Employer Obligations During Closings and Layoffs
Don’t forget the WARN Act, a federal law that requires covered employers to provide employees with a 60-day advanced notice of impending layoffs.
When an employer is closing a plant or engaging in a mass layoff, it is important for it to keep its WARN Act obligations in mind. Lately, supermarket chains in Florida—including Lucky’s Market, Earth Fare, and Penn Dutch Food Centers—learned that lesson the hard way after each was sued in a class action for failing to comply with the WARN Act.
The WARN Act stands for Workers Adjustment and Retraining Notification Act. It is a federal law that requires covered employers to provide employees with 60 days’ advance notice of layoffs. It applies to employers with at least 100 full-time employees—including any employee who works at least 20 hours per week—or at least 100 employees who work a combined 4,000 hours per week. The failure of an employer to provide the required notice can open it up to a federal lawsuit by employees.
Lucky’s and Earth Fare were each sued in February under the WARN Act. After opening its first Florida store in 2016, Lucky’s had a total of eight stores in Florida when, due to the divestment of national retailer Kroger in late 2019, it announced the closure of all of its Florida stores, as well as 32 other stores across the country.
The problem is that Lucky’s announced the store closures on January 24, with an expected layoff date of February 12. This was not sufficient advance notice to employees. As a result of failing to comply with the notice requirements under the WARN Act, Lucky’s was sued in a class action in the U.S. District Court for the Middle District of Florida. The plaintiffs in the lawsuit are seeking the wages that they would have earned had they been provided with the full 60-day notice of the layoffs.
In February, North Carolina-based Earth Fare closed all of its 50 locations nationwide, including 14 locations in Florida. According to the complaint filed against it, Earth Fare informed employees on February 3 that they were laid off, effective immediately. Earth Fare never provided any prior notice to its employees. This resulted in employees filing a class action lawsuit against Earth Fare in the U.S. Bankruptcy Court of Delaware.
Additionally, last September, South Florida supermarket Penn Dutch Food Centers was hit with a class action lawsuit under the WARN Act. The employees claimed that Penn Dutch closed its stores without providing any prior notice to employees.
These cases show how important it is for employers who are closing down a location to keep their WARN Act obligations in mind. The WARN Act does not apply to every layoff; it applies only to “plant” closings and mass layoffs. A “plant closing” is the closing of an employment site that results in the layoff of at least 50 full-time employees during a 30-day period. A “plant” can include a company store, a warehouse, or any company location.
The WARN Act also applies to mass layoffs that do not involve a plant closing if the layoffs result in the termination of at least 500 full-time employees—or 50 full-time employees if that accounts for at least 33 percent of the employer’s total workforce. If a covered employer engages in a plant closing or mass layoff, the employer is required to provide employees with 60 days’ advance notice of the layoff.
It may be easy to forget about the WARN Act when an employer is concerned with other matters associated with a plant closing or mass layoffs. However, employers should keep their WARN Act obligations in mind to avoid risking a lawsuit.
From: Daily Business Review