The tug-of-war between employers and employees has reached new heights this year, fueled by a surge in mass layoffs, escalating unemployment and headline-making labor and employment lawsuits.
National unemployment reached 4.1% as of June 2024, according to the United States Bureau of Labor Statistics (BLS), marking a steady increase since the low point of 3.4% in April 2023.
Despite the nearly month-over-month .1% increase, these figures are a welcome contrast from the 14.8% unemployment rate the U.S. experienced in April 2020 during the early months of the COVID-19 pandemic.
But the struggle between employers and employees continues due to mass layoffs and high-profile employment litigation actions dominating the news cycle.
Labor and employment litigation in 2024 displayed a common trend: employers and their counsel overlooked crucial state and federal laws when downsizing or closing operations, with many now facing class action lawsuits from former employees.
The WARN Act, which protects workers during significant layoffs by requiring employers to provide advance notice, played a vital role in many of these lawsuits. Recent trends in labor and employment further highlight the importance of this legislation as companies navigate workforce changes and economic challenges, ensuring that employees are informed and prepared for transitions.
On the labor side, new safety guidelines at both state and federal levels have been rolled out. It's imperative for outside and general counsel to stay informed about these changes to mitigate physical risks and protect employee welfare.
Staying vigilant of these developments will enable lawyers to offer up-to-date counsel, helping their organizations and clients avoid costly government fines and liabilities.
Ignoring WARN Signs Routes Employers to Court
Rapidly changing industries like technology, franchising and media have led to a rising tide of class action lawsuits against prominent employers.
Recent claims by former employees assert that their former companies failed to provide adequate notice before mass layoffs, allegedly violating the Worker Adjustment and Retraining Notification (WARN) Act. Initially enacted by the 100th U.S. Congress in 1988, this federal law mandates that employers with over 100 employees must notify stakeholders 60 calendar days in advance of planned closures or mass layoffs. Failure to comply can lead to legal action for backpay and associated damages.
“There is a federal WARN statute and several states, including California, have their own WARN statutes,” said Zak Franklin, founder of Franklin Law, an employment law firm based in California.
“Employers must comply with each WARN law that applies to them. These laws generally require larger employers to give employees and certain government officials advance notice of planned layoffs. If an employer fails to properly give notice of these layoffs, then the employer can be liable to the employees and potentially to the government, as well.”
This year, notable lawsuits have been filed against various companies, including The Messenger, a digital news outlet that abruptly shut down in January 2024, terminating nearly 300 employees without warning.
Another case involves Beverage Works, a Red Bull distributor, which reportedly laid off about 200 employees across New York and New Jersey in early June 2024, despite anticipating plant closures.
The upscale convenience store chains Foxtrot and Dom’s, after merging in 2023, also faced similar backlash when they closed 35 locations less than a year after combining.
Such abrupt terminations have left many employees feeling blindsided. Investigative reporter Jim LaPorta, who worked at The Messenger, took to social media to express his dismay, revealing he learned of his termination from The New York Times before receiving any direct communication from his employer. His post notably highlighted the absence of severance and the immediate cessation of health care benefits.
Heather Jackson, co-chair of Taft’s Employment and Labor Relations practice group in Chicago, Illinois, said there are many different legal options for employees after layoffs.
“In the event of a plant closure or mass layoff, employees may have remedies under the federal WARN law, or state counterparts,” said Jackson, who is recognized by Best Lawyers for Employment Law – Management, in Chicago. “If an employee has an employment agreement, that agreement may provide for additional legal remedies.”
Two of the most high-profile class actions alleging WARN noncompliance were filed against Red Lobster and Tesla.
Just days prior to its Chapter 11 bankruptcy filing in May 2024, the Red Lobster seafood franchise closed 93 locations across the country without notice. According to the Orlando Business Journal an estimated 6,500 workers were affected.
Donna Lowe, a lead plaintiff from Roxbury, New Jersey, is taking a stand against the seafood franchise, accusing Red Lobster Hospitality LLC of violating both the federal WARN Act and the New Jersey WARN Act, in a lawsuit filed in the U.S. District Court for the Middle District of Florida later that same month.
These cases are extremely complicated, expensive and reliant on expert witness testimony, which is why preventative action is always the best approach.”
Tesla CEO Elon Musk announced in April that the electric vehicle maker would terminate more than 10% of its global workforce, or about 14,000 people, many of whom were based in California.
A proposed suit from a former employee at the Dublin manufacturing plant contends that Tesla neglected to provide the required 60 days of advance notice ahead of layoffs, seeking 60 days’ worth of lost wages, salaries, commissions, bonuses, accrued holiday pay, 401(k) contributions, health insurance and other fringe benefits for terminated employees.
These cases serve as a stark reminder of how even some of the most revered leaders in the world can make a difficult decision more costly than it has to be. Jackson emphasized that employers who focus on compliance will avoid trips to court.
“I have successfully represented employers in resolving cases arising from mass layoffs—including those that were alleged to have a ‘disparate impact’ on a protected class or category,” she said. “These cases are extremely complicated, expensive and reliant on expert witness testimony, which is why preventative action is always the best approach.”
Franklin has also advised employers on complying with WARN laws, though he noted none resulted in litigation and he has not brought any claims for such violations.
“Employers planning a significant layoff should, probably at least three months prior, engage counsel to advise them on federal and state WARN laws to see if the employer is required to give notice, how, when and to whom,” he said.
