The Sugar Law Center for Economic and Social Justice is a national, non-profit organization, advocating for working people and their communities. We work for economic and social justice by binding corporations and government to their legal and ethical responsibilities. The Sugar Law Center has been at the forefront of WARN Act litigation since 1992. Together with our cooperating attorneys, the Law Center has represented thousands of workers and in hundreds of WARN Act cases throughout the country.
The Sugar Law Center is affiliated with the National Lawyer's Guild.
In Guippone v. BH S&B Holdings L.L.C., 737 F.3d 221 (2d Cir. Dec. 10, 2013), the Court of Appeals considered whether a private equity firm and/or a parent holding company could be liable as a single employer under the WARN Act when layoffs were undertaken at a subsidiary retail clothing store chain. The Court of Appeals upheld the lower court's dismissal of the private equity firm but overturned the dismissal of the parent holding company finding:
The record evidence would allow a jury to conclude that Holdings was so controlled by HoldCo that it lacked the ability to make any decisions independently, and that the resolution passed by HoldCo's board "authoriz[ing] Holdings to effectuate the Reduction in Force" was, in fact, direction from HoldCo to Holdings to undertake the layoffs. Authorizing layoffs is not just a prerogative of ownership—it's a function of being an employer, especially where, as here, HoldCo was the sole member and manager of Holdings, and the HoldCo board operated as Holdings' board. There is sufficient evidence in the record to allow a jury to conclude that Holdings was not free to implement its  own decisions, and that the layoffs were, in fact, directed by HoldCo.
"[B]ecause the balancing of the factors is not a mechanical exercise, if the de facto exercise of control was particularly striking... then liability might be warranted even in the absence of the other factors." Pearson, 247 F.3d at 504 (internal citation omitted). Here, there is sufficient evidence from which a jury could conclude that HoldCo directed the layoffs with no regard to Holdings' separate corporate form. Given this, we reverse the grant of summary judgment to HoldCo.
In late September, the Northern District of Indiana issued an opinion and order denying defendants' motion to dismiss. The court considered whether a private equity firm (Monomoy) could be held liable under the WARN Act for layoffs at plastics manufacturing facility operated by a limited liability company (Fortis). The court found that:
This is a close case, but when each factor is balanced according to its relative weight, Mr. Young’s allegations regarding the status of Fortis and Monomoy as the “single employer” of Mr. Young and the other class members are sufficient to survive Monomoy’s Motion to Dismiss. On the issue of highest importance—the decision to close the Fort Smith Facility—Mr. Young made a number of clear factual allegations regarding Monomoy’s involvement and exercise of control over Fortis. As was noted in Pearson, if sufficiently egregious, de facto exercise of control can be sufficient to warrant liability on its own. Pearson, 247 F.3d at 496.
The case is Young v. Fortis Plastics, L.L.C., 2013 U.S. Dist. LEXIS 137075 (N.D. Ind. Sept. 24, 2013). The court's opinion can be found here.
Innovative legislation has been introduced in the North Carolina General Assembly that would establish a Workforce Displacement Benefit Program to "provide uniform payments to workers who are displaced as a result of a mass layoff that is identified by the Governor as a major distress event." The primary sponsor of the House bill (No. 528) is Rep. Pierce. The bill was introduced on April 2, 2013 and was referred to the Committee on Appropriations. In the Senate, the primary sponsor is Sen Clark. The Senate bill (No. 579) was filed on April 1, 2013 and has been referred to the Committee on Rules and Operations.
For the fourth consecutive year, Rhode Island legislators have introduced before the General Assembly bills to adopt a state WARN Act. House bill 5508 and Senate bills 0230 and 0367 would establish the Rhode Island Worker Protection and Job Loss Notification Act. The bills were introduced in February and are pending before the House Labor Committee and Senate Labor Committee respectively.
Representatives Slater, Silva, Williams, and Diaz introduced the House bill and Senators Crowley, Pichardo, Goldin, Sosnowski, and Conley introduced the Senate versions. Kudos to each.
Minnesota legislators Rep. Ryan Winkler and Rep. Mike Sundin introduced a bill, HF 1266, on March 5, 2013. The bill would require employers to give at least 30 days notice before undertaking a worksite closing or mass layoff affecting 25 or more employees. The law would apply to any employer of 25 or more employees. By lowering the triggering thresholds, the bill seeks to expand worker protections by covering more employers and more displaced workers. As a trade-off for expanded coverage, the notice period is shorter than that found under federal law.
Earlier this year, Minnesota legislators introduced a bills (H.F. No. 2284 & H.F. No. 2446) that would allow the Commissioner of the Department of Labor and Industry to issue an order requiring an employer to comply with the state's Early Warning System law. The Early Warning System statute presently "encourages", but does not require, employers to provide advance notice of plant closings, substantial layoffs, or relocation of operations. The bills would permit the Commissioner to enforce the law and also permit affected workers to obtain relief, including treble damages, for violations of the Commissioner's order. The proposed laws are pending before the House Jobs and Economic Development Finance Committee.
