WARN ACT NEWS

Delaware Legislature Enacts the Delaware Worker’s Adjustment and Retraining Notification Act

In a victory for workers, H.B. 409, the Delaware Worker’s Adjustment and Retraining Notification Act (DWARN) took effect on January 9^th, 2019.  Signed by Delaware Governor, John Carney on July 11^th, 2018 the legislation requires 60 days written notice be given by employers of 100 employees or more to affected employees in circumstances of mass layoffs, plant closings, and relocation involving 50 employees or more working a combined 2000 hours a week at a single worksite. 60 days written notice must also be given to any union representation, the local elected official, and the Delaware Department of Labor Division of Employment and Training.

Vermont Legislature Considers Protections for Displaced Workers

In March, the Vermont House of Representatives passed a bill (H. 758) that would require employers of 50 or more persons to provide forty-five days advance notice of mass layoffs and worksite closings.   The bill is now before the Senate and is pending a third reading and possible amendment.  Although the original billed would have provided greater notice (90 days) to more workers (employers of 20 or more persons), the pending bill represents positive action to mitigate the often devastating impact of mass layoffs and closings both to the local communities and afffected workers.  

Additional information can be found at VTDIGGER.ORG here.

From the Second Circuit, Another Good Decision on Single/Joint Employer

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  [228]  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.

The decision in Guippone can be found here.

A Good Decision from the North District of Indiana on Single/Joint Employer

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.  

North Carolina General Assembly Considers Extended Benefits

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.   

Persistence will Prevail in the Ocean State!

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.

New Bill Introduced in Minnesota Legislature

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.

Legislators Work to Strengthen Minnesota's Voluntary Advance Notification 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.

Rhode Island Continues to Consider State WARN Act

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. 

Department of Labor Issues Guidance to Federal Contractors

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.   

New Jersey Legislature Again Considers Innovative Measures

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.  

Nebraska Bill Indefinitely Postponed

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.

New Hampshire takes step Backwards

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. 

Hawaii Enacts WARN Enforcement Law

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.

Nebraska Considers State WARN Act!

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.  

WARN Act Legislation: New Jersey & Rhode Island Updates

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.

US Chamber of Commerce Propaganda Criticizes State WARN Requirements Where None Exist

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.   

Extended Mass Layoffs – Second Quarter 2011

In August, the U.S. Department of Labor, Bureau of Labor Statistics, released extended mass layoff statistics for the second quarter of 2011. In this quarter, employers initiated 1, 624 mass layoff events resulting in the separation of 261, 346 workers from their jobs. The figures reflect a decrease in events and separations over the year for seven consecutive quarters.  The official national unemployment rate reported for the quarter averaged 8.9%, a decline from 2010’s average of 9.5%.

The state of California was hardest hit by worker separations for the quarter, followed by Illinois, Pennsylvania, New York and Ohio. Of the four census regions, the West region reported the largest number of separations.  Of the nine census divisions, the Pacific and the East North Central reported the highest numbers of displaced workers.  All four regions and eight of the nine divisions reported fewer laid-off workers compared to the last year’s second quarter. 

WARN Act Legislation: Year End Recap

The United States Congress and a number of state legislatures had WARN Act reform legislation pending for much of the past year. Workers rights advocates saw one notable victory and a number of initiatives that lays the groundwork for future efforts. In too many instances however, good bills were introduced but saw no meaningful action after being referred to legislative committee.  Following entries provide a recap of legislative initiatives that were put forward and/or considered by federal and state legislatures during the previous year.

United States Congress: The FOREWARN Act of 2009 was introduced before the House of Representatives by Rep. George Miller (CA-7) and before the Senate by Sen. Sherrod Brown (OH).  The House bill received bi-partisan support among its co-sponsors. Sen. Brown also introduced the Regional Economic Recovery Coordination Act of 2009 and Rep. Guiterriz (IL-4) introduced the Alert Laid Off Employees in Reasonable Time Act.  Each of these bills were referred to committees.  However, to the disappointment of workers rights advocates, none saw further action during the 111th Congress. Rep. Gutierrez, Rep. Miller and Sen. Brown will be returning to join the 112th Congress and it is hoped that WARN Act reform will be reintroduced and pushed forward in the new Congress.

California: In California, the state legislature considered legislation to improve the state’s WARN Act by extending the notice period from 60 to 90 days.  The bill was introduced by Assemblymember Sandré Swanson.  The bill was referred to but did not make it out of committee.  Assemblymember Swanson was re-elected in November and will return to the legislature in 2011.  

Hawaii: The Hawaii House of Representatives and state Senate considered innovative bills, HB396 HD2 and SB688 HD2 respectively, that would have provided additional job security to employees when their employer’s company was taken over by a successor.  The bills were introduced in 2009 and were carried over to the 2010 legislative session.  Both bills were passed to various committees and did not receive a vote before the full House or Senate.

Iowa:  Iowa enacted state WARN Act legislation in 2010.  See entry below.    

Massachusetts:  The Commonwealth of Massachusetts has been considering two bills that would improve the state’s exising advance notice laws.  In the House, an Act Relative to the Notification of Large Job Layoffs, House No. 1847 was introduced by Representative Michael Rush.  In the Senate, a similar bill was introduced by Senators Anthony Petruccelli, Gloria Fox, Willie Mae Allen and Elizabeth Malia.  Both bills were referred to committee, but saw no further action during this legislative session.  

Minnesota:  Since 2009, the Minnesota state legislature has been considering bills that would make the state’s voluntary advance notice guidelines binding law,  enforceable by the state labor commissioner.  The bills have been pending before state House and Senate committees for more than a year and will have to be re-introduced if they are to be considered during the next legislative session.  In the state House, the bill was authored by Representatives Ryan Winkler, John Ward, and Denise Dittrich.  In the state Senate, the bill was authored by Senator David Tomassoni.  Each of the authors were re-elected to their offices during elections in November, 2010.

New Hampshire:  New Hampshire passed state WARN Act legislation in 2009 and the law became effective on January 1, 2010.

New Jersey: Legislators in New Jersey re-introduced several bills during 2010 that would strengthen the state’s Millville Dallas Airmotive Plant Job Loss Notification Act.  The bills however did not make it out of committee. If past history is any indication, the bills are likely to be re-introduced during the next legislative session.   

New Mexico:  In early 2010, the New Mexico legislature considered a state WARN Act bill introduced by Rep. Mimi Stewart.  The bill passed the New Mexico House of Representatives and then was referred to the state Senate.  Unfortunately, after intensive lobbying and rumors of a catered barbeque dinner curtesy of corporate lobbyists, the Senate Corporations and Transportation Committee tabled the bill during a late session and the bill then died in committee.  The bill was supported by Governor Bill Richardson.  Rep. Mimi Stewart returns to the New Mexico legislature next year; however a new governor will take office in 2011.

