The 11th U.S. Circuit Court of Appeals has determined that a casino which had instituted two layoffs that ultimately culminated in the closure of its facility violated the federalWorker Adjustment and Retraining Notification (“WARN”) Act by failing to provide notice to its former employees in a timely and appropriate manner. This liability was established in spite of the fact that the casino owner offered an “unforeseeability” defense – arguing that unforeseen business circumstances had precluded the company from providing the required notice – allowed under the WARN Act. Weekes-Walker v. Macon Cnty. Greyhound Park, Inc., 11th Cir., No. 12-14673, 8/5/13

In December 2008, Macon County Greyhound Park, Inc. (“MCGP”), a former greyhound track-turned-casino, became one target of a Task Force on Illegal Gambling created by Alabama’s Governor. During the ensuing litigation between gaming establishments and the Task Force, MCGP engaged in various layoffs of its employees, all undertaken without notice to those individuals.

First, on January 5, 2010, MCGP laid off 68 employees due to “scheduled renovation.” One month later, after the Task Force arrived to seize MCGP’s electronic gaming machines, MCGP laid off its remaining employees, again without formal notice. However, subsequent to the February 4 layoff, MCGP held a meeting with its employees to discuss unemployment issues. It also posted on its website and on interstate billboards that it had closed as a result of the Task Force. Neither the meetings, nor the postings/billboards referred to the WARN Act, nor did either list any reason for not complying with the 60-day notice provision required by that Act.

After a March 5, 2010 state court restraining order against the Task Force’s actions, MCGP reopened for business. However, on July 30, 2010, the Supreme Court of Alabama reversed the lower court and abrogated the injunction against the Task Force, in response to which MCGP “permanently closed its doors on electronic gaming.” As with the other layoffs, no formal notice was provided to employees prior to the closure.

In October 2010, a group of former employees filed a complaint in federal court, alleging that MCGP violated the WARN Act when it failed to provide notice prior to the layoffs/closure. The district court granted summary judgment in favor of the employees, and MCGP appealed.

While the Eleventh Circuit remanded the issue of the January layoff back to the district court for further review (because the event did not fit neatly into the WARN Act definition of “plant closing” or “mass layoff”), it found that MCGP did, in fact, violate the notice provision of the WARN Act. It did so in spite of MCGP’s assertion of the “unforeseeability” defense allowed under the Act.

The WARN Act is intended to enable employees to “adjust to the prospective loss of employment” by seeking and obtaining alternative jobs, or by entering skill training/retraining to allow them to compete successfully in the job market. In order to allow that to happen, the Act requires an employer to provide 60 days of notice prior to layoffs or plant closures of certain magnitudes, as described in the Act. However, under certain unforeseen business circumstances, an employer may order a plant closing or mass layoff before the conclusion of the 60-day period. Under the Act, an employer asserting this defense must “give as much notice as is practicable and at that time shall give a brief statement of the basis for reducing the notification period.” This notice should be specific and must include a statement regarding the nature of the layoff, the expected date of the action, information on any “bumping” rights, and contact information of a company official who can provide further information.

In this case, the Eleventh Circuit found that MCGP could not support the “unforeseeability” defense, because the company failed to provide any of the required notice information to employees prior to its actions. While MCGP claimed that the employees received notice through the company’s postings on its website and on billboards blaming the Task Force for its closure, the Court held that such information was insufficient because it did not reference the WARN Act or provide any of the other required detailed information. Further, in order to be in full compliance with the WARN Act, the delivery method chosen by the company must “ensure receipt,” which website and billboard information did not.

The Eleventh Circuit’s opinion instructs employers that under the WARN Act, a business must provide notice to affected employees of mass layoffs or plant shutdowns before the employer can exercise the “unforeseeability” defense. Under that defense, an employer can obtain a reduction of the notification period because of unforeseen business circumstances, but cannot ignore or eliminate the requirement without risk of liability.