An illegal gambling establishment in Alabama faced additional legal woes when it was sued by a class of former employees for allegedly violating the Worker Adjustment and Retraining Act (“WARN Act”) when it laid off its employees without giving them any formal notice. Sides v. Macon County Greyhound Park, Inc., 725 F.3d 1276 (11th Cir. 2013).  Macon County Greyhound Park, Inc., or Victoryland, as it was affectionately called by locals, was an Alabama greyhound track turned multi-million dollar casino that hosted electronic gaming on its premises.  Unable to persuade law enforcement authorities who were operating under the authority of the Governor’s Task Force on Illegal Gambling that the electronic gambling machines it hosted constituted the game of bingo, the firm began to lay off employees.  It did so in three waves: 1) in January 2010 on a temporary basis due to alleged renovations, which the parties conceded was not by itself a covered event under the Act; 2) in February 2010 when it laid off 249 employees on a permanent basis due to Task Force investigations; and 3) in August 2010 on a permanent basis when it closed its operations for good in the face of a “looming Task Force raid.”

Although Victoryland met with its employees and posted on both its website and area interstate billboards that it had closed as a result of the Task Force’s activities, it did not provide formal notice before any of the three layoffs.  The WARN Act requires that “[a]n employer shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order.”  Only affected employees, however, are entitled to 60-days advanced notice under the Act.

In granting summary judgment in favor of the employees, the district court aggregated the first two layoffs and held that the “WARN Act applied to all three alleged violations” and that the ACT “imposes a condition precedent such that an employer seeking to leverage the unforeseeable business circumstances defense must first give notice under the statute.”   On appeal, the Eleventh Circuit Court of Appeals  pondered whether each layoff was covered under the Act and whether the unforeseeable circumstances defense applied to excuse Victoryland’s failure to provide formal notice.  Id. (affirming in part, reversing in part, and remanding so that the district court could make the appropriate factual determination whether the employees laid off in January were affected employees).

 A valid WARN Act claim requires the presence of the following three elements:  ‘(1) a mass layoff [of plant closing as defined by the statute] conducted by (2) an employer who fired employees (3) who, pursuant to WARN, are entitled notice.’ In this case, MCGP’s argument hinge[d] on whether the three incidents (January, February and August), individually or aggregated, can be classified as a plant closing or mass layoff under the WARN Act.

Id. at 1281 (internal citation omitted).

The Court looked to the plain meaning of the statute and quickly determined that the “district court erred as a matter of law when it aggregated the January and February layoffs,” but noted that it lacked the factual record to determine if the , employees displaced temporarily in January could be considered affected employees at the moment of final termination.   The Court also determined that the February and August layoffs were plant closings under the WARN Act” and that Victoryland was liable for those violations unless the unforeseeable circumstances defense applied as Victoryland claimed in its defense.

The unforeseeable business circumstances exception applies to closings and layoffs that are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required.  However, while this defense might alleviate the strict enforcement of the Act, it does not discard its absolute notice requirement.  Therefore, even where the defense is properly invoked, some type of notice is still required.

 An employer averring this defense, however, ‘shall give as much notice as practicable and at that time shall give a brief statement of the basis for reducing the notification period.’ Notice under the WARN Act should be ‘specific’ and include:  (1) a statement regarding the temporary or permanent nature of the layoff; (2) the expected date of the mass layoff or plant closing; (3) information on ‘bumping rights; and (4) the ‘name and telephone number of a company official to contact for further information.

Id. at 1284 (internal citations omitted).

The lesson to the employer, therefore, is simple.  Strict compliance with the statute is a good place to start.  And to avoid litigation costs and fees, the employer should err on the side of caution and issue notices to all affected employees at least 60 days in advance of a “mass layoff” or “plant closing.”   While this might add cost to the employer’s operations, that expense will likely pale in comparison to the possible exposure it would face in defending a class action.  Of course, exceptions to the notice requirement exist, but even where applicable, some sort of notice must also be given the employee.  Therefore, be safe, and WARN.

Guest Contributor: Raz Axente