Ohio:  State representative Kenny Yuko introduced a state WARN Act bill before the Ohio General Assembly earlier this year.  The bill was referred to the House Commerce & Labor Committee.  The committee however took no action on the bill before the end of the legislative session.  Rep. Yuko returns to the Ohio House of Representatives and will hopefully continue to pursue the issue during the next legislative session. 

Pennsylvania:  In 2010, Representatives White, Belfanti, Bradford, Brennan, Daley, DePasquale, Freeman, Gibbons, Hornaman, Josephs, Kula, Murt, M. O'Brien, Quinn, Santoni, Siproth, K. Smith and Thomas introduced the Pennsylvania Workers Adjustment and Retraining Notification Act before the state House of Representatives.  The bill was referred to the Labor Relations Committee but was not acted upon during this legislative session.

Rhode Island:  The Rhode Island Worker Protection and Job Loss Prevention Act, (S2233 & H7462) was introduced before the state General Assembly.  The bills have been pending before House and Senate committees, but have not received committee hearings or been scheduled for a vote during the current legislative session. 

Recent Court Decisions On WARN Act Issues

With record high job dislocation in recent years, the nation’s courts have been confronted with numerous related lawsuits, many of which have been filed based on  violations of the WARN Act.  The following summaries detail decisions entered in recent months.    

Platt v. Freedom Mortg. Corp. (D.N.J. 2010).  Plaintiffs alleged that the Defendant terminated their employment as part of a mass layoff in January 2010 without giving the required advance notice under the WARN Act.  The Defendant moved to dismiss for failure to state a claim and asserted that only 44 of the 60 employees were laid off.  The court recognized that it would be improper to consider the employer’s extraneous evidence on the pre-answer motion to dismiss.  As a result, the court denied the Defendant’s motion finding that Plaintiffs alleged facts sufficient to show that the Defendant is an employer subject to the 60 day advance notice provision and alleged facts sufficient to show that the Defendant’s layoffs constituted a mass layoff. 

In re Storehouse, Inc. (Bkrtcy. E.D. Va. 2010).  The Plaintiff brought an action against his former employer under the WARN Act. The court found that the Plaintiff was not a mobile worker, but rather, had worked from an identifiable single site of employment.  The court found further that layoffs at the Plaintiff’s site of employment affected fewer than 50 people.  As a result, the court held that the Plaintiff did not qualify for WARN Act protections.

Bennett v. Roark Capital Group, Inc. (D. Me. 2010).  Former employees and their labor union brought an action against their employer WSI and various other corporate parents. Among other claims, the Plaintiffs alleged violations of the WARN Act. The Defendants moved to dismiss. 

To determine the whether the corporate parent companies qualified as the employer under the  WARN Act, the court recognized two tests.  Under the first test, the court considered whether the parent companies and WSI had: (1) common ownership; (2) common directors and/or officers; (3) de facto exercise of control; (4) unity of personnel policies emanating from a common source; and (5) the dependency of operations between the companies.  Under the second test, the court considered the: (1) interrelation of operations between the companies; (2) whethere there was common management; (3) the existence of centralized control of labor relations; and (4) common ownership.  The court found it improper to consider the probability that there will be such evidence prior to the completion of discovery.  The court held that Plaintiffs were entitled to conduct discovery to determine if such evidence exists and denied Defendants’ motion to dismiss.

Richards v. Advanced Accessory Systems, LLC. (E.D. Mich. 2010).  Plaintiffs alleged a WARN Act violation when they were informed that they were laid off without 60 days advance. The court examined the extent to which an entity with a controlling ownership interest in an employer is subject to WARN Act liability.

Looking to US DOL regulations, the court considered the following factors: (1) common ownership; (2) common directors and/or officers; (3) de facto exercise of control; (4) unity of personnel policies emanating from a common source; and (5) dependency of operations.   The court found that the third, fourth and fifth factors weighed in favor of the Defendant parent corporation and granted that company’s motion for summary judgment. 

In re Taylor Bean & Whitaker Mortgage Corp. (Bkrtcy. M.D. Fla. 2010).  On WARN Act claims, Plaintiffs requested certification of a class.  Defendant argued that the claims should be handled through the claims administration process and that an adversary proceeding was unnecessary. The court found that a class action adversary proceeding was appropriate and preferable to the claims procedure and that an adversary proceeding was necessary to protect  employees’ rights given the relatively small nature of the individual claims.

In re FF Acquisition Corp.  (Bkrtcy. N.D. Miss. 2010).  Former employees alleged that their former employer violated the WARN Act when, on the day of filing for bankruptcy relief, the employer terminated all manufacturing activities and issued a notice that it was ceasing business operations.  In order to be exempt from the 60 day advance notice requirement, the court recognized that the employer must show that the circumstances were unforeseeable and that the layoffs were caused by those circumstances.  The Plaintiffs asserted that the shutdown was foreseeable due to variety of factors.  The Defendant stated that the failure of the company’s three principal customers to provide written commitments for orders by August 2005 resulted in an inability to provide their primary lender with a viable business plan showing that the company could repay its debts.  Without funding from their lender, business operations could not continue. 

The court held that the “unforeseen business circumstances” and the “faltering company” exceptions to WARN Act liability applied to the facts of the case. The court’s decision seemingly misapprehends the unforeseen business circumstances exception.  By its very terms, a faltering company that is actively seeking capital (under the second exception) not only forsees but is critically aware of the dire circumstances necessitating the capital sought. Under such conditions, the adverse business circumstances cannot be considered “unforeseeable.”

Eash v. Export Packaging Co., Inc. (C.D. Ill. 2010).  Plaintiffs alleged that the Defendant employer, failed to provide adequate (60 day) notice prior to the termination of their employment. Plaintiffs brough a motion for class certification that was not opposed by the Defendant.

Despite class certification being properly and routinely granted in such cases, the court curiously found it hard to believe that Plaintiffs would “be familiar with which employees did or did not receive written notice of their terminations” and that the Plaintiffs thereby failed to establish the numerosity requirement of FRCP 23.  Plaintiffs’ motion for class certification was then denied without prejudice.

Third Quarter Extended Mass Layoff Numbers

In November, the U.S. Department of Labor, Bureau of labor Statistics released extended mass layoff statistics for the third quarter of 2010.  In this quarter, employers initiated 1,297 mass layoff events which resulted in the separation of 187,091 workers from their jobs.  The numbers reflect a drop from the record highs experienced in 2009, but continue to represent historically high numbers.  The official unemployment rate of 9.5% is nearly unchanged from last year.

