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The following case study will examine the resolution of a class-action lawsuit filed by approximately 360 employees against their former employer. The lawsuit was eventually settled in favor of the employees without the necessity of a lengthy court battle. The case involves Lucas Aviation, a medium-sized company that specialized in the maintenance, repair and modification of large airline-type aircraft.
In October of 1993, Lucas decided to close its doors and layoff all its employees with little or no notice. The employees sued the company and eventually were paid a settlement because of the company’s violation of the intent of the Worker Adjustment and Retraining Notification (WARN) Act.
The WARN Act
The WARN Act, which went into effect in February, 1989, was intended to protect workers, their families and communities from sudden plant closings that would cause undue hardship. Generally, the WARN Act applies to employers with 100 or more employees. The Act covers private, for-profit and nonprofit as well as public organizations. Federal, State and Local government employers are exempt from the requirements of WARN. All fulltime hourly and salaried, managerial and supervisory employees are covered (The Worker Adjustment and Retraining Notification Act).
The WARN Act provides that covered employees must be notified of plant closing or mass layoff at least 60 days before the closing or layoff. The employer must also notify the State dislocated worker unit and the chief elected official of local government where the plant is located. The Act applies to a “single employer,” which means the organization has (1) common ownership, (2) common directors and/or officers, (3) de facto exercise of control, (4) unity of personnel policies emanating from a common source, and (5) the dependency of operations (Glenn, 2002).
A major exception to the required 60 day notice is that a “faltering company” that has sought new capital or...