Total Articles: 8
Employee Resignations after Employer Announced Business Closing "Not Voluntary Departures" under Federal WARN, Appeals Court Rules
Employees who stopped reporting to work after their employer announced it would close in 12 days if it did not find a buyer for the business have suffered an “employment loss” under the federal Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. §2101 et seq., the federal appeals court in San Francisco has determined.
A warning for parent corporations subject to the WARN Act (pdf).
The federal Worker Adjustment and Retraining Notification Act (WARN
Act) generally requires covered employers to provide 60 days' notice of a
plant closing or mass layoff. Failure to comply with the requirements of
the Act may subject employers to substantial liability. Furthermore, a
recent decision by Delaware's federal court reminds parent corporations
that they may also be liable for damages under the WARN Act if a
subsidiary lays off employees in a manner that violates the statute.
A WARN Act Refresher Course.
As the steady drumbeat of grim economic news continues, more and more employers are forced to face the unpleasant prospect of laying off valued employees to survive. When times are tough, the last thing a struggling business needs is a class-action lawsuit claiming that the former employees are entitled to 60 days' additional pay under federal or state law.
Fair WARNing for These Harsh Economic Times.
As this Bulletin went to press, the Dow Jones Industrial Average was below 6700, and approximately 6.5 million people are currently unemployed. Given the dire state of our economy, this appears to be an opportune time to review employer obligations under the federal Worker Adjustment and Retraining Notification Act.
Third Circuit Clarifies the Faltering Company Exception to Notice Requirements of the WARN Act.
The purpose of the Worker Adjustment and Retraining Notification (WARN) Act is to protect workers by requiring advance notice of plant closings. Such notice allows workers some time to adjust to the prospective loss of employment, and to seek other jobs or retraining. The WARN Act requires generally 60 days written notice before a closing or mass layoff by covered employers (typically, those with at least 100 full-time employees at a site). Companies that violate the Act are liable for back pay and benefits for each day that the required notice is not provided, up to the 60 day maximum.
Construction Workers WARN Act Claims Denied: Site of Employment Was Actual Construction Site, not Corporate Headquarters.
The Ninth Circuit recently affirmed the decision of a federal trial court denying former construction workers claims that their termination violated the Worker Adjustment and Retraining Notification (WARN) Act. The Court held that the workers were not covered by WARN because they did not demonstrate that 50 or more laid-off employees worked at a single site of employment.
Worker Adjustment and Retraining Notification ("WARN") Act Liability And Entrepreneurial Companies (pdf).
Recent court decisions involving Carolinas employers have broadened potential liability
exposure for venture capital and private equity firms involved with entrepreneurial
companies. Specifically, the recent decisions have expanded scenarios in which venture
capital and private equity firms may be considered joint employers with the companies
in which they make equity investments. As a result, the equity investors may be liable
under the Worker Adjustment and Retraining Notification (WARN) Act and other
employment laws to employees of their portfolio companies.
"WARN Watch--Employers Laying Off Workers Must Follow Notice Requirements"
Employers contemplating facility closings or reductions in force as a means of coping with the current business downturn must be aware of their legal obligations under the federal Worker Adjustment and Retraining Notification Act ("WARN"), 29 U.S.C. Sections 2101, et seq., and interpretative regulations promulgated by the U.S. Department of Labor, 29 C.F.R. 639.1-10.
