Compliance with WARN for Remote Workers

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Assignment of remote workers under the Worker Adjustment and Retraining Notification Act (WARN) is a complex and unsettled issue, which could be subject to legal challenge. WARN requires employers to provide written notice at least 60 calendar days in advance of a covered plant closing or mass layoff at a single site of employment.  A mass layoff is defined as a reduction in force (RIF) that results in an employment loss at a “single site of employment” during any 30-day period for: at least 33 percent of the employees (excluding part-time employees); and at least 50 employees (excluding any part-time employees; or at least 500 employees (excluding part-time employees.) 29 U.S.C. § 2101(a)(3). 

In assessing whether a RIF triggers WARN requirements, an employer must assess which employees are included in the active workforce at a single site.  WARN was passed in 1988, long before the rise of remote work, and assignment of remote workers to a site of employment for purposes of WARN is an evolving legal issue. In this article, we explain the current status of the law and provide practical guidance to employers facing this conundrum. 

The regulations and case law give rise to a theory that WARN does not apply to truly “remote” workers, particularly those who are assigned to and work solely from their home, are not assigned to any physical company office location, and are not engaged in regular travel as part of their assignment. For workers who work exclusively from home, some employers may consider their home their assigned site of employment.  However, some courts have found certain remote workers to be considered “outstationed” employees—a term neither the Department of Labor (DOL) nor regulations have defined—if they work remotely but are based at an employment site, receive their assignments from a single location, or report to a specific location. 

The WARN Act provides that “for 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 sites (e.g. railroad workers, bus drivers, salespersons), the single site of employment to which they are assigned” is either:

• Their home base,
• The place from which their work is assigned, or
• The place to which they report.

20 C.F.R. § 639.3(i)(6). 

Forcing an assignation of remote workers under this framework can be practically unworkable for many employers who have remote workers receiving work from various sites and persons.  In considering the above three factors when assessing the site assigned to an outstationed worker, those three sites may be three different locations or more.

While, given the unsettled nature of the law, excluding remote workers from the reduction in force calculations is not without risk, the regulations do not necessarily require inclusion of such employees. Notably, the WARN Act and regulations seemingly do not contemplate truly “remote” workers who work permanently from their home. Rather, the regulations focus solely on “mobile” remote workers and “outstationed” employees. See 20 C.F.R. § 639.3(i)(6).  For WARN calculations and notice purposes, these mobile remote employees are assigned to either the single site of employment to which they are (1) assigned as their home base; or (2) from which their work is assigned; or (3) the site which they report.  See § 639.3(i)(6); see also Bader v. N. Line Layers, Inc., 503 F.3d 813, 818 (9th Cir. 2007) (“The DOL’s comments explain that this regulation was intended to apply to ‘mobile workers,’ including ‘outstationed workers and traveling workers who report to but do not work out of a particular office.’”).

Moreover, requiring assignment of remote workers to a physical site for WARN purposes is also inconsistent with the statutory purpose of WARN.  The main objective of WARN was to notify communities and individual employees in a single community of an impending economic disruption of a major layoff or plant closing and to provide adjustment services to workers, employers, and the affected communities.  This is not satisfied by including truly remote workers stationed throughout the country (or even over multiple states or localities) in the WARN calculation. Accordingly, there is an argument that WARN was never intended to apply to truly “remote” workers.

