On March 30, 2020, the U.S. Supreme Court declined to review a decision from the Seventh Circuit in Leeper v. Hamilton County Coal, LLC, No. 19-1109, which held that a layoff was temporary, and thus did not trigger the 60-day notice requirement of the Worker Adjustment and Retraining Notification Act (the “WARN Act”).

On February 5, 2016, the defendant employer in Leeper distributed written notice placing 158 employees on a temporary layoff the next day, which stated “[o]n August 1, 2016 you may return to your at-will employment. …”  Fifty-six recipients of the notice resumed employment, at full pay, within six months.  The employees filed suit under the WARN Act arguing their termination constituted an “employment loss” which required the employer to provide 60 days’ of advanced notice that they were being terminated, and they were only given 24-hour notice.  Under the WARN Act, a covered mass layoff is a reduction-in-force that eliminates more than 33% of full-time employees through employment loss in the form of either termination, a layoff lasting longer than six months or a 50% or greater cut in hours.

The Seventh Circuit ruled that the WARN Act’s 60-day notice requirement was not triggered because the employer informed employees that they “may return,” and a significant portion of the employees did, in fact, return to work within six months of the communication.   The Court also evaluated several other factors, such as whether employees ceased receiving pay or other benefits, but decided that the language of the notices ultimately controlled.

The Seventh Circuit’s decision deepened a circuit split.  The Seventh Circuit joined the Second and Sixth Circuits in holding that the content of any communication regarding a layoff’s permanence should be evaluated using a prospective analysis, i.e., from the view point of the employee at the time the notice is received.  These Circuits have determined that a permanent cessation of employment occurs when, at the outset of the employment cessation, employees lack a reasonable expectation of being recalled, a conclusion made after analyzing the employer’s communications, whether wages and benefits ceased, the employer’s policies and practices, industry standards and other factors.  The Seventh Circuit primarily focused on the communications received by employees and the employer’s invitation to return, placing less value on other factors that plaintiff argued pointed to a permanent separation, such as the fact that wages and benefits ceased.  By contrast, the Eighth Circuit has evaluated the content of the notice at issue with respect to the permanency of a layoff with the benefit of hindsight, i.e., determining that if an employee is rehired within six months, the layoff is temporary—even if the employee and employer believed at the outset that the separation was permanent.

On January 23, 2020, the plaintiff filed a petition for a writ of certiorari asking the U.S. Supreme Court to resolve this circuit split, seeking a uniform standard that sets forth the content, factors and analysis used to determine whether a layoff is temporary or permanent.  However, on March 30, 2020, the Supreme Court declined that petition.

Given the uncertainties employers are presently facing as a result of the coronavirus, it is important for employers to be mindful of the current Circuit split and carefully consider the timing of layoffs and content of employee communications.  Employers should also be mindful of  the state in which any layoff takes place if the employer has multiple locations subject to conflicting standards concerning notice.

Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

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Photo of Nicole Eichberger Nicole Eichberger

Nicole A. Eichberger is a partner in the Labor and Employment Law Department and head of the New Orleans office. She is a member of the Class & Collective Actions and Wage and Hour Groups. Nici is an experienced trial lawyer and represents…

Nicole A. Eichberger is a partner in the Labor and Employment Law Department and head of the New Orleans office. She is a member of the Class & Collective Actions and Wage and Hour Groups. Nici is an experienced trial lawyer and represents clients in all types of employment-related matters, from single-plaintiff and complex employment to large, complex class and collective actions alleging discrimination, non-compete violations, and wage and hour disputes.

Nici has significant experience assisting clients in the defense of numerous class and collective actions. She frequently counsels employers, fiduciaries, and trustees on employment, wage and hour and benefit issues.

In addition to her litigation practice, Nici assists in conducting workplace investigations and audits related to discrimination, managerial training, non-competes and employee classification. She is adept to counseling clients on a wide array of issues including reviewing and drafting employee handbooks, wage and hour issues, employee leave and training policies.

She is a member of the Firm’s eDiscovery Group and advises clients on eDiscovery matters, including day-to-day preservation, investigations and litigation strategies.

Nici recently completed a three-year term was on the ABA’s Standing Committee on Pro Bono & Public Service and serves as the Pro Bono Co-Coordinator for Proskauer’s New Orleans office. She is a prolific writer, frequently contributing to Proskauer’s Law and the Workplace Blog and a sought-after speaker on collective/class action topics.

Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.