Is Twitter Breaking the Law with Mass Layoffs?
It has been reported that Twitter “has begun laying off employees under its new owner, Elon Musk,” in a decision that could impact “up to 3,700 people.” Reuters noted that the “federal Worker Adjustment and Retraining Notification (WARN) Act requires businesses with 100 or more employees to provide 60 days’ notice before engaging in mass layoffs.” As a result, Twitter “is already facing a proposed class action claiming the layoffs are imminent and will violate U.S. and California laws if employees are not given advance notice or severance pay.” In a WARN filing, “Twitter gave notice on Friday, November 4, 2022, that it would be cutting 93 staff at its office in Santa Monica, 106 staff in San Jose, and 784 staff in San Francisco.” The notices “said the terminations were expected to begin Jan. 4.” Is that enough notice to comply with the federal WARN act?
The 11th Circuit has previously explained the elements which must be met for the warn act to apply in Sides v. Macon Cnty. Greyhound Park, Inc., 725 F.3d 1276, 1281 (11th Cir. 2013): “(1) a mass layoff [or plant closing as defined by the statute] conducted by (2) an employer who fired employees (3) who, pursuant to WARN, are entitled notice.” A plant closing is defined at 29 U.S.C. § 2101(a)(2) as “… the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30–day period for 50 or more employees excluding any part-time employees.”
A mass layoff is a reduction in force which … (A) is not the result of a plant closing; and (B) results in an employment loss at the single site of employment during any 30–day period for … (i)(I) at least 33 percent of the employees (excluding any part-time employees); and (II) at least 50 employees (excluding any part-time employees); or (ii) at least 500 employees (excluding any part-time employees)[.]
Id. § 2101(a)(3). So far, the WARN act appears to apply to this Twitter layoff.
The 11th Circuit further explained, “To determine who should receive notice, we look to 29 U.S.C. § 2102(a): ‘An employer shall not order a plant closing or mass layoff until the end of a 60–day period after the employer serves written notice of such an order … to each affected employee.’ Id. § 2102(a)(1) (emphasis added). “Affected employee[ ]” is defined to mean an employee “who may reasonably be expected to experience an employment loss as a consequence of a proposed plant closing or mass layoff by [his or her] employer.” Id. § 2101(a)(5) (emphasis added). “[E]mployees” include “[w]orkers on temporary layoff or on leave who have a reasonable expectation of recall….” 20 C.F.R. § 639.3(a)(1)(ii). An “employment loss” means “(A) an employment termination, other than a discharge for cause, voluntary departure, or retirement, (B) a layoff exceeding 6 months, or (C) a reduction in hours of work of more than 50 percent during each month of any 6–month period.” 29 U.S.C. § 2101(a)(6). Sides at 1281-82.
The six-month expected duration of the layoff is not a matter to play around with as the regulation at 20 C.F.R. § 639.4 further details that “An employer who has previously announced and carried out a short-term layoff (6 months or less) which is being extended beyond 6 months due to business circumstances (including unforeseeable changes in price or cost) not reasonably foreseeable at the time of the initial layoff is required to give notice when it becomes reasonably foreseeable that the extension is required.”
So to recap, for the WARN act to apply to an employer, there must be:
- 100 full-time employees;
- a plant closing which is a permanent or temporary shutdown of the single site of employment- and that impacts 50 or more full-time employees within 30 days OR a mass layoff, which is a reduction in force of one-third of the employees with at least 50 impacted at that single site or 500 employees are laid off at a single site;
- failure to provide at least 60 days’ notice before closing the plan or ordering a mass layoff. The notice must be sent to each employee representative or affected employee and then to the state or entity designated by the state to carry out rapid response activities as defined by another federal statute.
There are a number of defenses that can arise. For example, the sale of part or all of the employer’s business, in which case the seller is responsible for writing the notice, the employer’s seeking capital or business and that fell through, any form of natural disaster, or certain business circumstances or lack of a reasonably foreseeable event causing a shorter layoff to extend past six months. There is also a good faith and reasonable grounds exception.
As you can see, it is quite a hat trick to get through all of the elements and avoid the various defenses. If liability is established, back pay will be awarded to each affected employee, along with benefits that would have remained in place. So did Twitter break the law? There would be quite a bit that still needs to be proved to demonstrate that. A mass layoff alone falls far short.