When an employer is closing a plant or engaging in a mass layoff, it is important for it to keep its WARN Act obligations in mind. Lately, supermarket chains in Florida, including Lucky's Market, Earth Fare and Penn Dutch Food Centers, have learned that lesson the hard way after each has been sued in class actions for failing to comply with the WARN Act. The WARN Act stands for Workers Adjustment and Retraining Notification Act, and is a federal law that requires covered employers to provide employees with a 60-day advanced notice of the layoffs. The failure of an employer to provide the required notice can open it up to a federal lawsuit by employees.

Lucky's and Earth Fare were each sued in February under the WARN Act. In the case of Lucky's, Lucky's opened its first store in Florida in 2016 and had a store locally in Fort Lauderdale. Lucky's opened a total of eight stores in Florida. However, due to the divestment of national retailer Kroger in late 2019, Lucky's announced the closure of all of its Florida stores, as well as 32 stores across the country. The problem is that Lucky's announced the closure of the stores on Jan. 24, with an expected layoff date of Feb. 12. This was not sufficient advanced notice to employees of the store closures.

As a result of Lucky's failure to comply with the notice requirements under the WARN Act, Lucky's was sued in a class action in the U.S. District Court for the Middle District of Florida. The plaintiffs in the lawsuit are seeking the wages that they would have earned had they been provided with the full 60-day notice of the layoffs.

North Carolina-based Earth Fare had opened 50 locations nationwide, with 14 locations in Florida. Earth Fare closed all of its locations in February. According to the complaint filed against Earth Fare, Earth Fare informed employees on Feb. 3 that they were laid off effective immediately. Earth Fare never provided any prior notice to its employees. This resulted in employees filing a class-action lawsuit against Earth Fare in the U.S. Bankruptcy Court of Delaware.

Additionally, last September, local South Florida supermarket Penn Dutch Food Centers was also hit with a class-action lawsuit under the WARN Act. The employees claimed that Penn Dutch closed its stores without providing any prior notice to employees.

These cases show how important it is for employers who are closing down a location to keep their WARN Act obligations in mind. The WARN Act covers employers who employ at least 100 full-time employees or at least 100 employees who work a combined 4,000 hours per week. The WARN Act has an expansive definition of full-time employee as including any employee who works at least 20 hours per week. It is also important to keep in mind that the WARN Act does not apply to every layoff. It only applies to "plant" closings and mass layoffs.

A "plant closing" is the closing of an employment site that results in the layoff of at least 50 full-time employees during a 30-day period. A "plant" can include a company store, a warehouse or any company location. The WARN Act also applies to mass layoffs that do not involve a plant closing if the mass layoff results in the termination of at least 500 full-time employees or 50 full-time employees if it includes at least 33 percent of the employer's total work force. If a covered employer engages in a plant closing or mass layoff, the employer is required to provide employees with 60 days advanced notice of the layoff.

Typically, it is easy to forget about the WARN Act because employers are often concerned with other matters associated with the plant closing or mass layoff. However, employers should keep their WARN Act obligations in mind to avoid risking a lawsuit.

Daniel Eric Gonzalez is a labor and employment law associate in the Fort Lauderdale office of Hinshaw & Culbertson. His clients include international corporations and small and midsize employers. Contact him at dgonzalez@hinshawlaw.com.

Andrew M. Gordon, a partner with the firm, is a litigator who focuses his practice in the representation of management-side labor and employment matters such as defending employers against state and federal discrimination, sex harassment, wage and hour, and retaliation claims, as well as FLSA collective actions, DOL compliance audits, whistleblower claims, and litigating non-compete/trade secret issues. Contact him at agordon@hinshawlaw.com.

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Employer obligations during closings and layoffs: Don't forget the WARN Act

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