A federal contractor that could not secure extended financing and suddenly laid off its workers when it could not make payroll was not a covered “employer” under the Worker Adjustment and Retraining Notification Act (WARN Act), the U.S. Court of Appeals for the Fourth Circuit has held. Schmidt v. FCI Enters. LLC, Nos. 19-02384, 20-01076 (June 24, 2021).
Articles Discussing General Issues Under WARN.
Emily Borna discusses the prospective litigation implications of class action claims brought under the WARN Act regarding notice requirements for layoffs related to the COVID-19 pandemic in “Covid as Natural Disaster? Courts to Decide WARN Act Defense,” published by Bloomberg Law.
Beginning with the onset of the pandemic in March 2020, employers were left with little choice but to make tough decisions about the size and composition of their workforce. In many cases, employers were forced to shutter operations entirely.
Dear Littler: We are planning a layoff that will involve many of our employees who are working remotely during the pandemic. How do we decide who works at a particular location for WARN counting purposes?
—Counting in Columbus
It is an entrepreneur’s nightmare. The company you struggled to create goes out of business due to a lack of financing. As the company goes under, the employees sue. Out of money, the company does not defend itself in court and a multi-million dollar default judgment gets entered against it. When the company can’t pay the judgment, the former employees sue you individually. They argue that the company’s failure to pay the “back pay” judgment constitutes a violation of the Massachusetts Wage Act, M.G.L. c. 149, § 148, which imposes individual liability on certain corporate officers. The employees now seek to hold you individually liable for the whole judgment, plus treble damages and attorneys’ fees.
A California Court of Appeals has held that temporary furloughs trigger notice obligations under the California Workers Adjustment and Retraining Notification Act (CA-WARN). Specifically, the appellate court in The International Brotherhood of Boilermakers v. NASSCO Holdings Inc., decided that employees were entitled to 60 days’ notice of termination under CA-WARN after the employer temporarily furloughed more than 50 employees within a 30-day period at a single worksite in California.1
Executive Summary: March 1 has arrived without a budget compromise in Washington, DC. Barring a last minute deal before midnight tonight, across-the-board federal budget cuts are expected to go into effect. For employers, this will bring with it a variety of direct and indirect consequences, including automatic cuts to the budgets of various federal agencies with workplace oversight and enforcement responsibilities. The most significant impact is expected to be on employers doing business with the federal government, particularly contractors with sizeable workforces servicing federal contracts. In the coming weeks a host of employment law issues may be implicated for contractors, some of which do not have the clearest answers.