Among the four census regions, the West and Northeast were hardest hit by recent extended mass layoffs.  California, followed by New York, and then Florida were the states that recorded the largest number job separations and likewise Los Angeles,  New York City, and San Francisco-Oakland  were the nation’s metropolitan areas that suffered the highest number of such job separations.

Minnesota Legislature Considers Binding Advance Notification Rules To Protect Workers

Earlier this year, a bill, Senate File No. 3198, was introduced before the Minnesota Senate with provisions that would require employers to provide advance notice to workers facing a mass layoff or worksite closing.  The bill is sponsored by Senator David Tomassoni and has been referred to the Senate Business, Industry and Jobs Committee.

The bill's requirements are substantively similar to those found in an earlier companion House bill, House File No. 1963.  Most notably, the legislation would permit state officials to enforce advance notice regulations that are currently voluntary.  See our June 26, 2009 blog entry for a further discussion of requirements that are now found in both the House and Senate bills. 

Folks in the Land of the 10,000 lakes may wish to contact Sen. Tomassoni to thank him for his efforts on this bill and may wish to reach out to the Senate Business, Industry and Jobs Committee  to voice support for this legislation.   

Catching Up with Indiana Legislation and Hawaii Bills

A couple of developments passed under the radar during the past year.  Indiana legislation amended state unemployment insurance laws and Hawaii's legislature is considering a bill, both of which potentially implicate displaced workers rights.

 

 In Indiana, amendments to the unemployment insurance statute at IC-22-4-32-23 include provisions that require notice to the state when a company is considering dissolution, liquidation, or withdrawal of business entities from Indiana.  Within 30 days of adopting a plan to take such actions,  a company must file written notification with the Department of Workforce Development.  The notification must indentify: (1) the corporation’s assets, (2) the corporation’s liabilities, (3) the details of the plan or resolution, (4) the names of the corporate officers, directors, shareholders or owners, trustees, and/or members, and (5) a copy of the minutes of the meeting at which the plan as adopted.  For one year following the dissolution, liquidation, or withdrawal, corporate officers and directors remain personally liable for any acts or omissions that result in the distribution of corporate assets in violation of the interests of the state, unless within 30 days after providing notification, the company follows departmental procedures to seek clearance from liability. The amendments passed the state legislature and were signed into law by the governor.

 

The Hawaii House of Representatives and Senate are considering bills, HB396 HD2 and SB688 HD2 respectively, that would provide job security to employees.  In the event of a company's divestiture, corporate successors facility would be required to hire  incumbent nonsupervisory and non-confidential employees without requiring them to apply for employment. The successor would be permitted to pre-screen  incumbent employees, conduct criminal history checks, and drug screening. Successor companies engaged in a substantially dissimilar business would be exempt from the bill's requirements, as would successors with substantially reduced staffing needs. The House and Senate bills would apply to employers of 100 or more workers. Employers who violate the act would be required to compensate illegally dislocated workers for the difference between the employee’s prior salary and the amount of their unemployment insurance payments throughout the time period that the individual is covered under the state's unemployment insurance program. Under the Senate bill, successor employers would receive a one-year exemption from the state's general excise tax. 

 

The bills were introduced during the 2009 legislative session and have been carried over to the 2010 session. SB 688 is sponsored by Senators Takmine, Chun, Oakland, Bunda, Gabbard, Kindani, and Tsutsui.  The bill was passed by the state senate and then transmitted to the state House of Representatives.   HB396 is sponsored by Rep. Roy Takumi and was recommended for passage by the House Labor and Economic Revitalization, Business & Military Affairs Committees before being referred to the House Finance Committee where it remains pending. 

 

Residents of Hawaii may wish to contact their state senators and representatives to express support for this legislation.

Pennsylvania General Assembly Considers State WARN Law

Earlier this year, a bill to require advance notification to workers and communities facing sudden job loss was placed before the Pennsylvania House of Representatives.  The bill would provide expanded protections beyond that required by existing federal law. 

House Bill 2390, the Pennsylvania Worker Adjustment and Retraining Notification Act, was introduced by Representatives White, Belfanti, Bradford, Brennan, Daley, DePasquale, Freeman, Gibbons, Hornaman, Josephs, Kula, Murt, M. O'Brien, Quinn, Santoni, Siproth, K. Smith and Thomas.  The bill was referred to the House Labor Relations Committee, where it remains pending. 

The bill would require employers of fifty or more workers to provide ninety days advance notice to employees who lose their jobs as a result of a business closing or mass layoffs.  Business closings would be defined as the termination of operations at a single site of employment resulting in job loss to twenty-five or more workers.  A mass layoff would occur when, at a single site, twenty-five or more workers comprising one-third of the workforce suffer a loss of employment or when 250 or more workers were laid off at a single site.  The proposed law would empower the state secretary of labor to accept complaints and investigate employer violations.  

Concerned Pennsylvanians are asked to contact the chair of the House Labor Relations Committee and their state representatives to register their support of the pending legislation.

Amendments Remain before Massachusetts' General Court

A couple of bills to amend existing state law and improve advance notification requirements in Massachusetts passed under our radar earlier this year, but remain pending before the 186th General Court of the Commonwealth of Massachusetts.  In the House, an Act Relative to the Notification of Large Job Layoffs, House No. 1847 was introduced by Representative Michael Rush.  the bill was referred to the legislature's Joint Committee on Labor and Workforce Development, where it remains.    In the Senate, a similar bill was introduced by Senators Anthony Petruccelli, Gloria Fox, Willie Mae Allen and Elizabeth Malia.  The bill, Senate No. 204, was referred to the Joint Committee on Economic Development and Emerging Technologies, where, along with other legislation, it was the subject of a study order this past June. 

If you are in the Bay State, please contact members of the Joint Commitee on Economic Development and Emerging Technologies along with your state senator to urge passage of this important legislation.

Iowa Law Takes Effect

On July 1, 2010, the Iowa Worker Adjustment and Retraining Notification Act came into effect providing additional protections for workers facing layoffs.  The law represents a well-deserved victory for advocates who have proposed such legislation during a number of legislative sessions over the past fifteen years.  The present law was passed by the state House of Representatives on January 27 and the Iowa Senate on March 10 and then signed into law by Governor Chet Culver on March 22, 2010.  By its terms, the law was to take effect on July 1.

Iowa's law expands protections to workers beyond those provided by the federal WARN Act.  The statute requires employers of twenty-five or more workers to give thirty days advance notice to employees when undertaking a worksite closing or mass layoff affecting twenty-five or more workers.  The law also contains a ninety day aggregation period similar to federal law.  Notice must also be provided to union representatives and the Iowa Department of Workforce Development.

The Iowa WARN Act is enforced by the state's Department of Workforce Development. 

