Duane Morris Class Action Review - 2023 - Report - Page 377
Even as COVID-19-related layoffs and the pandemic itself begin to recede, these
rulings may have implications beyond the pandemic in defining the parameters of the
natural disaster exception – and the causation standard that attaches to it – particularly
as severe weather and similar events are anticipated to occur with greater frequency.
“Unforeseeable Business Circumstances” Exception. Many employers that
conducted mass layoffs or plant closings during the pandemic also relied on the WARN
Act’s “unforeseeable business circumstances” exception, which applies in
circumstances caused by a sudden, dramatic, and unexpected condition beyond the
employer’s control. For example, the 2021 decision in Benson, et al. v. Enterprise
Leasing Company Of Orlando, LLC, 2021 U.S. Dist. LEXIS 55136 (M.D. Fla. Feb. 4,
2021) – a WARN Act case brought by former employees of a national rental car
company that implemented layoffs at several Florida locations – the employer argued
that both the natural disaster and unforeseeable business circumstances exception
applied in light of “the unprecedented economic upheaval” unleashed by the pandemic.
The court denied the employer’s motion to dismiss, holding that even if the facts alleged
show the employer faced unforeseeable business circumstances, an employer must
nonetheless “give as much notice as is practicable.” There were no facts indicating the
employer could not have given more notice.
Rulings On State-Law Claims Asserted By Employees Who Were Furloughed Or Laid
Off As A Result Of The Pandemic
As noted, the plaintiffs’ class action bar has also brought putative class actions under
state law based on furloughs and layoffs that took place after the onset of the pandemic.
For instance, in Hartstein, et al. v. Hyatt Corp., 2022 U.S. Dist. LEXIS 26453 (C.D. Cal.
Feb. 14, 2022), former employees alleged that they were entitled to accrued vacation
time after Hyatt laid them off indefinitely at the start of the COVID-19 pandemic. Due to
the pandemic, Hyatt furloughed thousands of California workers in March 2020, offering
to pay out their accrued vacation time and paid time off upon request. Employees also
received cost-free health insurance coverage and access to the complimentary hotel
room program, which provided a certain amount of free hotel stays per year. About
three months after the layoffs, Hyatt terminated many employees. Former employees
then sued Hyatt in April 2020 for failing to pay overtime, compensate them for unpaid
wages while furloughed, and provide correct wage statements. The court certified three
sub-classes of former employees, including: (i) furloughed employees who did not
receive payment upon ending their jobs; (ii) furloughed employees who did not receive
vested non-discretionary hotel room bonuses; and (iii) hourly employees who received
the hotel bonuses but requested overtime compensation for those bonuses.
Hyatt moved for summary judgment on the grounds that state labor laws did not support
the former employees’ requests for unpaid overtime or hotel room bonuses. The class
also moved for summary judgment, claiming that the layoffs qualified as discharges
under state labor law and that the hotel room bonus was a “wage” that the court could
consider as a factor in computing overtime pay. The court rejected the position of the
class. The court determined that the hotel room bonus program was more similar to a
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© Duane Morris LLP 2023
Duane Morris Class Action Review – 2023