For the third consecutive year, a state WARN Act has been introduced before the Rhode Island legislature. House bill 7565 and Senate bill 2378 would establish the Rhode Island Worker Protection and Job Loss Notification Act.
The House and Senate bills contain several important innovations. The bills would apply to employers of 75 or more workers. Notice requirements would be triggered by a transfer of operations resulting in the termination of employment for 25 or more workers and also be triggered by mass layoffs of 50 or more workers or mass layoffs of 25 or more workers representing 1/3 of the employees at the establishment.
The Senate passed the bill in June, however the House continues to consider the bill in committee.
Over the summer, defense contractors have threatened to issue blanket WARN Act notices of potential layoffs to all civilian employees on Nov. 2. The threats are the result of massive across-the-board sequestration cuts to the federal budget that are scheduled to take effect on January 2, 2013. Without a budget compromise in Congress, federal contractors anticipate significant layoffs resulting from the sequestration cuts.
In response the U.S. Department of Labor has issued a guidance letter stating that due to the contingent nature of the cuts, the unknown impact on particular federal contracts and contractors, and other contingencies, the layoffs are presently unforseeable. The Department of Labor further noted that blanket notices to all employees are not consistent with the purposes of the WARN Act, which seeks to inform those workers who are reasonably anticipated to be laid off and to provide them with an opportunity to seek other employment in advance of job loss.
Sen. Michael B. Enzi (R-Wyo.) has taken a lead in questioning the DOL and coming to the defense of existing WARN Acts requirements as applied to federal contractors. We would otherwise applaud such efforts had WARN Act reforms not stalled before the Senate H.E.L.P. Committee (upon which Sen. Enzi sits) due to opposition within his party. In light of his recent opinions however, we look forward to his strong support and leadership to strengthen existing WARN Act requirements as new bills come before his committee in the future.
The New Jersey legislators remain at the forefront of forward-thinking elected officials seeking to protect workers and communities from the devastating effects of sudden job loss. Again this year, New Jersey legislators introduced innovative legislation that would: 1) provide access to certain job training courses for employees affected by plant closings, mass layoffs, or transfer of operations (A 1799 and S 397); 2) allow persons affected by certain plant closings, transfers and mass layoffs to receive temporary suspension of payment of interest on mortgage loans (A 1802 and S 916); and provide for expedited injunction for violations of law requiring prenotification of certain plant closings, transfers and mass layoffs (A 1807 and S 398).
Each of the bills remain pending before the committees of the state Assembly and Senate.
Legislative Bill 472, which would have adopted the Nebraska Workers Adjustment and Retraining Notification Act, was indefinitely postponed at the end of the state's legislative session earlier this year. For further consideration, the bill will need to be reintroduced during the the next legislative session, scheduled to begin January 9, 2013.
Effective January 1, 2012, New Hampshire's state WARN Act is amended to cover fewer New Hampshire workers. The legislation increases the threshold size of covered employers from those with 75 or more full-time employees to those with 100 or more full-time employees. The amended law now mirrors federal legislation in that respect and will result in fewer New Hampshire employees recieving advance notice of impending job loss.
Earlier this year, a new Hawaiian law took effect which provides penalties for employers who fail to act in accordance with the state WARN Act. An employer in a covered establishment who violates the Act will be held liable to each affected employee for back pay and benefits for the period of violation, not to exceed sixty days. Employer liability may be reduced by any wages paid during the notice period and voluntary and unconditional payment not required by a legal obligation. The law further empowers the state department of labor to conduct investigations and enfore the state WARN statute.
In January of 2011, Nebraska state senator Russ Karpisek introduced the Nebraska Workers Adjustment and Retraining Notification Act (LB 472). The bill seeks to provide more worksite and worker coverage, more efficient administrative response and enforcement, and more meaningful advance notice to employees. After introduction, the bill was referred to the Business and Labor Committee where it remains pending.
The bill would require employers to provide 60 days advance written notice of a mass layoff, worksite closing, or a transfer of operations which would result in the loss of 25 jobs or more. Notice must be given to each affected employee, each representative of the affected employees, the Commissioner of Labor, the local workforce investment boards and the mayor of the city or village within which the event will occur or, if not within a city or village, the county board. The notice period is increased to 120 days for an event which would result in job losses for 250 employees or more. The bill further allows for the aggregation of individual employment losses if the losses occur at a single site for two or more groups of employees and if any of the individual employment losses involve fewer affected employees than are necessary to require notice under the act.
Enforcement provisions would attach liability to violating employers for each affected employee. The penalties include double back pay for each calendar day of the violation, the value of benefits from the employer’s employee benefit plan through the entire 60 day notice period, as well as liability for other economic and exemplary damages shown by the employee through a preponderance of evidence to have been caused by the employer’s violation of the Act.
