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A group of 194 employees fired by Vanderbilt University in the summer of 2013 can't pursue a class action -- and planned settlement -- against the university over Vanderbilt's violation of "mass layoff" laws, the Sixth Circuit ruled last week.
The canned employees alleged that Vanderbilt never provided them or 279 other employees 60-days notice as required by the mass layoff provisions of the Worker Adjustment and Retraining Notification Act. But, to fall under WARN, a layoff must effect at least 500 workers, the Sixth found, and the two groups of fired employees were let go too far apart to be combined for WARN purposes.
No Failure to WARN?
WARN requires employers with more than 100 employees to provide workers with 60 days notice before a mass layoff of 500 workers or more. To prevent companies from laying off 499 employees every week, sans notice, the act allows plaintiffs to aggregate separate layoffs within a 90-day period, in order to find a mass layoff.
That's just what the Vanderbilt employees tried to do here. The 194 complaining employees were terminated without notice on July 1st, 2013. The other, non-suing, 279 Vandy workers were given notice of termination on September 17, 2013, just 79 days later.
There was one catch, though. While the workers laid off in September stopped working on the 17th, they continued to be paid until 60 days later. Vanderbilt argued that those 60-days of full pay, no work meant the termination did not fall within WARN's 90-day aggregation period.
Paid Leave Is Not Termination
The viability of the laid off Vanderbilt workers' WARN claim hinged on whether the September firings were terminations, as the workers argued, or simply paid leave, as Vanderbilt claimed. The WARN Act doesn't define termination, but Department of Labor regulations say it is "to have its common sense meaning" of "the permanent cessation of the employment relationship."
Here, the Sixth found that such a relationship wasn't severed until November. The 279 September employees were able to maintain full pay and benefits for 60 days and ineligible to collect unemployment.
"So long as these employees were being paid and accruing benefits," the Sixth wrote, "there had not been a permanent cessation of the employment relationship." WARN creates no obligation that employees actually work after their termination notice. To avoid falling within the 90-day aggregation period, it's enough that they continue to receive wages and benefits.