While there is almost no legal authority addressing how to make an assignment to a physical site of remote workers who work solely from their home and are not expected to travel, there seems to be a split of authority between those courts that do address the issue, with courts more recently conflicting over what may constitute an “outstationed” worker. At least one bankruptcy court case in the Eastern District of Virginia has analyzed the application of WARN to these types of remote workers and concluded that a “true telecommuter’s” single site of employment would be the location where they work as opposed to where they receive work (i.e., their home would be the single site of employment). See In re Storehouse, Inc., No. 06-11144-SSM, 2010 WL 4453849 (Bankr. E.D. Va. Nov. 3, 2010) (finding that if the employee had chosen to work remotely from his home in Richmond, Virginia, and reported to the Atlanta, Georgia office, he would still have a single site of employment—his residence in Richmond). The court reasoned that:

[T]he alternative to finding that a telecommuter’s single site of employment is his or her home would be to find that the single site of employment is determined by where he or she receives work from and reports to. Such an interpretation would not make sense within the broader outlines of the WARN Act… [Congress’s] decision to target only those layoffs affecting 50 or more people in a single location is significant. It supports the conclusion that § 639.3 (i)(6) does not apply when fewer than 50 community residents have lost their job as a result of a single layoff.” Id.

Similarly, an older Tenth Circuit case, while considering a similar provision of the Family Medical Leave Act, opined that the provision of the WARN Act addressing “outstationed” workers governs only those employees without a fixed place of work. See Harbert v. Healthcare Servs. Grp., Inc., 391 F.3d 1140, 1152 (10th Cir. 2004) (noting all three examples listed in the parenthetical of 20 C.F.R. § 639.3(i)(6) (railroad workers, bus drivers, and salespersons) are employees who do not have a fixed place of work). Using this line of reasoning, those workers that are assigned a fixed location of working from home, rather than to a physical location but opting to work remotely, would have their homes fall under the regulation’s single site of employment option as the site in which they are assigned. Similarly, while not a case, New York’s mini-WARN Act was amended in June 2023 to clarify that employees who “work remotely but are based at an employment site,” are counted as employees of that employment site for purposes of determining if the employer triggers the employee threshold. 12 NYCRR Part 921-1.1(7)(i). It appears that the consideration point here is the assignment workers receive – whether or not they are notated to be full-time remote and not assigned a particular location.

Alternatively, while determining class certification for a group of remote employees, the Delaware Bankruptcy Court unequivocally stated that the text of “outstationed” employees “undoubtedly covers remote employees,” as the remote workers’ single site of employment was to be determined by the “true source of the instructions” these employees were receiving. Hoover v. Drivetrain LLC, No. AP 20-50966, 2022 WL 3581103, at *4 (Bankr. D. Del. Aug. 19, 2022). However, even here, the court stated that it was “not clear to the Court that the caselaw [sic] requires that construction of the Subpart 6 language,” and it was ultimately a merits question and not the be resolved at the class certification stage. Id. at *5.

As a final note, and more akin to a public policy consideration, the language of the WARN Act provides that it is “civically desirable and it would appear to be good business practice” for employers to provide advance notice when terminating a significant number of employees, even if there is ambiguity if the action is covered. 20 CFR § 639.1(e). This regulation goes on to say that it is “prudent” to weigh the desirability of advance notice against the risk of litigation to resolve notice disputes, and thus “[t]he Department encourages employers to give notice in all circumstances.” This article does not address all of the considerations that impact this analysis, including safeguarding proprietary information, timing of selection decisions, and employee productivity following such notice, to name a few.

In conclusion, excluding remote workers in a mass layoff or assigning them to their homes for purposes of WARN, though not without risk, may be a decision made in good faith and with the support of at least one case, particularly if employees are assigned as remote. While Storehouse is supports excluding remote workers from the company’s physical office locations, there is always a risk that a court in a different jurisdiction, such as shown in Delaware, could interpret 20 C.F.R. § 639.3 differently, especially if a remote employee consistently receives instruction from a set location or is assigned a physical location regardless of working remotely.  That risk may be mitigated for employees whose assigned home base and/or the place they report is their home, not an office location and who do not travel for their work or report to a physical site.

Ultimately, because of the ambiguity in the regulations, and the inability of the courts to establish a clear ruling on the single site of employment for truly remote workers, companies anticipating reducing their work-from-home workforces should consult counsel and carefully weigh the considerations involved in assessing applicability of WARN.