Business Law Section Blog: The COVID-19 Crisis and Wisconsin’s Business Closing and Mass Layoff Law:

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  • Business Law Section Blog
    June
    01
    2020

    The COVID-19 Crisis and Wisconsin’s Business Closing and Mass Layoff Law

    Thomas J. Nichols, Graham C. Garland

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    During the COVID-19 crisis, it is critical that Wisconsin employers understand their obligations under the Wisconsin Business Closing and Mass Layoff Law. Thomas J. Nichols and Graham C. Garland discuss these obligations for employers.

    Unfortunately, some Wisconsin businesses will not make it through the ongoing COVID-19 crisis unscathed.

    Employers laying off significant numbers of employees must understand their obligations under the Wisconsin Business Closing and Mass Layoff Law (WBCML).

    Generally, employers subject to WBCML are required to notify the Department of Workforce Development (DWD), any affected employee, any related collective bargaining unit representative, and the highest official of the municipality in which the affected employment site is located, no later than 60 days prior to a business closing or mass layoff.1

    Employers Subject to WBCML

    Not every employer is subject to the WBCML notice requirement.

    An employer, as defined in the WBCML, is “any business enterprise that employs 50 or more persons in this state.”2 As such, employers with 49 or fewer total employees in Wisconsin are not subject to the WBCML notice requirements.

    Thomas J. Nichols Thomas J. Nichols, Marquette 1979, is a shareholder with Meissner Tierney Fisher & Nichols S.C., Milwaukee, where he focuses his practice on business and tax law.


    Graham C. Garland Graham C. Garland, Georgetown 2016, is an associate attorney with Meissner Tierney Fisher & Nichols S.C., Milwaukee, where he practices in business law.

    However, this definition raises questions. For example, do I count all employees or just full-time employee equivalents? In the absence of additional guidance, it seems prudent to count all employees, even part-time ones.

    Another question arises: “What if I own multiple businesses? Am I required to give this notice if, in the aggregate, all of those businesses employ more than 50 persons?”

    Unlike its federal counterpart, the Federal Worker Adjustment and Retraining Notification Act (WARN Act),3 WBCML does not statutorily aggregate employers based on ownership. In fact, the supplemental definition of employer in the administrative code considers wholly or partially owned subsidiaries that are independent of a parent corporation as separate employers.4 The DWD’s policy is to only aggregate businesses that share the same management, workforce and operational purpose.5

    When Notice Is Required

    When an employer meets the WBCML “employer” definition, an employer laying off employees only needs to provide the WBCML notice if the layoff affects a sufficient number of employees to meet either the “business closing” or “mass layoff” requirements.6

    As defined in the administrative code, an affected employee is “an employee that suffers a loss of employment” where that loss of employment results in “an employment termination (other than a discharge for cause, voluntary discharge, or retirement), a lay off exceeding six months, or a reduction in hours of work of more than 50 percent during each month of any six-month period”7 (emphasis added).

    Moreover, the “business closing” and “mass layoff” definitions specifically exclude “new or low-hour employees” from the calculation.8 A “new or low-hour employee” is defined as any person who has either only been employed for fewer than six of the last 12 months or who, on average, works less than 20 hours a week.9

    Business Closing, Mass Layoff

    A business closing is defined as a permanent or temporary shutdown of an employment site or one or more facilities or operating units at an employment site or within a single municipality that “affects” 25 or more employees, not including new or low-hour employees.10

    Therefore, an employer who anticipates a business closing, either temporary or permanent, must provide the WBCML notice when the employer has 50 or more employees in Wisconsin, and 25 or more of those employees at a particular site are “affected,” as defined above.

    Conversely, if the layoff does not exceed six months, the WBCML notice is not required.

    The WBCML defines a mass layoff as:

    a reduction in an employer’s workforce that is not the result of a business closing and that affects the following number of employees at an employment site or within a single municipality, not including new or low-hour employees:
    (1) at least 25 percent of the employer’s workforce or 25 employees, whichever is greater; or
    (2) at least 500 employees.11

    In short, even if an employer does not temporarily or permanently shut down its business consistent with a “business closing,” and an employer must provide the WBCML notice if the employer has 50 or more employees in Wisconsin, and a minimum of 25 employees are “affected,” is defined above. Conversely, if the layoff does not exceed six months, no WBCML notice is required.

    Exceptions to the Notice Requirement

    Additionally, the WBCML provides various exceptions to this notice requirement.

    Particularly relevant to the COVID-19 crisis is the exception for unforeseeable business circumstances. This exemption applies when at the time a notice would have been timely given, a business circumstance was not foreseeable.12 This is a facts and circumstance test, and the application of the exception is left to the determination of the Department.

    Presently, the rapid onset of the COVID-19 pandemic and government shutdown of almost all businesses would apply, and the DWD agrees.13 However, the DWD has issued guidance that employers subject to the WBCML should still provide the notice as soon as practicable, including as much information possible and then updating the notice when necessary.14

    Moreover, the administrative code encourages voluntary notice even in situations where notice might not otherwise technically be required.15

    This article was originally published on the State Bar of Wisconsin’s Business Law Blog. Visit the State Bar sections or the Business Law Section web pages to learn more about the benefits of section membership.

    Endnotes

    1 Wis. Stat. §109.07 (2020); Wis. Admin. Code DWD §279 (2020).

    2 Wis. Stat. §109.07(1)(d) (2020).

    3 See Federal Worker Adjustment and Retraining Notification Act, 29 U.S.C. §2101, et seq. (2020); Worker Adjustment and Retraining Notification, 54 C.F.R. §639.3(a)(ii)(2) (2020).

    4 Wis. Admin. Code DWD §270.01(1)(d) (2020)

    5 Teleconference with Department on April 15, 2020. This parallels the administrative code definition of “Employment Site” Wis. Admin. Code DWD §279.01(1)(e) (2020).

    6 See id. at §279.04(2)(a).

    7 Id.

    8 Wis. Stat. §§ 109.07(1)(b) and (f).

    9 Id. at §109.07(1)(h).

    10 Id. at §109.07(1)(b).

    11 Id. at §109.07(1)(f).

    12 Id. at §109.07(6)(d); Wis. Admin. Code DWD §279.08(5).

    13 Wis. Admin. Code DWD §§279.08(a) and (b).

    14 Department of Workforce Development, “Equal Rights Covid-19 Public Information-Information for Employers.”

    15 Wis. Admin. Code DWD §279.09(1).

    ​​​




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