Background. According
to the Court’s opinion, the employer terminated the plaintiff-group -- 194 employees -- without the requisite 60-day advance
notice under the WARN Act on July 1, 2013.
Approximately 77 days later, the employer notified an additional 294
employees that they were being placed on paid leave because their positions
would be eliminated in 60 days on November 16, 2013. This second group received full pay and
benefits during those 60 days (even if they began other jobs) and were not
eligible to apply for unemployment compensation until November 16. However, they were directed on September 16 to
gather all of their personal belongings and to turn in all employer
property. They were also provided with
career transition counseling and directed to leave and remain off the
premises. Only if the two groups were
aggregated could the entire group consists of a “mass layoff” under the WARN
Act and they could only be so aggregated if they were terminated within 90 days
of each other.
No Termination While Receiving Pay and
Benefits. The Act does not define “termination,” but
the Department of Labor has “explained that it is “to have [its]
common sense meaning” as “the permanent cessation of the employment
relationship.” 54 Fed. Reg. 16,042, 16,047 (Apr. 20, 1989).” The trial court found that the second group
had been terminated on September 17, but the Sixth Circuit found that this did
not give sufficient weight to the fact that the employees were still receiving
and accruing full pay and benefits:
So long as these employees were being paid and accruing
benefits, there had not been a permanent cessation of the employment
relationship. This comports with the purpose of the WARN Act, which is to
provide workers “some transition time to adjust to the prospective loss of
employment, to seek and obtain alternative jobs and, if necessary, to enter skill
training or retraining that will allow these workers to successfully compete in
the job market.” 20 C.F.R. 639.1(a). Providing the September employees with the
60-day notice gave them just that.
Relevancy of Unemployment Compensation. Further, the fact that the employees were not eligible for unemployment
benefits until November 16 also supported the fact that they were still
employed until that date and had not been terminated or rendered “unemployed.”
No Duty to Permit Work During Notice
Period. In addition, if the date of notice were the
same as the termination date, the Court found that it would be “impossible” for
an employer to ever give 60-days advance notice under the Act:
Thus, the implication
of the district court’s reasoning is that, in order for employment to continue
after the WARN notice, employers would need to permit employees to perform work
after the notice and before termination, even if the employer had a host of
legitimate business reasons for desiring their absence from the premises after
the notification.
Under the WARN Act,
however, there is no obligation for employers to continue to require employees
to perform work after the WARN notice, as long as the employees continue to receive
wages and accrue benefits. As the Department of Labor has stated:
[t]he question . . . has been raised as to whether an employment loss
occurs if an employee retains full pay and benefits and other entitlements but
is not required to report to work. DOL notes that neither WARN nor the
regulations dictate the nature of work to be performed—or
whether work must be performed—during
a period of employment after notice of an impending plant closing or mass layoff
has been given.
54 Fed. Reg. 16,042,
16,048 (emphasis added); . . . Just as employers are not required to permit
employees to perform work
during the notice period to continue the employment relationship, there is no
reason to believe that employers must permit employees to show
up to work to do so. It
would hardly make sense for the WARN Act’s aggregation provision to apply if an
employer sent employees home for the notice period, but not apply if the
employer had the employees sit in an empty room and do nothing.
The Court also rejected the trial court’s conclusion that
the second group could not be “employees” under the WARN Act regulations
because they were not “actively working” or “temporarily laidoff, or on leave,
with a reasonable expectation of recall.”
The Court found that this analysis would have required the employer to
permit the employees to continue working through the notice period even though
this was clearly not required. Further,
the analysis of “affected individual” only applies when determining who was
entitled to notice, not when determining whether to aggregate employees.
No Pay In Lieu of
Notice. The Court also rejected the
plaintiffs’ argument that the employer had actually just paid the second group in lieu of notice because employees were
paid even if they obtained other employment during the notice period. Instead, the Court characterized it as pay in addition to notice because the
notice specifically stated that they were still employed until the end of the
notice period. The Court refused to penalize the employer
for being more generous than legally required by continuing to pay employees
who obtained other jobs during the notice period even though it was not legally
required to do so.
Act’s Policy Not
Violated. Finally, the Court
rejected the plaintiffs’ argument that the employer impermissibly manipulated
the timing of terminations in order to evade the Act’s requirements:
The WARN Act’s aggregation provision was designed to capture
employment losses that were alone not sufficient in number “but which in
aggregate exceed the minimum number, and
which occur within any 90-day period.” 29 U.S.C. § 2102(d) (emphasis
added). This statutory language is clear, and employers are permitted to rely
on such language in spacing out layoffs. Congress has promulgated a 90-day
aggregation period, and it is inappropriate for the courts to extend the period.
There is nothing illegal about an employer spacing out layoffs so that some
occur beyond a relevant 90-day period. While plaintiffs understandably feel
that they received less favorable severance treatment than the September
employees, [the employer’s] actions did not violate the WARN Act.
NOTICE: This summary is designed merely to inform and alert you
of recent legal developments. It does not constitute legal advice and does not
apply to any particular situation because different facts could lead to
different results. Information here can be changed or amended without
notice. Readers should not act upon this information without legal advice. If
you have any questions about anything you have read, you should consult with or
retain an employment attorney.
