9th Circuit Court of Appeals Holds Employees Who Quit After Announcement of Plant Closing Are Entitled To WARN Act Notice

The United States Court of Appeals for the Ninth Circuit as recently faced with a question of first impression under the federal Workers’ Adjustment and Retraining Notification (WARN) Act — whether  employees who leave a job because a business is closing have “voluntarily departed” within the meaning of the statute. In Collins v. Gee West Seattle, LLC issued January 21, 2011, the court answered the question in the negative and held that such employees are entitled to receive the sixty days’ notice required by the statute. 

The case arose out of a claim by approximately 150 employees that an auto dealership had failed to provide them with the required notice in advance of closing its facilities, by announcing on September 26, 2007 that it would be “closing its doors” only ten days later. By October 5, 2007, only 30 employees remained, and the company shut its doors that day. The suit was brought on the ground that the dealership failed to provide the required notice to each “affected employee,” which the statute defines as anyone who “may reasonably be expected to experience an employment loss as a consequence of a plant closing.” “Employment loss” is in turn defined as an employment termination other than a discharge for cause, retirement, or “voluntary departure.”

The district court dismissed the case on the ground that the 120 employees who left their jobs before October 5 did not suffer an “employment loss” because they “voluntarily departed” their jobs, and that the statutory notice was therefore not required because there was no “plant closing” resulting in job losses for at least 50 employees within a 30-day period as is required to trigger the statute. However, the Ninth Circuit disagreed with this interpretation and held that it was inconsistent with the purpose and structure of the statute, which is to provide time to employees who lose their jobs as a result of a plant closing to find new employment without “being pressured to mitigate damages by taking any job offered.” The employees were accordingly permitted to proceed with their claim against the dealership for failing to provide them with the required notice, and to seek recovery of back pay and benefits for the full sixty days. 

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