Minnesota Legislator Joins As Co-sponsor Of State Bill

 Last spring, Representative Ryan Winkler introduced legislation (H.F. No. 1963) to provide enforcement provisions to the advance notice requirements of an existing statute, which presently has none.  This month, Representative Denise Dittrich joined as a co-author to the bill.  Representative John Ward had previously joined as a co-author.  The bill was recommended for passage by the Civil Justice Committee in 2009, however due to an odd-year adjournment, the bill was returned to that Committee where it remains pending.  

For more information on the Minnesota legislation, see our June 26, 2009 entry.

Advance Notice Law Introduced Before Rhode Island General Assembly

The Rhode Island Worker Protection and Job Loss Prevention Act, (S2233 & H7462) was introduced before the state Senate on February 9, 2010 and reintroduced before the state House of Representatives on February 11.  The Senate bill is sponsored by Senators Frank DeVall, John Tassoni, Elizabeth Crowley, and Frank Ciccone and has been referred to the Senate Labor Committee.  The House version is sponsored by Representatives Roberto DaSilva, Helio Melo, John Savage, John Carnevale, and Arthur Corvese and has been referred to the House Labor Committee. 

The bills' requirements are substantially similar to legislation introduced before the House during the last legislative session and in the wake of the Colibri jewelry factory closing in East Providence last year.  For more information see our entry of April 26, 2009 and Rep. DaSilva's press release on the issue.

Ocean Staters are asked to contact their state senators and representatives to register their support of the pending legislation.

General Assembly Considers New Advance Notice Law To Protect Ohio Workers & Local Communities

On February 2, 2010, Ohio Representative Kenny Yuko introduced a well-crafted bill (H.B. 434) that would require employers to provide their employees with advance notice of mass layoffs, worksite closings, and transfers of operation.  The legislation is co-sponsored by Representatives Robert Hagan, Mike Foley, Tom Letson, Clayton Luckie, Debbie Phillips, Marian Harris and John Domenick.  The bill imposes few, if any, expenses and no new taxes on Ohio businesses, while providing meaningful accountability for companies that violate the notification rights of workers and local communities who suffer the direct impact of sudden job loss.

Ohio's bill would apply to employers of fifty or more workers and require ninety days advance notice of worksite closings, mass layoffs (including layoffs lasting longer than four months) and transfers of operations that affect twenty-five or more workers at a single site.  For closings, layoffs, and transfers that affect two hundred and fifty or more workers, advance notice must be given one hundred and twenty days before the job action.  The bill further provides that notice should be given to the affected employees, their representatives, the department of job and family services, local workforce policy boards and local elected officials and also allows rapid response team members on-site access to provide critical information to displaced workers.  The law would permit state officials to bring enforcement actions against violating companies and also allow enforcement by affected employees through a complaint procedure with the state's department of job and family services and/or a civil action. 

The bill has been assigned for review by the House Commerce & Labor Committee.

All you Buckeyes out there are encouraged to contact Rep. Yuko and the bill's co-sponsors to thank them for their leadership on this issue and to contact your state representatives and House Commerce & Labor Committee members to have your voice heard in support of this legislation.   

New Jersey Legislators Re-Introduce Amendments to Millville Dallas Job Loss Notification Act

Earlier this month, New Jersey legislators in the state Assembly and the Senate re-introduced innovative bills that would allow: 

• Qualified individuals who have been  affected by business closings and mass layoffs to receive a temporary suspension of interest payments interest on mortgage loans. (Introduced as Assembly Bill No. 1939 and Senate Bill No. 992); 
• State officials to seek immediate injunctive relief when advance notice is not provided. (Introduced as Assembly Bill No. 1985 and Senate Bill No. 977); and
• Laid off workers to receive free tuition at New Jersey state colleges for job training courses when the course has room for additional students and no other financial aid is available to the worker. (Introduced as Assembly Bill No. 1923 and Senate Bill No. 976).

Primary sponsors of the Assembly bills include Jack Conway and Herb Conaway. These bills are presently pending before the Assembly Labor Committee.  In the Senate, the primary sponsor is Diane B. Allen.  The Senate bills have been split between that body's Commerce Committee (S992) and Labor Committee (S976 and S977).

Note: Similar legislation was first introduced before the New Jersey State Legislature during the last legislative session. (See our entry of June 19, 2008).  

Denizens of the Garden State should contact committee members and their state senators and assembly persons to voice support for these bills.

Iowa House Passes Advance Notice Legislation

By a vote of 81-18, the Iowa House of Representatives passed a bill requiring employers to provide advance notice of business closings and mass layoffs to affected workers and local communities.  The bill was  proposed by the Iowa Department of Workforce Development and introduced before the House in March 2009.  The House Labor Committee was assigned to review the bill and issued its report recommending passage on January 22, 2010.  The bill passed on a vote of the full house on January 27, 2010 and was then messaged to the state Senate.  The proposed legislation (SSB 1055) has now been referred to the Senate Labor and Business Relations Committee and assigned to a subcommittee composed of Senators William Dotzler, Dick Dearden and Pat Ward.  A description of the bill's provisions can be found at our June 26, 2009 entry.

 

If you are in the Hawkeye state, please contact members of the Labor and Business Relations Committee and your state senator to urge passage of this important legislation.  Members of the Committee can be found here and your state senator can be located here.  

New Mexico Seeks To Protect Local Workers & Communities From Sudden Job Loss

Over the past several weeks, New Mexico state officials sought legislation to reduce the time that dislocated workers spend on unemployment and to provide stability to local communities by requiring the state's largest employers to provide advance notice of worksite closings and mass layoffs. 

With the support of New Mexico Governor Bill Richardson's office, House Bill No. 180 was introduced by state Representative Mimi Stewart on January 26, 2010.  The bill would require large employers to provide 60 days notice of worksite closings and mass layoffs affecting 25 or more workers.  The proposed law would also permit the state attorney general to bring suit on behalf of workers and/or communities against companies that fail to provide the required notice and would require the company to repay tax breaks and loans that it received from a state or local government as an incentive to continue operations at the facility. The bill capped allowable damages at double back pay to the workers for each of the 60 days that the employer is found in violation and provided modest civil penalties for violation of the Act.  The bill did not  enact any new taxes or exact new costs to employers.

On February 11, the House Judiciary Committee reported out an amended draft of the bill that passed the full House by a vote of 41-27.  The bill then moved to the Senate for its consideration and was referred to the Senate Corporations and Transportation Committee.  After significant lobbying, including reports of corporate lobbyists lining the back wall of the room while deliberating Committee members dined on barbecue provided by the lobbyists,  the Senate Corporations Committee voted to table the bill.  As a result the bill is unlikely to receive further consideration during this legislative session.

If passed in this or future sessions, the legislation would represent a significant move to divorce the state from the historical exploitation of employees that is found in too many locales of neighboring states and other regions of the country. 

