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Fourth Circuit Affirms Dismissal of WARN Suit Against Non-Employer Project Owner

    Client Alerts
  • December 03, 2021

The federal Worker Adjustment and Retraining Notification (WARN) Act requires employers to provide employees with 60 days advance notice of a plant closing or mass layoff. On Tuesday in an unreported decision, the Fourth Circuit Court of Appeals (which includes North Carolina, South Carolina, and Virginia) affirmed dismissal of class action WARN claims from the employees of contractors who alleged they suddenly lost their jobs when the project they were working on was canceled.

In Butler v. Fluor Corp., the plaintiffs accused their employers (the contractors) and the utility behind the project of violating WARN by failing to give them advance notice of the project cancellation. The district court initially dismissed the claims against the contractors, noting that they were not aware of the utility’s intentions and had given their employees WARN notice as soon as they learned of the cancellation. The court then dismissed the claims against the utility on the basis that it was not an employer as defined under WARN.

The Fourth Circuit panel unanimously affirmed the dismissal, rejecting the plaintiffs’ claims that the utility has functioned as an employer with respect to its contractors’ employees. The court also agreed that the contractors themselves had no advance notice of the cancellation (in part due to insider trading laws that prevented the utility from disclosing its intent), and it therefore fit within the WARN exception for unforeseeable business circumstances. This decision demonstrates the importance for employers of issuing WARN notice as soon as they become aware of circumstances that could lead to a plant closing or mass layoff, even where that notice is provided less than the 60 days in advance normally required under WARN.