More Effective ‘Communication’ in Place for Emergency Workers
Employees in all industries received enhanced protections from the Occupational Safety and Health Administration (OSHA), which published a final rule to update the Hazard Communication Standard (HCS).
Effective July 19, 2024, the changes improved HCS to align with better-informing employees about chemical hazards in the workplace, which could reduce chemical-related injuries and illnesses.
The HCS is now aligned with the Globally Harmonized System of Classification and Labeling of Chemicals, which was adopted by the United Nations in 2003. The DOL said the HCS now addresses, “the amount and quality of information on labels and safety data sheets and allow workers and first responders to react more quickly in an emergency.”
Sue A. Roudebush, a partner in Taft’s Columbus, Ohio, office, lauded the HCS update, noting that the prospective benefits of coupling the new labeling requirements with training mandates will contribute to safer workplaces.
“While most changes with HCS-10 are for manufacturers, importers and distributors as they are the entities in the driver’s seat regarding labeling, this will not be a pass for employers should OSHA determine the HCS-10 requirements have not been met,” said Roudebush, who is recognized by Best Lawyers for Workers’ Compensation Law – Employers in Columbus.
“Employers should reach out to the entities in which they obtain hazardous chemicals to make sure they have the latest label(s) and other safety-related information, and then implement any changes immediately.”
Even some of the most revered leaders in the world can make a difficult decision more costly than it has to be."
Trade secrets impeded prior efforts to update the HCS, but the modification will require labels on small packaging to be more comprehensive and decipherable without inadvertently revealing any proprietary information.
“Employers and workers are only able to comply with the HCS-10 criteria to the extent they are aware of the hazardous chemical, and this will likely be the issue for some time as chemical manufacturers, importers, distributors and employers sort out what is protected under trade secret status – a subjective status not explicitly defined by OSHA and already often challenged,” Roudebush said.
“The permissible exposure limit (PEL), threshold limit value (TLV), or other designated exposure limits, as well as properties and effects of the hazardous ingredients, were previously required to be included on safety data sheets. But HCS-10 provides new requirements relating to concentrations and concentration ranges being claimed as trade secrets.”
California Requires Workplace Violence Plans for All Entities
Several states, including New York, Washington and Minnesota, require workplace violence plans for sectors such as health care, education and public entities.
While other states follow general workplace safety requirements under OSHA, they may lack specific mandates for workplace violence prevention. California set a new precedent on Sept. 30, 2023, when Gov. Gavin Newsom signed SB 553 into law, requiring all businesses (with some exemptions) to have workplace violence prevention plans at all times and in all work areas.
SB 553 differs from other safety initiatives in that it calls for a “plan,” and not a “program,” which is recognized as a one-time or quarterly event or assessment.
Effective July 1, 2024, employers must establish, implement and maintain an effective written Workplace Violence Prevention Plan. This bill amended Section 6401.7 of California’s Labor Code and highlights several key requirements set forth by Cal/OSHA.
Employers are tasked with identifying responsible parties for executing the plan, involving employees and their representatives and ensuring there’s a process for receiving and addressing reports of workplace violence without employee retaliation.
Additionally, employers must foster open communication about workplace violence, implement effective training, respond to actual and potential emergencies, identify, evaluate and rectify violence hazards and conduct thorough post-incident responses and investigations.
“The journey of SB 553 began in the aftermath of the 2021 massacre at the Valley Transportation Authority (VTA) railyard in my district in San Jose,” said State Senator Dave Cortese (D-San Jose) when the bill was signed last September.
On May 26, 2021, long-time VTA employee Samuel James Cassidy tragically shot and killed nine of his coworkers before taking his own life, marking the worst mass shooting in San Francisco Bay Area history.
“On that horrible day, we quickly realized how safety protocols can and must be enhanced.”
The Division of Occupational Safety and Health has implemented penalties ranging from a minimum of $16,131 for serious violations to a maximum of $161,323 for willful or repeated offenses.
SB 553 also requires employers to track and report workplace violence, which Zak Franklin said is a positive step for organizations and their employees in reducing threats of future violence.
“Employees who are subjected to violence in the workplace should get to know whether their employer has had similar workplace violence issues in the past and what steps, if any, the employer took to protect employees,” Franklin said.
“If the employer failed to take proper measures and this contributes to additional employees suffering workplace violence, then those employers can more easily be held accountable when employees bring suit and discover what previous workplace violence incidents have occurred. This, in turn, should incentivize employers to take seriously their obligation to try to prevent workplace violence.”
Employers and lawyers nationwide should take note, Franklin added, as California laws tend to serve as legal templates for neighboring states.
“California is often a leader in new employment legislation,” he said, “and it would not be surprising to see other states follow suit and implement additional legislation similar to SB 553.”
Exempted Businesses and Entities
The entities and workers below are exempt from SB 553. Some already have customized plans due to the nature of their work, while remote workers and small companies also have different criteria.
• Most healthcare service providers
• Department of Corrections and Rehabilitation
• Law enforcement
• Employees teleworking from the location of their choice
• Less than ten employees working at any given time who are inaccessible to the public
Justin Smulison is a professional writer who proudly contributes to Best Lawyers. Credits include reporting for the New York Law Journal and leading production for ALM's Custom Projects Group. In addition to writing, he has developed global audiences by hosting and producing podcasts and video interviews for professional organizations and music sites. JustinSmulison.contently.com
