Dive Brief:
- Hooters violated the Worker Adjustment and Retraining Notification Act (WARN Act) when it enacted a mass layoff without notice on March 25, two former workers alleged in a class action lawsuit (Scott and Seales v. Hooters III, Inc. No. 20-cv-00882 (M.D. Fla. April 16, 2020)).
- The plaintiffs say they and approximately 679 other similarly situated workers are owed 60 days' compensation and benefits, as the WARN Act obligates employers to give 60 days' notice before a mass layoff or plant closing. Hooters gave workers no advance notice, plaintiffs said. "Defendant could have but failed to evaluate the impact of COVID-19 upon its 679 employees 60 days prior to the March 25, 2020 mass layoff, as evidenced by the fact that it gave no advance written notice whatsoever," the complaint said.
- In a March 26 statement on its website, the company noted that, with its dining rooms closed and revenues halved, it and its franchisees "had no alternative but to dramatically reduce" the size of its workforce in response to the economic impact of the novel coronavirus.
Dive Insight:
The WARN Act requires employers with more than 100 full-time employees to provide at least 60 days' notice to workers before a plant closure or "mass layoff." The U.S. Department of Labor defines mass layoff as a reduction in force that does not result from a plant closing and results in employment loss at a single site during a 30-day period for at least 50-499 employees (if they represent at least a third of the total active workforce, excluding part-time employees) or 500 or more employees.
A global pandemic "likely qualifies" as "unforeseeable business circumstances" that would create an exception under the federal WARN Act, law firm Squire, Patton and Boggs wrote in a blog post. But state laws, often referred to as mini-WARN Acts, may not create the same exception. Florida, where the Hooters workers sued their employer, is not subject to a mini-WARN Act.
Notably, California recently relaxed some of its notice requirements for coronavirus-related layoffs under its mini-WARN Act. In a March 17 Executive Order, California Gov. Gavin Newsom suspended the notice provisions for any employer ordering a mass layoff, relocation or termination at a covered business when the closure was caused by unforeseeable business circumstances related to COVID-19.
Earlier this year, New Jersey became the first state to require severance and increased notice time for mass layoffs, plant closures and transfers. The law, which takes effect July 19, requires employers with 100 or more employees to provide at least 90 days' notice of any move or closure that will result in a layoff of 50 or more employees over a period of 30 days or less. The previous notice period was 60 days.
