WARN Act Violation

A couple of weeks ago, my company laid off myself
and 130 others with no notice, just two weeks of
severance pay. There were about 400 people
in the company. I, and many of my former
co-workers wonder if a class action lawsuit
would be appropriate.

In their quarterly filing 3/27 with the SEC and in
news articles on 3/16, the company comments on the
"With the continued weakness in the economy at large and the market for e-business services in general, we have initiated cost reduction
measures to more closely align our cost structure with near-term future revenue opportunities. In the first quarter of 2001, we expect
to report a charge of $4.5 million to $5.0 million in connection with employee severance and the elimination of excess office space and

This does not seem to fall into any of the 60-day notice
exception categories:
1)faltering company (applies only to plant closing)
2)unforseeable business circustance
3)natural disaster.

1 answer  |  asked Apr 3, 2001 5:58 PM [EST]  |  applies to Illinois

Answers (1)

Neil Klingshirn
The company appears to have avoided WARN by one layoff

WARN requires a 60 day notice for a "plant closing" or a "mass layoff." It sounds like you are describing a mass layoff.

WARN defines a mass layoff as a reduction that results in an employment loss during any 30 day period for "at least 33 percent of the emloyees (excluding part time employees) AND at least 50 employees."

131 divided by 400 equals .3275. In other words, the company appears to have deliberately avoided WARN notification by one layoff.

Technically, employers can come up to the edge of a WARN violation without triggering the notice requirement, so long as they stay outside of the mass layoff definition.

The problem for the employer with "getting cute" like this is that WARN has two technical traps. First, it covers all layoffs during any 30 day period. Therefore, find out if the company laid of anyone within 30 days before or after your layoff.

Second, buried in section 2102(d) is a rule that says employment losses for two or more groups within a 90 day period have to be counted as a single employment loss. Therefore, look 90 days forward and back. A single, additional layoff will not get you to a mass layoff, since the 90 day rule applies to two or more "groups." However, a layoff of two or more will probably put you over the top, subject to some additional issues (i.e., whether the employment losses have distinct causes).

More helpfully, if your employer is truly in financial distress, it will probably have to lay off two or more people in the next 90 days. I suggest that you keep vigilant and revisit this issue when the 90 days has run, unless the employer previously laid off another group.

Finally, you might get to your last layoff if one or more employees feel compelled to resign because they are convinced that they will be fired with little warning, as were you. This would involve a difficult argument that the resigning employee(s) were "constructively laid off." However, where an employer so obviously structures a layoff to avoid WARN as is your case, courts tend to look very hard at them.

Contact me directly if more layoffs occur and we will take the next steps. I am licensed to practice only in Ohio, but may be able to appear pro hac vice with local counsel should the case so merit it.



posted by Neil Klingshirn  |  Apr 4, 2001 10:50 AM [EST]

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