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EARTH FARE AND THE “WARN” ACT

In early February, Earth Fare announced it would be closing all of its stores, likely meaning each of its 3,000 employees would be laid off.  In response, two employees of the Asheville-based grocery store chain filed a class-action lawsuit alleging Earth Fare violated the Worker Adjustment and Retraining Notification Act (the “WARN Act”).  Generally, the WARN Act requires employers with at least 100 employees to provide at least a 60-day advance written notice of plant closings and mass layoffs; however, the likelihood of success of the plaintiffs’ claims will be determined by the specific definitions provided in the WARN Act, as well as its exceptions and exemptions.

 

The WARN Act

 

How the WARN Act Defines “100 Employees”

 

As stated above, the WARN Act applies to employers with at least 100 employees, but specifies how the number of employees is calculated for purposes of the Act.  In order to be an eligible employer, the company must have:

 

  1. At least 100 employees, excluding part-time workers, or;
  2. At least 100 employees who work an aggregate of at least 4,000 hours per week, excluding overtime.

 

With more than 3,000 employees, it is highly likely Earth Fare meets the statutory threshold.

 

Employees Entitled to WARN Act Notice

 

If an employer meets the 100-employee threshold, it will also need to determine which of its employees are entitled to notice if a triggering event occurs.  Whether the Earth Fare plaintiffs can succeed on their claims will depend, in part, on whether they are among the following categories of employees considered to suffer an “employment loss”:

 

  1. An employee who is terminated,
  2. As a result of a triggering event, defined below:
    1. An employee who is laid off for more than six (6) months, or;
    2. An employee whose hours are reduced by at least fifty percent (50%) in any six-month period;
  3. An employee who may reasonably be expected to fall into categories 1 or 2, above, as a consequence of a proposed triggering event; or
  4. An employee who is on temporary layoff or leave at the time of the proposed triggering event but has a reasonable expectation of being recalled to work (e.g., workers’ compensation, medical or parental leave, etc.).

 

For purposes of determining who is entitled to notice, an employee’s full- or part-time status is irrelevant.

 

Triggering Events

 

The WARN Act recognizes two events that trigger a notice requirement, barring any of the exemptions and exceptions listed below.

 

  1. A plant closing. This is a permanent or temporary shutdown of a single employment site. A plant closing can also be a permanent or temporary shutdown of one or more facilities or business units within a single employment site, as long as the shutdown results in an employment loss for at least fifty (50) employees, excluding part-time employees.
  2. A mass layoff. This is a reduction in workforce that:
    1. Is not the result of a plant closing, and;
    2. Results in an employment loss at any single employment site for:
      1. At least fifty (50) employees, excluding part-time employees, if this number constitutes at least thirty-three percent (33%) of the employees at the employment site, excluding part-time employees; or
      2. At least 500 employees, excluding part-time employees, regardless of what percentage of the workforce this number constitutes.

 

Importantly, the WARN Act does not require a plant closing or mass layoff to be a single-day occurrence.  Instead, a triggering event can occur over the course of up to thirty (30) days.

 

Exceptions

 

The WARN Act provides two (2) specific exemptions, and three (3) further exceptions are generally recognized.

 

  1. Exemption: labor strike or lockout. If the plant closing or mass layoff is the result of a strike or lockout due to a labor dispute, the WARN Act does not apply.
  2. Exemption: temporary facility or completion of a specific project. If the plant closing is a closing of a temporary facility, or the closing or layoff results from the completion of a specific project, and the affected employees were hired with the understanding their employment was limited to the duration of the facility or project, the WARN Act does not apply.
  3. Exception: a faltering company seeking capital. The WARN Act applies, but 60-day written notice is not required, if:
    1. The employer was actively seeking capital or investments which, if secured, would postpone or altogether avoid the layoff or closing, and;
    2. The employer reasonably believed that advance notice of the layoff or closing would detrimentally affect its ability to secure such capital or investments.
  4. Exception: unforeseeable business circumstances. The WARN Act applies, but does not require 60-day written notice, if the cause(s) that led to the layoff or closing could not have reasonably been foreseen by the employer sixty (60) days prior to the layoff or closing.  In order for the circumstance to be unforeseeable, it must be sudden, dramatic, and outside of the employer’s control.
  5. Exception: natural disaster. The WARN Act still applies, but 60-day notice is not required, if the layoff or closing is the direct result of a natural disaster.

 

Importantly, as noted above, the exemptions mean the WARN Act does not apply at all.  Conversely, the exceptions still require the employer to provide notice to the protected employees as soon as practicable, but will forgive those employers who could not reasonably provide notice sixty (60) or more days in advance of the closing or layoff.

 

In the Earth Fare case, the plaintiff’s claims will fail if either exemption applies.  Additionally, the exceptions, if applicable, could shield Earth Fare from liability if they provided the required notice as soon as practicable under the circumstances.

 

If you have questions regarding an employment dispute, please call us at (704) 457-1010 to schedule a consultation.  For more information regarding our firm, attorneys, and practice areas, please visit http://www.lindleylawoffice.com/.

 

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