Ninth Circuit Clarifies Meaning of "Voluntary Departure" Under WARN Act

In Collins v. Gee West Seattle, LLC, a three member Ninth Circuit panel held 2-1 that employees who receive notice of a plant closing, but stop returning to work before the plant closing takes effect, have not “voluntarily departed” under the Worker Adjustment and Retraining Notification Act (WARN).

In Collins, the employer announced to its employees in late September 2007 that it would be closing its doors at the end of business on October 7, 2007. Before that announcement, the employer had approximately 150 employees. By October 5, however, only 30 employees continued to report to work, the remainder having opted to stop coming in.

Under the WARN Act, an employer must provide at least 60-days notice to each affected employee, assuming the closing or shutdown would result in “an employment loss…during any 30-day period for 50 or more employees.” 29 U.S.C. § 2101(a)(5).  An “employment loss” is defined as a termination “other than a discharge for cause, voluntary departure, or retirement.”  (Emphasis added.)

In Collins, the employer argued that the 120 employees who stopped coming to work were “voluntary” departures because they left of their own free will before the plant closed. As a result, only the 30 remaining employees were "involuntary" terminations, and therefore the WARN Act was never implicated. The Ninth Circuit disagreed, reversing the District Court’s grant of summary judgment, and holding that employees who stopped coming to work because of the notice that the plant would close did not depart “voluntarily” within the meaning of the Act. The Court noted that the employer’s interpretation is “inconsistent with the Act’s general structure and its overall purpose,” and would render “superfluous” the “faltering business” exception to the WARN Act—which allows employers who are uncertain as to the future of the business to provide notice of the closure “as is practicable.”

While Collins applies to only a narrow set of circumstances, employers facing the unfortunate circumstance of an uncertain mass layoff or plant closing must take into consideration that employees who stop coming to work before the layoff or closure, but based on the representation that the layoff or closure will occur, must be counted for purposes of WARN Act calculations. When faced with such an uncertain situation, employers are better off providing notice when practicable, and consider arguing a faltering business defense. 

See also World of Employment's prior WARN Act related posts:



FOREWARN Act Introduced - Changes to WARN Act in 2009?

Last week, the Federal Oversight, Reform, and Enforcement of the WARN (FOREWARN) Act was introduced in the House by Rep. George Miller (D-CA) and in the Senate by Sen. Sherrod Brown (D-OH).  FOREWARN aims to amend the Worker Adjustment and Retraining Notification (WARN) Act by requiring more and smaller employers to notify workers of  plant closings or mass layoffs.  FOREWARN also would increase penalties for employers who violate the act.  For more information, click here to read Senator Brown's press release on FOREWARN

This isn't the first time in Congress for FOREWARN; it was introduced in 2007, but failed to gain traction, perhaps because of a likely veto from the then Bush White House had it passed.  The reintroduction of FOREWARN does not come as a big surprise:  the Stoel Rives World of Employment warned (ouch! bad pun!) that changes were coming to the WARN Act back in March.  Better yet, we predicted FOREWARN would be on then President-Elect Obama's agenda back in November 2008. 

While FOREWARN is still making its way through Congress, employers must comply with the existing WARN Act, and we have some WARN Act resources to help:

Tenth Circuit Affirms Dismissal of WARN Act Case

We don't need to tell you there's a recession going on, and that a recession means layoffs.  But we will remind you that layoffs may implicate the Worker Adjustment and Retraining Notification (WARN) Act - the federal law that requires employers to give 60 days' notice of certain mass layoffs and plant shutdowns. 

Sometimes giving 60 days' notice of a layoff just isn't possible, and the law makes exceptions in some circumstances.  A recent case from the Tenth Circuit Court of Appeals illustrates one of those exceptions.  In Gross v. Hale-Halsell Co., the employer successfully relied on the "unforeseeable business circumstances" exception to WARN.  In that case, the employer--a grocery wholesaler and distributor--was forced to lay off over 200 employees when its largest customer suddenly dropped its account.  The court held that the employer had no choice but to lay its employees off (the employer subsequently declared bankruptcy), and that it gave as much notice as was practicable under the circumstances. 

Notwithstanding the outcome of Gross, courts are notoriously reluctant to apply the WARN Act exceptions; before relying on an exception to bypass giving notice of a qualifying layoff or plant closure, it is probably a good idea to consult legal counsel.  There is also good, free information from our friends at the U.S. Department of Labor to help guide you through troubled times and to determine whether the WARN Act may apply to you.  Just click below to download the information: