LAYOFFS – WARN ACT LIABILITY

In today’s economy, most companies have either implemented layoffs or are considering such action. Of course, any “mass layoff” (generally at least one-third of the workforce and at least 50 employees, OR a total of 500 employees) is subject to the 60-day advance notice requirement of the Federal Worker Adjustment and Retraining Notification Act. Failure to give the advance notice can result in substantial liability for pay in lieu of notice.

There are several narrow exceptions to the WARN Act – exceptions designed to protect failing businesses and companies forced to implement layoffs through no fault of their own. The exceptions are:

• natural disasters such as flood, fire, earthquakes, or drought;
• where the company is actively seeking capital to rejuvenate the business and giving WARN notices might discourage banks or investors from providing the capital;
• layoffs caused by circumstances the company could not have reasonably foreseen within the prior 60 days.

The November 2008 Tip Sheet reported on a case where a Court gave a very narrow reading to the second exception (seeking capital), but it is the last exception that normally gets the most attention. The Federal Appeals Court in Denver recently interpreted that exception in a case involving a wholesale grocery warehouse, and the ruling provides some degree of protection for companies that suddenly lose customers.

Hale-Halsell Company (“HHC”) had been experiencing financial problems for months when its major customer representing almost half of HHC’s business suddenly canceled all its orders. HHC laid off about 200 employees 3 days later, and the laid-off workers sued for 60 days pay under the WARN Act. The Appeals Court upheld the dismissal of the case, saying that while HHC knew that it was in financial trouble, the Company had no idea that its major customer was about to pull the plug.

While this decision offers protection for employers, it is always best to give the 60 days notice if at all possible, and to remember that even when it is not possible to give 60 days notice, the WARN Act still requires that laid-off workers (and state and local government entities) be given (1) as much advance notice as practicable, and (2) a written statement explaining why more notice cannot be given.

CRIMINAL BACKGROUND CHECKS – EEOC HOSTILITY CONTINUES

Last month’s Tip Sheet reported on recent formal hearings where the EEOC revealed that it is considering a broad ban on the common practice of using criminal background checks to screen potential employees. While no official action has been taken on that proposal, a recent decision from the Federal Appeals Court in Chicago shows that even under the current law the EEOC is taking an aggressive stance against companies that use this screening tool.

Watkins Motor Lines, Inc. (“Watkins”) refuses to hire those who have been convicted of violent crimes. Please note – Watkins does not consider arrest records or convictions involving nonviolent (mostly drug-related) crimes. Watkins only seeks to avoid hiring those with a confirmed record of violent acts.

The EEOC is attacking this policy on the basis that it has a disparate impact on Black applicants and is therefore racially discriminatory. Watkins refused to comply with an EEOC subpoena for its records, and the Appeals Court ruled that Watkins must comply with the subpoena.

While the Appeals Court did not rule on the validity of the EEOC’s underlying claim, the case shows that the EEOC is firmly committed to challenging criminal background checks. The Watkins policy is a relatively narrow and conservative approach. Many companies disqualify applicants with any type of criminal conviction. If the EEOC is attacking the Watkins policy, others should certainly reconsider their practices.

Questions that should be asked include:

• Does our policy have a disparate impact on Black or Hispanic applicants?
• If so, how would we justify the policy, i.e., could we prove “business necessity?”

Again, the merit of the Watkins case has not been decided. It is possible that the subpoenaed documents will not show any disparate impact or even if they do, it is possible that Watkins will be able to demonstrate “business necessity.”

But, it is certain that the use of criminal background checks is fertile ground for controversy.

GUNS AT WORK - NO GOOD DEED GOES UNPUNISHED

The December 2007 and September 2008 Tip Sheets reported on developments in the continuing conflict between (1) companies with workplace violence policies that prohibit weapons on company property, including company-owned parking lots, and (2) state laws providing that employees have a “right” to bring guns to work and keep them in their vehicles. Florida and Oklahoma have such laws, and Texas recently joined the list. NOTE: As reported in the December 2007 Tip Sheet, a Federal trial court in Oklahoma struck down that state’s law on the ground that it was in conflict with the Federal OSHA law. On February 19, the Federal Appeals Court in Denver reversed the lower court and upheld the Oklahoma statute.

An unusual court decision in Florida indicates how these laws may be applied in practice – down where the rubber meets the road so to speak.

Colin Bruley worked as a leasing agent at an apartment complex in Jacksonville. As part of his compensation, the owner provided him with a rent-free apartment in the complex. Bruley signed a statement acknowledging receipt of the owner’s policy prohibiting employees from having firearms on “any Company premises or while on any Company business.” Nonetheless, Bruley kept a shotgun in his apartment.

One morning at 2 AM, Bruley heard what sounded like a gunshot and someone crying for help. He grabbed his shotgun, loaded one shell in the chamber, and set off to investigate. He found the victim, summoned medical personnel, and rendered emergency first aid that saved the victim’s life.

Bruley was hailed as a hero, but he was fired the next day for violating his employer’s policy on firearms. In the ensuing lawsuit, Bruley pointed to the Florida statute that allows employees to keep guns in their vehicles. The judge, while clearly sympathetic to Bruley’s plight, nonetheless dismissed his case, holding that (1) Bruley did not keep his gun in his vehicle and therefore the Florida law did not help him, and (2) Bruley was an at-will employee who clearly was aware that keeping a gun in his apartment violated his employer’s lawful policy.

Once again, no good deed goes unpunished. One wonders whether Bruley’s case might have had a different outcome if he had kept the shotgun in his car instead of in the apartment. Probably so, provided he did not remove the gun from the vehicle. But this case says that once an employee removes a gun from the vehicle – for any reason including a mission of mercy – the Florida statute no longer provides the employee with any protection.