Residents of the Land of Enchantment are asked to contact Governor Bill Richardson's office and the office of Representative Mimi Stewart to express your appreciation for their efforts in support of this legislation and  we at the Sugar Law Center will be honing our barbecuing skills in the months ahead.

2009 Mass Layoff Numbers - Highest On Record

The U.S. Department of Labor has reported final numbers for 2009 mass layoffs. As defined by the Department, a mass layoff event is one where a single establishment has at least 50 initial unemployment insurance claims filed against it within a prescribed time period.  The total number of mass layoff events in 2009 is estimated at 28,030 on a non-seasonally adjusted basis.  The 2009 numbers are the highest since the Department began tracking this information in 1995.

 

Likewise, the 2009 Department of Labor numbers for extended mass layoff events are also the highest annual numbers on record. Extended mass layoffs are actions where a single establishment has at least 50 initial unemployment insurance claims filed against it within a prescribed time period and where the workers were separated from their jobs for more than 30 days.  The total number of extended mass layoff events in 2009 is estimated at 11,452.  On a potentially positive note, fourth quarter extended mass layoff events were  found to have decreased by 43% from the numbers reported during the fourth quarter of the previous year.   

 

More information can be found at the U.S. Department of Labor, Bureau of Labor Statistics' website on Mass Layoff Statistics.

New Hampshire's Law Takes Effect

On January 1, 2010, New Hampshire’s state WARN Act went into  effect. The law requires employers to provide advance notice to  employees before mass layoffs or plant closings. The law applies to more employers and protects more workers than existing federal legislation by lowering numerical thresholds for determining when notice is required.  The law also contains innovative provisions that empower the state labor commissioner to determine liabilities for violations and that provide a lien upon business revenues and company property for sums owed under the Act.

California Dept. of Industrial Relations Issues Interpretation of State Law

Following termination of operations at its printing facility, Insync Marketing Solutions, LLC (Insync) laid off approximately 230 workers and filed for Chapter 7 bankruptcy protection. Insync also filed a letter with the California Labor Commissioner and the Department of Industrial Relations seeking a ruling on the company’s liability under the California WARN Act.  Insync argued that although 60 day advance notice of the layoffs was not provided to workers, the company met the faltering company exception in section 1402.5 of the state law.  The faltering company exception has three required elements under 1402.5(a). 

 

The California Labor Commissioner reviewed the case and its findings were adopted by the Department of Industrial Relations director. The Commissioner found that Insync did not meet the first element of the faltering business exception.  The first element requires that the employer be “actively seeking capital or business” to continue operations.  Although Insync was seeking a buyer before the employee terminations, the company did not provide sufficient evidence that it was taking action to secure the investment of new capital. The Commissioner cited federal regulation 20 C.F.R. § 639.9 as well as three federal cases for the proposition that seeking the sale of a company alone is not enough to qualify for the faltering business exception. A company must provide evidence that the company was also seeking additional capital or business.

 

Finally, the Commissioner found that even if Insync was able to meet the first requirement, Insync would still not meet the third element of the faltering business exception. The third element requires “[t]he employer reasonably and in good faith believed that giving the notice … would have precluded the employer from obtaining the needed capital or business”.  Insync did not provide objective evidence of a good faith belief.

Wisconsin Amendments Become Law

Since early this year, the Wisconsin State Assembly and State Senate have been considering companion bills to provide modest amendments to the state WARN Act.  On November 3, 2009, Bill 266 passed the Assembly and was messaged to the Senate.  The Senate concurred on November 5.  The Governor approved the bill and it became law on December 1.  The amendments allow local workforce development boards to provide additional resources to workers facing potential worksite  closings and mass layoffs.  (Note: as a result of the Assembly's passage of its bill, the Senate's companion bill, SB 183, was laid on the table). 

Unemployment Across The Nation

The American Observer posts a multimedia presentation by Latoya Egwuekwe that starkly reveals the spread of deepening unemployment across the nation.  Using U.S. Dept of Labor, Bureau of Labor Statistics data, the presentation titled The Decline: The Geography of a Recession graphically shows continuing increases in county unemployment rates from January 2007 through the present. 

Record High Extended Mass Layoffs In Third Quarter

The U.S. Department of Labor released its third quarter report for extended mass layoffs.  The report finds a record high number of extended mass layoffs for any third quarter previously reported (since data was first collected in 1995).  The 1,776 extended mass layoff events affected more than 275,000 workers.  The Western and Midwestern states were the hardest hit. 

Since being introduced before the U.S. Senate and House of Representatives, WARN Act reform bills (FOREWARN Act) S. 1374 and H.R. 3042 have been referred to and remain pending before committees of both chambers.

State WARN Act News: New Hampshire Governor Signs Advance Notice Bill

Governor John Lynch signed the New Hampshire Workers Adjustment and Retraining Notification Act into law today.  The Governor's press release on the signing states that "new law sends a strong message to New Hampshire workers that we care about their hard work, and we care about them and their families."   The law will take effect January 1, 2010 and provides a number of protections beyond those found in federal legislation.  For further information on the law, see our June 26,2009 entry.

WARN Act Reform in U.S. Congress: Senate Update On FOREWARN Legislation

U.S. Senator Sherrod Brown's proposed legislation has been assigned bill no. S. 1374.  The bill has been read twice and referred to the Committee on Health, Education, Labor, and Pensions.  The Senate H.E.L.P. Committee is chaired Senator Edward M. Kennedy.  Committee members by rank include:

Democrats by Rank: Edward Kennedy (MA), Christopher Dodd (CT), Tom Harkin (IA), Barbara A. Mikulski (MD), Jeff Bingaman (NM), Patty Murray (WA), Jack Reed (RI), Bernard Sanders (I) (VT), Sherrod Brown (OH), Robert P. Casey, Jr. (PA), Kay Hagan (NC) and Jeff Merkley (OR).

Republicans by Rank: Michael B. Enzi (WY), Judd Gregg (NH) ,Lamar Alexander (TN), Richard Burr (NC), Johnny Isakson (GA), John McCain (AZ), Orrin G. Hatch (UT), Lisa Murkowski (AK), Tom Coburn, M.D. (OK) and Pat Roberts (KS).

Please let these Senators and your state's Senators know  that you support their efforts to strengthen the WARN Act.

