricane.
There is no guidance addressing whether the unprecedented situation of a global pandemic might qualify as a natural disaster, although employers should argue that this exception applies in the face of a pandemic, but for now the faltering company exception and the unforeseeable business circumstances exception appear to be the most plausible alternatives available to employers compelled to reduce the size of their workforce in response to the dislocations resulting from COVID-19.
Employers considering reliance on either of these exceptions should proceed with extreme caution. For example, the faltering
company exception is narrowly construed and applies only to companies that are seeking financing or new business on a company-wide basis. It does not apply generally to layoffs by employers that are experiencing financial difficulties, nor does it apply in situations where an employer is seeking financing or new business targeted at a specific facility or division. Furthermore, the employer must be able to demonstrate a reasonable belief in the potential viability of the additional financing or new business and that it would have ameliorated the need for the closing or layoff.
At first glance, the unforeseeable business circumstances exception seems tailor-made for many of the disruptions
caused by the COVID-19 crisis. For example, it extends to government-ordered closings of a facility that occur without prior notice. But even so, complications may arise in the event of the potential for subsequent workforce reductions beyond the initial one prompted by the crisis. Layoffs of a size not requiring WARN notices that occur within 90 days of each other are generally aggregated, and that means that a company will have to assess whether notice needs to be provided to those employees by considering whether subsequent layoffs will occur in a 90-day period from any given layoff (or be second-guessed for not providing that notice).
That raises an important related point. Both the
unforeseeable business circumstances and faltering company exceptions are “affirmative defenses,” not outright exemptions to the notice requirement. In other words, notice is still required under the WARN Act, but the exceptions provide a defense to employers that do not provide that notice at least 60 days in advance. Notice must still be provided even if less than 60 days in certain situations, and the law even contemplates notice “after the fact” in rare circumstances. In such situations, notice must be provided to all affected employees, and employers must provide an explanation of why less than 60 days advance notice was provided.
In addition to the complexities associated with
the application of the exceptions to the 60-day advance notice requirement, there are complexities embedded in the statute itself that create the risk that an employer’s decision may be second-guessed with the benefit of hindsight. For example, some employers may believe that the layoffs resulting from the COVID-19 crisis will last less than six months, in which case they would not be subject to the WARN Act’s notice requirements. Covered “employment losses” include only layoffs lasting six months or more. But if layoffs anticipated to last less than six months are extended beyond that point in time and that extension is deemed to be have been foreseeable, and if the number of layoffs trigger WARN obligations, then the company will be retroactively non-compliant with its notice
obligation. Keep in mind also that the WARN Act defines “employment loss” to include reduction in work hours of more than 50% during each month of any six-month period, so notice also may be required in situations involving efforts to manage the current crisis by reducing hours of workers at a given employment site.
A final cautionary word – while exceptions to the WARN Act’s 60-day advance-notice requirements may well be available for some plant closings and layoffs implemented as a result of the COVID-19 crisis, the application of the statute to any particular situation and the compliance obligations that it imposes involve a fact-intensive analysis that includes not only the actions
under consideration by the employer at that time but also ones that it may be contemplating to take in the future.
Calfee invites you to visit our COVID-19 Resource Center containing First Alerts to help guide you through the challenges faced by individuals and organizations as a result of the novel coronavirus outbreak. We are committed to helping you meet the diverse and complex challenges and navigate the disruptions caused by this pandemic. Please check the COVID-19 Resource Center regularly for the latest updates, or subscribe to receive the most up-to-date Alerts sent directly to your email inbox.