In Collins v Gee West Seattle LLC, a case of first impression, the Ninth Circuit ruled that employees who leave their jobs after being informed that the business is closing are suffering an "employment loss" and are not "voluntarily departing." On September 26, 2007 Gee West Seattle, an automobile franchise with approximately 150 employees, informed its employees that it would be closing its doors on October 7, 2007. By October 5, 2007, only 30 employees were reporting to work at the Gee West facilities. After the business closed, several employees sued claiming that Gee West had violated the WARN Act by not giving 60-days notice before closing its doors.
The WARN Act requires that employers not order a plant closing or mass layoff without a 60- day notice period if the shutdown will result in an employment loss at a single site for more than 50 employees. Gee West argued that since all but 30 employees had left their jobs of their own free will prior to October 7, 2007, Gee West's closing did not trigger the WARN Act's 60-day notice requirement. The Ninth Circuit disagreed, and held that rather than count the number of employees remaining on the date of closure, the starting point for analyzing "employment loss" is to determine how many positions will be eliminated by the date of closure, which in this case was 150 positions. Without evidence of departures for reasons other than the announced impending shutdown, the court held it is unreasonable to conclude that employees voluntarily departed after receiving notice of the upcoming closure. The Court therefore concluded that Gee West was liable for WARN Act violations unless it could establish valid defenses on remand. This decision places the burden on the employer to prove that employees left for reasons other than shutdown for purposes of calculating whether a shutdown falls under the WARN Act notice requirement.