Don't Forget to WARN

 

South Florida residents should be familiar with the Plantation mortgage foreclosure law firm Law Offices of David J. Stern.  Stern himself built a fortune in recent years by operating the go-to firm for banks seeking to foreclose on residential mortgages.  (Full disclosure - my wife, who is an attorney, used to work for the Stern firm, but left several years ago.)  According to a litany of recent news articles, the firm is being investigated by the state Attorney General, and has recently lost many of its clients.   The firm and its related loan-servicing business reportedly laid off some 700 employees this fall.

Now, the firm faces a class-action lawsuit brought by four ex-employees. The lawsuit, filed last week, alleges violations of the federal Worker Adjustment and Retraining Notification Act, which is more familiarly known as the WARN Act. The WARN Act applies to businesses with more than 100 employees. Among other things, WARN requires that employers provide at least 60 calendar days notice to “affected employees” before “mass layoffs” that involve at least 50 people, if those people comprise more than 1/3 of the workforce. 

The four plaintiffs here claim they were all laid off this fall. They allege that the Stern firm failed to provide any advance notice to them, and that they had “barely an opportunity to gather their personal items before security badges and telephone extensions were deactivated”. 

The penalties for a WARN violation can include up to 60 days lost wages and lost benefits to the affected employees, plus the employees’ attorneys fees. Clearly, if the Court here were to certify this as a class-action involving hundreds of ex-employees, the stakes for the Stern firm would be quite large.

There are a few limited statutory exceptions to the WARN notice requirement. The one that the Stern firm here may argue applies is the “unforeseeable business circumstances” exception. Under that exception, the employer can give fewer than 60 days notice, if the mass layoff is as a result of a “sudden, dramatic, and unexpected” business circumstance that was not reasonably foreseeable. Loss of a major client can suffice. Even under this exception, the employer must give as much notice as practicable under the circumstances. 

The lawsuit here anticipates that the Stern firm will attempt to argue that exception, and claims that the firm “had plenty of advance opportunity to provide notice”. If this case progresses, the relevant questions will be when the Stern firm became aware of the “unforeseeable business circumstances”, and whether the firm had the opportunity to provide the  60-days notice, or at least some notice. 

It is obviously much too early to determine what will happen in this case. But, in these economic times, WARN Act lawsuits have become more prevalent than before. Any sizeable employer seeking to lay off numerous employees, or to shut down operations at any of its facilities, would be wise to consult labor and employment counsel before doing so. As stated above, the penalties for violating WARN can be severe.

Saving Your Workforce Seminar -- An Invitation

Please see the invitation below.  Feel free to sign up if you're interested in attending, or contact me for additional details. 

Saving Your Workforce:
 Avoiding Layoffs Through Furloughs and Other Solutions  

  

WHEN
Wednesday, May 6, 2009 
8:00 AM  - 9:30 AM
 

WHERE

The Miami City Club
200 South Biscayne Blvd.
Suite 5500
Miami,  FL 33131
  

For many employers, these are desperate economic times. Every entity facing diminished revenue must consider cost cuts to survive. As news reports show, layoffs or reductions in force (RIFs) are being used daily to achieve cost savings, and for some employers they may be the best solution. In some cases, however, the savings are not immediate as a result of statutorily required or voluntary notice periods, as well as costs of severance pay.

A different approach may be a furlough strategy, customized to fit each employer’s needs, which may also achieve a significant cost-savings benefit. Implementing a furlough can help retain the employer’s experienced workforce at a reduced cost, to help the enterprise weather the economic crisis. Most employees faced with, for example, the choice of a 20 percent annual pay reduction or the loss of their job would not hesitate to choose a reduction in pay. Further, both employers and employees taking advantage of a furlough program are well-positioned to take advantage of any increase in business activity in the inevitable economic recovery, whether it be this year or next. Furloughs are often viewed by the workforce more favorably than layoffs, thus preserving morale in the organization as well. But, implementing a furlough plan is not without its pitfalls. This seminar will provide guidence regarding the correct way to implement a furlough plan, and will also discuss other potential ways to avoid RIFs.

  

   
Presented by:

 
Mark J. Beutler, Esq. EpsteinBeckerGreen
                     Kevin E. Vance, Esq. EpsteinBeckerGreen

  

View Event Agenda and Biographies 
RSVP by
Monday, May 4, 2009
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Please contact Anneliese Garcia at 305.579.3200
or
agarcia@ebglaw.com with any questions.
 

 

About EpsteinBeckerGreen Founded in 1973, EpsteinBeckerGreen is a law firm with nearly 400 lawyers practicing in offices in Atlanta, Chicago, Houston, Los Angeles, Miami, New York, Newark, San Francisco, Stamford and Washington D.C. The Firm’s size, diversity, and global affiliations allow its attorneys to address the needs of both small entrepreneurial ventures and large multinational corporations on a worldwide basis. EpsteinBeckerGreen continues to build and expand its capabilities as a law firm focused on five core practices: Business Law, Health Care and Life Sciences, Labor and Employment, Litigation and Real Estate. For more information on EpsteinBeckerGreen, please visit www.ebglaw.com.
 
 
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