Layoffs & Closings

Company Closings/Shutdowns

Every year thousands of hard-working Americans lose their jobs without proper notification.  Employers order sudden layoffs and shutdowns in healthcare, biotech, construction, manufacturing, telecommunications, information technology, retail, food services, indeed, across all fields.  Whether due to upheavals in the economy, swings in the markets, outsourcing, financial mismanagement, fraudulent activity, or simply lack of planning, these corporate decisions leave workers to pick up the pieces.

The news is traumatic

Some employees first learn their jobs are gone when they arrive at work and find the parking lot shut or the building doors padlocked.  They may be marched out of the building mid-day or told to pack up, leave and never return on a Friday or the eve of a holiday.   

When the word comes down like that, it’s a shock and life changing. After decades of work, employees may be forced to learn a new trade or skill - suddenly faced with the task of breaking into a new career.  Employees just starting to climb up the corporate ladder must reinvent themselves in a freefall. Families who relied on that paycheck must scramble to make ends meet. Medical bills go unpaid. They may have no choice but to seek government assistance. It is a situation that many people never thought would happen to them. 

WARN notice softens the blow

The WARN Act cannot stop these job losses. But, it is a “pause” button.  Before employers can start laying off employees or closing the facility, they must deliver employees a notice and wait 60 days before going ahead.

The notice and waiting period provide employees valuable lead time to prepare for the changed reality before it hits. It gives them a two-month period in which to begin lining up a new job, or retrain, or just figure out how to cope   If notice is not given, the WARN Act requires the employer pay the terminated employees 60 days’ pay and benefits, which represents the “breathing room” employees were denied when they were terminated without advance notice.

Signs that a layoff is coming are not sufficient – employees need the facts

Although the circumstances of every plant closing are different, there are some signs that a closing may occur.  Employees sense changes are afoot when the premises are invaded by strangers in suits, executives become distant, or unexplained changes occur in policies or work load.  Other red flags that signal layoffs are coming include:

  • Disinvestment (or “going to seed”) - Lack of equipment or building maintenance. Removal of equipment. Land sold for purposes unrelated to core business.
  • Ownership/management changes - Change of ownership. High turnover of manager or upper level positions. No successor for an aging owner. Managers replaced with outside consultants.
  • Declining Sales/Employment - Loss of major customers. Business doing worse than competitors, especially for a period of more than one year.
  • Inadequate Research & Development - No new products.
  • Financial Problems - Supplies arriving Cash-On-Delivery. Lack of supplies results in slowing production. Paychecks bouncing. Health insurance premiums unpaid. Taxes delinquent. Company financials need to be restated.

Despite the possible “warning signs” that may cause astute employees to start dusting off their resumes, Congress took away the guess work when it enacted the WARN Act. Instead of employees having to anxiously speculate over what the “writing on the wall” says, the WARN Act compels employers to spell it out in a plainly-worded, written notice delivered to each employee.

Buyers and sellers can pass the company but not the “buck” – they must inform their employees

Oftentimes, the “tea leaves” indicate a sale of the company is afoot.  Sales often involve a mass layoff or closure of facilities. In those situations, the question is ‘who is responsible for giving WARN notice?’ The answer depends on who owned the company when the layoff occurred. If the shutdown or layoff occurs before the sale closed, then the current owner-seller would be held responsible for giving the WARN notice. If the new owner took over and initiated the mass layoff just after the closing, then it may be held responsible not giving the employees their 60 days’ notice. But, if the deal falls apart, it does not mean the parties can blame each other and ignore the law. The original owner is usually subject to liability. 

It’s your right to know

You have the right to notice if you are covered by WARN.  But, because WARN’s definitions and rules are complex, the only way to know your rights is by contacting experienced WARN Act practitioners, such as the Outten & Golden attorneys. They can help you if you have lost your job in a mass layoff or shutdown to determine whether you are entitled to money from your former employer.

Consult with an Outten & Golden lawyer to determine whether you may have a claim. Just send us your contact info or give us a call.  You can also visit Outten & Golden's WARN Act website for more information.

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News

Toys R Us' bankruptcy lawyers get $56 million while laid-off workers get $2 million

CBS News - Kate Gibson

A year after Toys R Us closed, tens of thousands of laid-off workers are getting a portion of the severance promised and then rescinded as the retailer unraveled. 

While workers are getting $2 million, a fraction of the $56 million in fees awarded to Kirkland & Ellis, the law firm representing Toys R Us, the decision is still a victory of sorts. That's because pensions and severance payments are labeled as unsecured debt when a company files Chapter 11, making them low priority and less likely to be paid. 

A bankruptcy judge on Thursday approved the settlement to a class-action lawsuit filed...

Toys R Us workers win $2 million severance settlement

northjersey.com - Melanie Anzidei

One year after Toys R Us shut its doors, a group of workers who lost their jobs are set to receive a $2 million severance settlement.

Judge Keith L. Phillips of the Eastern District of Virginia on Thursday approved the settlement for 33,000 employees who were laid off after the toy company filed for bankruptcy last year, a group representing the workers announced. The settlement was the result of a class action claim filed by the workers last year.

The group was led by Ann Marie Reinhart Smith, a 30-year Toys R Us employee who filed the claim on behalf of all employees laid off without...

Former Munchery employees sue company, blame CEO for shutdown

Tech Crunch—Kate Clark

In a new class-action lawsuit, former Munchery facilities worker Joshua Philips is claiming the startup owes him and 250 other employees 60 days’ wages, citing The Worker Adjustment and Retraining Notification Act, a U.S. labor law that requires employers with an excess of 100 employees to give notice 60 days ahead of mass layoffs.

Munchery, a prepared meal delivery company headquartered in San Francisco, announced in an email to customers on January 21 that it would cease operations, effectively immediately. The abrupt shutdown not only came as a surprise to Munchery’s community of customers...