WARN Act Reform in U.S. Congress: House Update On FOREWARN Legislation

Rep. George Miller and Rep. John McHugh's bill, H.R. 3042, has been referred to the House Committee on Education and Labor. The Committee is chaired by Rep. George Miller. Committee members include:

Democrats by Rank: George Miller (CA-07), Dale E. Kildee (MI-05),Donald M. Payne (NJ-10), Robert E. Andrews (NJ-01), Robert C. Scott (VA-03), Lynn C. Woolsey (CA-06), Rubén Hinojosa (TX-15) Carolyn McCarthy (NY-04), John F. Tierney (MA-06), Dennis J. Kucinich (OH-10), David Wu (OR-01), Rush D. Holt (NJ-12), Susan A. Davis (CA-53), Raúl M. Grijalva (AZ-07), Timothy H. Bishop (NY-01), Joe Sestak (PA-07), Dave Loebsack (IA-02), Mazie Hirono (HI-02), Jason Altmire (PA-04), Phil Hare (IL-17), Yvette Clarke (NY-11), Joe Courtney (CT-02), Carol Shea-Porter (NH-01), Marcia Fudge (OH-11), Jared Polis (CO-2), Paul Tonko (NY-21), Pedro Pierluisi (PR), Gregorio Kilili Camacho Sablan (Northern Mariana Islands) and Dina Titus (NV-3).

Republicans by Rank: Howard McKeon (CA-25), Thomas E. Petri (WI-06), Peter Hoekstra (MI-02), Michael N. Castle (DE-At Large), Mark E. Souder (IN-03), Vernon J. Ehlers (MI-03), Judy Biggert (IL-13), Todd Russell Platts (PA-19), Joe Wilson (SC-02), Cathy McMorris Rodgers (WA-05), Tom Price (GA-06), Rob Bishop (UT-01), John Kline (MN-02), Brett Guthrie (KY-2), Bill Cassidy (LA-6), Tom McClintock (CA-4), Duncan D. Hunter (CA-52), Phil Roe (TN-1) and Glenn Thompson (PA-05).

Please let these Representatives and your state's Representatives know that you support these efforts to strengthen the WARN Act.

WARN Act Reform in U.S. Congress: Senator Sherrod Brown and Representatives George Miller and John McHugh Introduce New Legislation!

On June 25, 2009, Senator Sherrod Brown (D-OH) and Representatives George Miller (D-CA), Chairman of the U.S. House Education and Labor Committee, and John McHugh (R-NY) introduced companion bills before the U.S. Senate and U.S. House of Representatives (S.____ and H.R. 3042).  The bills would amend the WARN Act to improve advance notice and strengthen enforcement for the protection of workers facing the loss of their jobs as the result of business closings and mass layoffs.   Rep. Miller's press release reads:

WASHINGTON, D.C. -- U.S. Sen. Sherrod Brown (D-OH) and Representatives George Miller (D-CA), Chairman of the U.S. House Education and Labor Committee, and John McHugh (R-NY) introduced legislation today that would strengthen the law requiring employers to notify workers and communities of mass layoffs or plant closings. The bipartisan FOREWARN Act, would strengthen enforcement of current law and close loopholes in the Worker Adjustment and Retraining Notification (WARN) Act. 

***

“Workers deserve more than just a pink slip when they lose their job because of our nation’s economic difficulties,” said U.S. Rep. George Miller (D-CA), chairman of the House Education and Labor Committee. “Current protections for workers being laid off are both confusing and rarely enforced. While an early warning may not save their job, a meaningful early notice will help them prepare to find a new job or upgrade their skills for new employment.”

“Across our country, communities and families have been devastated by mass layoffs.  We have seen this acutely in Northern and Central New York and know all too well the lasting and fundamental impacts mass layoffs and plant closures have on individuals, families, and communities.  In the two decades since the WARN Act was enacted, our nation’s economy has changed markedly,” said U.S. Rep. John McHugh (R-NY).  “It is time to modernize the WARN Act to fit today’s economy, and thereby ensure workers and communities get the fair notice they deserve and need to prepare and adjust to their change in job status.  Thus, I am pleased to have had the opportunity to work with Chairman Miller and Senator Brown to develop the Forewarn Act.” 

“Mass layoffs send shockwaves through individual households and entire communities,” U.S. Sen. Sherrod Brown (D-OH) said. “This bill is about protecting workers and helping communities respond to mass layoffs. The WARN Act was supposed to give employees time to find a new job. Unfortunately, fair notice has become the exception not the rule. This bill will modernize the WARN Act by closing loopholes and strengthening its enforcement. Workers and communities should be armed with best arsenal of protective measures during these challenging economic times.” 

Over the past several months, laid-off employees have filed lawsuits over violations of the WARN Act against companies as varied as Lehman Brothers, retailers like Sam’s Club and Goody’s, the electronics chain Tweeter, ABX Air, USA Jet Airlines, and major law firms.

Congress passed the WARN Act in 1988 to give workers and communities 60 days advance notice to adjust to an impending “plant closing” or “mass layoff.”  Compelling evidence demonstrated that retraining and other readjustment efforts have the greatest success when advance notice is provided. 

The WARN Act’s effectiveness has been undermined by existing loopholes and weak enforcement. First, the WARN Act only covers 24 percents of all layoffs, according to a report by the by the Government Accountability Office (GAO). Of those layoffs, employers only provided notice approximately one-third of the time. The WARN Act has several exceptions that employers can invoke— both legitimately and illegitimately— including unforeseen business circumstances and whether a company is trying to attract capital to avoid a shutdown. Furthermore, the WARN Act is only invoked at companies with at least 100 employees that layoff 33 percent or more of their workforce. 

Second, weak penalties and enforcement measures may prevent employers from providing notice. GAO found that employers failed to provide notice to employees in two-thirds of layoffs and closures where the WARN Act applied.  The WARN Act requires violating employers to pay an employee a day’s pay for every day of notice not provided and does not provide the federal government the authority to enforce workers’ rights. 

The FOREWARN Act would give the U.S. Department of Labor (DOL) the authority to enforce the WARN Act, and would increase penalties for violation to double back pay. In addition, it would reduce the mass layoff figure from 50 to 25, reduce the employer size from 100 to 75 employees, and lower the mass layoff trigger. The lower thresholds would protect employees in both manufacturing and services firms. It would also lengthen the notification period from 60 to 90 days and require employers to provide written notification to the Department of Labor that includes the reason for the plant closing or mass layoff, whether the employer has jobs elsewhere, and a statement of each employee’s right to wages and benefits. The bill would also expand recipients of notification to Secretary of Labor, elected officials including the governor, member(s) of Congress, and state representatives, and the appropriate labor union(s) when applicable.

Representatives Reps. Lynn Woolsey (D-Calif.), Marcy Kaptur (D-OH) and Sens. Richard J. Durbin (D-IL), Russ Feingold (D-WI), Tom Harkin (D-IA), and John F. Kerry (D-MA). have co-sponsored the legislation introduced before their respective chambers. 

The text of the proposed bills is not yet available online.

