Employment Law Report
To Aggregate or Not to Aggregate, Under the WARN Act, That Is the Question
The Sixth Circuit began its opinion by noting the unusual circumstances presented. The plaintiffs in the case consisted of 194 employees (the “Plaintiffs”) who were terminated by Vanderbilt and who were claiming violations of the Worker Adjustment and Retraining Notification Act (the “WARN Act”), 29 U.S.C. §2101 et seq. However, whether these 194 terminated employees actually had a claim under the WARN Act was wholly dependent upon how Vanderbilt treated 279 other employees (the “Second Group”) who were not plaintiffs in the lawsuit and who had not protested Vanderbilt’s treatment of them.
Under the WARN Act, an employer of 100 or more employees is generally required to provide at least 60 days’ written notice to affected employees before a mass layoff may occur. A “mass layoff” is defined as “an employment loss at the single site of employment during any 30-day period for . . . at least 500 employees.” However, the WARN Act permits aggregation of two or more layoffs within a 90-day period if the employer can show that the layoffs were by separate and distinct actions or causes and were not an attempt to evade the requirements of the Act.
With that statutory backdrop, let’s look at the facts the Sixth Circuit had to consider.
The Plaintiffs were terminated by Vanderbilt on July 1, 2013. However, the number of Plaintiffs, consisting of only 194 individuals, is insufficient to constitute a “mass layoff” under the WARN Act. The Second Group of Vanderbilt employees, consisting of 279 individuals, was notified on September 17, 2013 that their jobs would be eliminated 60 days later, on November 16, 2013.
The Plaintiffs argued that their terminations occurred on September 17, 2003, the date Vanderbilt provided the Second Group with the aforementioned notice, and was therefore within the 90-day window to allow the Plaintiffs to add together, or aggregate, the number of the Plaintiffs’ terminations and those of the Second Group in order to meet the “mass layoff” standard under the WARN Act. The District Court agreed; however, the Sixth Circuit reversed.
The Sixth Circuit found that the Second Group of employees was terminated on November 16, 2013. Such date being more than 90 days from the Plaintiffs’ terminations, the Second Group’s termination could not be aggregated with the Plaintiffs in order to meet the “mass layoff” definition under the WARN Act.
In reaching this conclusion, the Sixth Circuit noted that the plain language of the notice provided to the Second Group clearly stated that their positions would be eliminated 60 days from the notice, i.e. on November 16, 2013. The notice letter also stated that the Second Group would “remain employed” but would be placed on “paid leave” for those 60 days, and that it was no longer required to report to work. Of importance, the Sixth Circuit found that the Second Group remained on Vanderbilt’s payroll and received their full pay and benefits on their regular pay dates for the 60 days after receiving their notice.
The Court noted, “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 see 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.’” The Court also relied upon the Tennessee unemployment statutes, which provide that an individual is unemployed in any week in which the individual performs no service and no wages are payable to the individual. The Plaintiffs did not provide any basis to believe that the Second Group of employees would have been eligible for state unemployment benefits during their paid leave.
With regard to the District Court’s finding that the Second Group was actually terminated on the date the notice was provided to them because they were not permitted to work thereafter, the Sixth Circuit, citing to Department of Labor guidance and a Fourth Circuit opinion, noted that there is no obligation under the WARN Act requiring employers to permit employees to continue to perform work after proper notice is given.
In short, the Sixth Circuit held that there was no cessation of the employment relationship as long as the employees continued to be paid and accrue benefits. Therefore, the Second Group was not terminated until November 16, 2013, which is more than 90 days from the Plaintiffs’ terminations on July 1, 2013. As a result, the Plaintiffs could not aggregate the two terminations to reach the “mass layoff” requirement under the WARN Act.
Incidentally, Footnote 1 of the opinion states that the parties stipulated that if the Plaintiffs and the Second Group were aggregated together, the total number of terminations within the 90-day period would reach the 500-employee threshold to constitute a “mass layoff” under the WARN Act. I am certainly not a math major, but when I add 194 individual Plaintiffs and 279 individuals in the Second Group, I get 473 individuals. I even checked the math twice on my trusty calculator.
Irrespective of and in addition to the math, the WARN Act is very technical. The defenses to such a claim can be equally as technical. If an employer is considering a mass layoff or reduction in force, it is prudent to seek legal advice from trusted employment counsel before embarking on such an endeavor to ensure that you are complying with the requirements of the WARN Act.