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WARN: DOES AN EMPLOYEE WHO LEAVES HER JOB BEFORE A PLANT CLOSES SUFFER AN “EMPLOYMENT LOSS”?
The Court of Appeals in San Francisco recently decided an interesting question under the WARN Act, which requires employers to give 60 days notice of a mass layoff or plant closing to “affected employees.” Collins v. Gee West Seattle, 31 IER 1153 Cases (2011). An “affected employee” is defined as one who is “expected to experience an employment loss as a consequence of a plant closing…” The statute also says that an employment loss does not include “a discharge for cause, voluntary departure, or retirement” (emphasis added). Put together, this language raises the question of whether employees who leave their jobs voluntarily before a plant closing have lost their employment “as a consequence of a plant closing.” The lower court in this case held that such employees did not suffer employment losses as defined in the statute and, therefore, the employer was not obligated to provide any WARN notices because, when the plant closed, only 30 employees remained at work and the WARN Act applies only if 50 or more employees have suffered an “employment loss.”
The court of appeals reversed and found that the employer’s argument “flips the basic structure of the WARN Act on its head” and results in an interpretation which frustrates the purposes of the Act. It notes that the primary purpose of the Act is to require employers to give notice of a plant closing to employees who are “expected to experience an employment loss” because of a plant closing (emphasis added). Thus, whether the employer must provide notice depends on his expectation of loss, not the actual loss that subsequently occurs.
A separate issue under the WARN Act is whether the layoff or plant closing results in “an employment loss at a single site of employment for 50 or more employees.” This issue, according to the court, turns on actual loss, not expected loss. Relying on a Department of Labor opinion letter, the Court concluded that the starting point for determining actual loss is the number of positions eliminated by the plant closing, not the number of employees remaining when the plant actually closes. Based on that logic, the court concluded that employees who left the company in anticipation of a plant closing are not employees who “voluntarily departed”; that those employees have suffered an “employment loss”; and, therefore, the company violated the WARN Act by not providing 60 days’ notice of the plant closing, even though less than 50 employees were still working when the plant actually closed.
