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: