Dive Brief:
- A lawsuit alleges that Las Vegas-based Zirtual violated federal law when it terminated about 400 employees without notice on August 10, according to an article at Las Vegas Sun.
- Zirtual’s employees, many of them full-time, provided remote virtual assistants to executives at a subscription fee. The company notified its employees Monday that it had closed after undisclosed financial troubles, the Sun reported.
- The complaint says the company, which was acquired last week by Startups.co, ran afoul of the Worker Adjustment and Retraining Notification Act, which requires companies with more than 100 employees provide 60 days notice before plant closings or mass layoffs. Under the statute, employers who do not comply with the requirements could be on the hook for employee pay and benefits for up to 60 days.
Dive Insight:
Based on the filing, the lawsuit alleges that Zirtual's employees are entitled to wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions and COBRA benefits for 60 days.
This looks like a textbook case on how not to fold up the tent. Zirtual's top HR executive, Jill Taylor Elliott, quit a week before the closing announcement, according to a report at Business Insider, because she didn't want to do anything illegal (according to a post she made on Facebook that was pasted into a blog by a Zirtual customer).
The Business Insider article also reported that the new owner of Zirtual, Startup.co, intends to reboot the company, but will no longer be hiring full-time employees because it intends to fill the workforce by using independent contractors. Ex-Zirtual employees are not too excited about that prospect, reports Business Insider.