Update:  Senator Sherrod Brown (D-OH) and Representatives George Miller (D-CA) and John McHugh (R-NY) introduced the Federal Oversight, Reform, and Enforcement of the WARN (FOREWARN) Act into both the House and Senate.  This legislation would strengthen the existing WARN Act in numerous ways.  Under FOREWARN, the U.S. Department of Labor (DOL) would also have authority to enforce the law.  FOREWARN would lower the mass layoff threshold from 50 employees to 25 and reduce the employer size threshold from 100 employees to 75.  It would also lengthen the notification period from 60 to 90 days and require employers to provide written notification to the Department of Labor that includes the reason for the plant closing or mass layoff, whether the employer has jobs  available elsewhere, and a statement of each employee’s right to wages and benefits.  It would further expand recipients of such notification to the Secretary of Labor, elected officials including the governor, member(s) of Congress, and state representatives, and the appropriate labor union(s) when applicable.  FOREWARN's expansions also include an employer posting requirement and provide educational materials to be available to affected employees.  Most importantly, FOREWARN would increase penalties for violation of the law to double back pay and it would prevent the waiver of any of these WARN rights outside of a settlement negotiated by the Secretary of Labor, a state attorney general, or a private attorney on behalf of affected employees.  

Colibri Workers - Update from Rhode Island

In a June 28, 2009 article, In These Times contributing editor, Kari Lydersen, provides an update on the courageous struggles of former Colibri Group workers to obtain back pay under the WARN Act.  Ms. Lydersen also has a forthcoming book, Revolt On Goose Island: The Chicago Factory Takeover, and What It Says About The Economic Crisis, which covers the sit-in by Republic Windows workers earlier this year at a factory in Chicago.  Among other issues, the Republic Windows sit-in occurred in response to the employer's failure to meet WARN Act requirements.

State WARN Act News: New Hampshire WARN Act Bill Passes Legislature

In the New Hampshire General Court, the Senate and House of Representatives have passed the New Hampshire Worker Adjustment and Retraining Notification Act.  The Act has been submitted to the Governor for signature.

The Act would apply to any employer of 75 or more full-time workers in the state and requires employers to provide 60 days advance notice of a plant closing or mass layoffs.  Plant closings are defined as a shutdown of operations affecting 50 or more full-time employees.  Mass layoffs are defined as an employment loss at a single site of employment that affects 250 or more full-time workers or that affects at least 25 full-time employees if they constitute 33 percent of the full-time employees of the employer.  The Act empowers the state commissioner of labor to determine liabilities and civil penalties for violations of the Act and permits employees to bring suit in court.  The Act also permits the state department of labor to take a lien against the business revenues and property of violating employers and provides that the state attorney general may petition the court for an order of restitution to injured persons whenever the state attorney general has reason to believe that an employer is violating or is about to violate the statute.

State WARN Act News: Advance Notice Law Introduced in Minnesota State Legislature

The Minnesota State Legislature has taken up legislation to empower to the state labor commissioner to enforce the advance notice requirements of an existing statute (Chpt. 116L, § 116L.976).  Currently the state has a well-intentioned but highly ineffective statute that asks businesses to voluntarily comply with advance notice to workers facing a worksite closing or mass layoff.  As a result, the state statute is rarely observed in practice. (Michigan has a similar statute).  While voluntary statutes can inform good faith employers who need guidance, these statutes too frequently provide bad faith actors with short term marketplace advantages over companies who observe the fundamental rights of their employees and the communities in which they are located.

Minnesota House File No. 1963 would empower the state commissioner to enforce the advance notice requirements of § 116L.976.  by permitting the commissioner to issue orders requiring an employer to comply with advance notice requirements. The department is required to serve the order upon the employer or the employer's authorized representative. An employer who wishes to contest the order must file written notice of objection within 15 calendar days after being served.  The commissioner may also bring an action in the district court to enforce or require compliance   The commissioner can also order violating employers to pay back pay to aggrieved parties and treble damages. Any employer who is found by the commissioner to have repeatedly or willfully violated the Act shall be subject to a civil penalty of $1,000 for each violation for each employee. In addition, the commissioner may order the employer to reimburse the department and the attorney general for all appropriate litigation and hearing costs expended in preparation for and in conducting the contested case proceeding. An employee may also bring a civil action seeking redress for a violation or violations of section 116L.976 in district court. An employer who violates the requirements is liable to the employee for the full amount of the wages, gratuities, and overtime compensation and for an additional equal amount as liquidated damages. In addition, in an action under this subdivision the employee may also seek treble damages and other appropriate relief provided by law.

Due to legislative rules of odd-year adjournments, the bill has been returned to the House Civil Justice Committee where it remains pending.

State WARN Act News: Indiana & Iowa Consider State WARN Acts

The midwest "I" states have been moving towards enactment of state advance notice legislation. Illinois passed state legislation in 2005.   Indiana has introduced such legislation during the past three legislative sessions and Iowa has introduced bills during the last two sessions.  

In February, Representative Dennis Tyler authored and along with Representatives  Terri Austin, John Bartlett and David Niezgodski introduced House Bill 1166 before the Indiana House of Representatives.  The bill would require advance notice of business closures or mass layoffs. The bill applies to any employers of between 50 and 100 employees in the state and the definition of employers includes a company or an officer of a company.  Employers are required to provide 60 days written notice of plant closings and mass layoffs.  Plant closings are defined as the permanent or temporary shutdown of a single site of employment resulting in an employment loss to at least 20  employees.  Mass layoffs are defined as a reduction of force resulting in an employment loss at a single site of employment to at least 20 employees.  If an employer violates the bill's requirements, an aggrieved employee would be permitted to  commence an action in court.  Employers that violate notice requirements to municipalities can be found to have committed a Class C infraction for each day that the violation occurs.  The bill is pending before the House Committee on Pensions and Labor.

In Iowa, Senate Study Bill 1055 and House Study Bill 62 have been submitted to both chambers of the state's General Assembly.  The Senate Study Bill has been assigned to the Labor and Business Relations Committee and remains pending before a subcommittee of that body.  The House Study bill has been now be introduced before the House of Representatives as House File 681 and has been referred to the House Labor Committee.  The bills and file would require employers to provide advance notice of business closings and mass layoffs. Employers who employ 25 or more full-time workers would be covered.  Business closings are defined as the permanent or temporary shutdown of a single site of employment resulting in employment loss for 25 or more workers.  A mass layoff is defined as a reduction in force of 25 or more employees.  Employers would be required to provide 30 days notice of business closings and mass layoffs.   The state department of labor would be empowered to conduct investigations and determine violations of the Act.  Violators would be liable for civil penalties of not more than $100 for each day of violation.

