Will Hostess Brands Layoffs Violate the WARN ACT?

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FOR IMMEDIATE RELEASE – November 16, 2012

Hostess Brands today announced that it is seeking Bankruptcy Court approval to sell its assets and immediately shut down operations on Tuesday, November 20, potentially resulting in a job loss to 18,500 employees.

The Worker Adjustment and Retraining Notification Act (WARN Act) requires employers to give 60 days notice to employees if more than 50 employees are laid off at any one location. Failure to give the 60 days notice entitles employees to damages equal to the wages and benefits that would have been earned during the 60 day notice period.

The WARN Act has an exception for layoffs resulting from a strike or lockout. However, that exemption may not apply to Hostess’s decision, said Charles A. Ercole, an attorney who specializes in WARN Act cases and is a partner at Klehr Harrison Harvey Branzburg LLP in Philadelphia, Pennsylvania. “The Churchill case held that a three day strike permitted the employer to avoid WARN Act liability when it subsequently shut down the company without giving notice. Many people think Churchill was wrongly decided and would not be followed by other courts. For example, in the USF Red Star case, we successfully argued that the WARN Act exemption does not allow an employer to avoid WARN Act liability merely because it chooses to shut down the plant without giving notice because there was a job action.” In USF Red Star, the employer immediately shut down the company after a one day strike and laid off 2000 employees without giving 60 days notice. The company eventually settled the WARN Act claims for $7 million.

Mr. Ercole says that his firm is continuing to monitor and investigate the Hostess situation for WARN Act and other labor law violations.


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