Cornhuskers may wish to contact Sen. Karpisek to thank him for his efforts on this bill and may wish to reach out to the Business and Labor Committee to voice support for this legislation.
Legislators in New Jersey and Rhode Island have reintroduced legislation that expired at the end of last year's legisaltive sessions. The New Jersey bills (Assembly Bills 1923, 1939, and 1985 and Senate Bills 976, 977, and 992) would improve the state's existing advance notification statute while the Rhode Island bills (House Bill 5221 and Senate Bill 421) would enact a mini-WARN Act.
Folks in the Garden and Ocean States are asked to contact their state senators and representatives to register their support of the pending legislation.
In what is an all-too-familiar tactic of the national office of the U.S. Chamber of Commerce, the organization has issued a "study" falsely claiming that legislation existing in particular states has a crippling impact on economic growth and job creation within that state. The new piece is titled "The Impact of State Employment Policies on Job Growth: A 50 State Review" and claims to rank states based on a "Employment Regulation Index". The index is compiled through negative scoring based on the existence of fair employment practices laws within a state. Additionally, if the laws have meaningful enforcement procedures to deter illegal conduct, this can lead to further negative scoring.
One factor used to determine the ERI is the presence of state WARN Act statutes. The presence of these mini-WARN Acts is cited as a "key aspect" of state employment polices that harm economic growth. Beyond the false premise of the report, the data surveyed is inaccurate and, at times, blatantly false. Particularly, the report includes the following states as having "WARN-type" requirements that exceed federal law: Connecticut, Michigan, Ohio, and Pennsylvania. If it were true, this would be news to workers in each of these states, but it is not.
Michigan and Ohio have no WARN-type requirements and Connecticut and Pennsylvania's statutes do not require advance notice to workers when job losss occurs as the result of a a plant closing or mass layoff. In 2005, the Connecticut state legislature introduced WARN-type legislation, but the bill did not pass before the end of the legislative session. The state has a law that requires the continuance of group health insurance for 120 days following a plant closing, but this cannot fairly be claimed as WARN-type legislation. Michigan has a non-binding statute that asks employers to provide notice of job loss, but compliance is voluntary and the statute has no enforcement provisions. The Ohio legislature introduced a mini-WARN Act last year, but it did not pass. The state only has a law that requires an employer undertaking a large-scale layoff to notify the state unemployment insurance director three days prior, so that the agency can prepare for processing of a large number of anticipated claims. Pennsylvania also does not require advance notice of plant closings or mass layoffs beyond what is required by the federal WARN Act. The state legislature has considered mini-WARN Act legislation during several sessions, but no law has yet passed. The state does require limited notice to state regulators when a takeover bid is underway and, during "control share acquisitions", requires modest severance to long-term employees. These laws are of very limited application and neither can fairly be considered WARN-type legislation requiring advance notice to workers of impending layoffs.
These errors were found on a quick review of WARN-type legislation. One is left to wonder what additional errors would be found regarding the Chamber's claims concerning wage theft legislation, anti-discrimination laws, and other statutes that protect workers and ethical employers from the predatory practices of less humane and corrupt enterprises. The Chamber's reports appear to have been drafted to protect the latter as the expense of the former.
Too often however, the Chamber's reports contain similar embedded errors. An example is the Chamber's annnual Litigation Climate "study". States that allow severely injured persons access to the courts to recover tort damages to pay for necessary medical care, lost wages, and other losses are considered to hinder economic growth. Notably, in past years, the report has awarded varying scores regarding Michigan's punitive damages laws. However, Michigan law does not permit recovery of punitive damages in tort cases. While the Chamber's studies have been debunked by academics and pollsters, they continue to be cited by journalists and politicians who fail to check the facts underlying the opinions presented. And that may be the purpose of these "studies" after all - to shape public perception regardless of the facts. As a consequence, they should be seen for what they are - propoganda pieces to create false impressions to undermine the laws that provide economic stability and a level playing field for all.
Minnesota Legislature This site has listings of committee members and contact information for state Senators and Representatives.
New Jersey Legislature This site has listings of committee members and contact information for state Senators and Representatives.
New Jersey Bills, A 1802 & S 916 Bills would allow laid off workers to receive temporary suspension of payment of interest on mortgage loans. Pending before Assembly Labor Committee and Senate Commerce Committee.
New Jersey Bills, A 1807 & S 977 Bills would empower state officials to obtain injunctive relief when advance notice is not provided. Pending before Assembly Labor Committee and Senate Labor Committee.
New Jersey Bills, A 1799 & S 397 Bills would provide for free tuition to laid off workers. Reported out of Assembly Labor Committee. Senate bill introduced before Senate Labor Committee.