United States Congress: Two Bills To Amend WARN Act

Alert Laid Off Employees in Reasonable Time Act.  On April 23, 2009, U.S. Representative Luis Gutierrez introduced House Bill 2077.  The bill would require an employer to give 60-day written notice to employees and to appropriate state and local government officials before ordering a mass layoff that results in employment loss for a single employer at more than one site of employment when the layoff affects at least 50 employees representing 33% of the full-time employees or affects 500 or more employees.  Violators would be liable to each aggrieved employee for double the back pay.  The bill was referred to the House Committee on Education and Labor and in early June was referred to the Subcommittee on Workforce Protections.

Regional Economic Recovery Coordination Act of 2009. On February 25, 2009, Senator Sherrod Brown introduced Senate Bill 480, which would amend the Worker Adjustment and Retraining Notification Act to require employers to notify the Secretaries of Labor and Commerce of a plant closing or layoff and the number of employees affected.  The bill has been referred to the Committee on the Environment and Public Works.

WARN Act Case Decisions: Update

Gross v. Hale-Halsell Co., 554 F.3d 870 (2009).  Plaintiffs were employed by Hale-Halsell Co. (“HHC”). HHC owned fifty percent of United Supermarkets, which was also HHC’s largest customer. At times, HHC failed to meet orders that United requested. United terminated the relationship, and HHC began experiencing financial troubles.  In January 2004, HHC met with some of its employees informing them of impending layoffs. Approximately two hundred employees were to be laid off the very next day. The plaintiffs brought this action and HHC moved for summary judgment on the basis that it was excused from the WARN Act requirements based on the unforeseeable business circumstance exception and the faltering company exception.  The district court granted the summary judgment holding that the termination of the United-HHC relationship was unforeseeable and caused the mass layoffs. The plaintiff appealed.

The Court of Appeals recognized that in asserting the unforeseeable business circumstance exception, the company has the burden of proving the circumstances faced were not reasonably foreseeable and that the unforeseeable circumstances was in fact the cause of the layoffs. The court concluded that the evidence showed that HHC could not reasonably foresee that United would terminate their relationship, which would make the circumstance unforeseeable.  The court then went on to discuss the causation issue.

With regard to causation, the court concluded that HHC’s decision to shut down came shortly after termination of the relationship with United. From this, the court held that United’ withdrawal was the cause of HHC’s decision to layoff its workers. Because the requirements of the unforeseeable business circumstances exception found to have been met. The court affirmed the decision of the district court.

In re Continental AFA Dispensing Co., 403 B.R. 653 (Bkrtcy.E.D.Mo.,2009).  In July 2008, Debtors terminated the majority of their 743 employees and in August 2008 filed for Bankruptcy.   On August 11, 2008 Joshua Bridges, Plaintiff, filed a class action adversary proceeding complaint on behalf of himself and a class of similarly situated employees seeking damages under the WARN Act.

The main issue the court dealt with was whether an employee terminated pre-petition by a debtor can be granted an administrative expense claim for back pay under the WARN Act.  The granting of administrative expense status gives those claims top priority for payment.   The court found that to be granted administrative expense claim status under the Bankruptcy Code the plaintiffs had to show that the services were rendered post-petition, and those services provided a direct and substantial benefit to the Debtor’s estate.  The Debtors admitted that they had breached the 60 day requirement under the WARN Act by terminating the employees, but argued that the termination occurred pre-petition, and therefore, the plaintiff’s services were not performed to preserve the estate. The court denied the claim for administrative expense status, stating that a WARN Act claim, for an employee terminated pre-petition, is not “an actual and necessary expense of preserving an estate.” 

In re Powermate Holding Corp., 94 B.R. 765 (Bkrtcy.D.Del.,2008).  On March 10, 2008, the Debtor Defendants sold their Minnesota assets and terminated the employment of all the workers at that location.  On March 17, 2008 the Debtor Defendants eliminated an additional 260 employees without prior notice, and then filed for Chapter 11 Bankruptcy.      Plaintiffs filed a claim charging violations of the WARN Act.  The Debtor Defendant moved for a dismissal or a determination that those damages were not entitled administrative expense priority status. 

In light of the 2005 changes to the United States Bankruptcy Code, the court first determined how the amendment of 11 USC § 503(b)(1)(A)(i) and (ii) should be interpreted.  Within these sections, the court found the two subsections (i) and (ii) as categories within a particular subset of allowable administrative expenses that were “actual, necessary costs and expenses of preserving the estate.” § 503(b)(1)(A). Therefore the court held that the amendment was to be independently evaluated in determining whether the WARN Act claims were administrative expense claims. This was in contrast to In re First Magnus Financial Corp., 390 B.R. 667 (Bkrtcy.D.Ariz.,2008), which interpreted that conjunction “and” to mean that both provisions, (i) and (ii), should be read together, requiring both sections to be satisfied for a claim to qualify as an administrative expense.

The court found that the decisive factor in determining whether a claim should receive administrative expense status was the relation of the petition date to the time when the rights or claims to back pay vested.  If the claim vested pre-petition the claim would not be entitled to administrative expense status because the back pay would be attributable to the time occurring prior to the commencement of the bankruptcy case. If the claim vested post-petition the claim would be entitled to administrative expense status because the back pay would be attributable to the time occurring after the commencement of the case.

The court concluded that WARN Act claims vest at the time of termination. Therefore the Plaintiff and employees claims vested entirely when they were terminated pre-petition, and were not entitled to administrative expense claim status in this case. The court also stated that other courts had consistently held that pre-petition claims, such as the present claims, were entitled to fourth or fifth level priority status pursuant to 11 U.S.C. § 507(a)(4) and (5).

State WARN Act News: Wisconsin Considers Amendments to Advance Notice Law

The Wisconsin Legislature is considering two bills that would amend the state's existing statute that requires advance notice to workers before business shutdowns and mass layoffs.  Assembly Bill 266 and Senate Bill 183 would strengthen procedures for providing information to workers and services from the state's rapid response team.  The bills would also create civil penalties for violations of the state's advance notification law.  The Assembly's bill is presently before the Committee on Workforce Development and the Senate bil is before the Committee on Labor, Elections and Urban Affairs. 

State WARN Act News: Mississippi Bill Introduced Earlier This Year

We missed this one earlier this year.  In Mississippi, House Bill No. 682 was introduced  to require advance notice to workers faced with a business closing or mass layoff.  The bill was authored by Rep. William J. McCoy.  The bill's provisions were  substantially similar to the requirements of the federal WARN Act.  The bill however would have allowed the state Attorney General to bring suit on behalf of aggrieved employees and municipalities. Unfortunately, the calendar deadline expired without passage, but hopefully will be reintroduced and acted upon in the next legislation. 

Rep. McCoy and the co-authors (Rep. Bill Moak, Rep.George Flaggs, Jr. and  Rep. Frances Fredericks)  of the bill should know that their efforts to protect the fundamental rights of our nation's workers and their families and communities are much appreciated.