Fourth Circuit Concludes Employer Not Obligated to Provide Work During 60-Day WARN Notice Period
November 9, 2007
The Worker Adjustment and Retraining Notification Act (WARN) requires employers to provide employees with 60 days advance notice of a qualifying plant closing or mass layoff. In some situations, less notice can be provided if the employer demonstrates that the layoffs resulted from unforeseeable business circumstances. When this burden cannot be met, the employer will often pay salary and benefits to employees in lieu of the full notice required under WARN.
A new decision from the Fourth Circuit Court of Appeals (which includes North and South Carolina) explores the employer’s right to provide pay in lieu of WARN notice. In this case, Long v. Dunlop Sports Group America, the employer told employees that it was closing its golf ball manufacturing facility in two months. Work at the facility immediately stopped, but employees were informed that they would continue to receive pay and benefits until their employment was terminated 60 days later.
The plaintiffs in this matter were a group of employees who accepted work with a new company that bought the facility. That group’s pay with the old company ended as of their date of employment by the new venture, while other employees continued to receive pay for the full 60 day period. The plaintiffs contended that their old employer was obligated to pay the full 60 days regardless of their departure for new jobs, because their employment had already been terminated as of the last day of actual work at the plant, and the full pay was in lieu of required WARN notice.
The Fourth Circuit disagreed, affirming summary judgment for the employer. The court concluded that for WARN purposes, the employees’ last date of employment was the day that they would stop being paid, not their last actual date of work. WARN requires employers to provide pay in lieu of notice, and there is no requirement to provide actual work. By accepting the new jobs prior to their last date of employment, the plaintiffs never suffered an employment loss as defined under WARN. By voluntarily leaving to accept work for the new operator of the facility, they forfeited any right to continuing pay or benefits.
The plaintiffs also complained that only employees who were hired by the new manufacturer were cut off from pay, while employees who accepted work at unrelated businesses continued to receive pay through the full 60 days. The Fourth Circuit concluded that the employer’s decision to pay these employees more than they were otherwise legally entitled to did not grant their co-workers any rights to pay beyond their date of new employment.