WARN Act Obligations Altered by Multiemployer Worksites

The 11th U.S. Circuit Court of Appeals ruled that mass layoffs at a DHL Express facility did not meet the threshold for worker notification because the use of contractors made it a multiemployer worksite.

The court rejected an appeal by plaintiff Darriest Likes to deny certification in a proposed class action alleging that the company violated the Worker Adjustment and Retraining Notification (WARN) Act before he was laid off from his job at the company’s Birmingham, Ala., facility.

The WARN Act requires employers to provide notice 60 days in advance of plant closings and mass layoffs of 50 or more employees from a single site. In general, employers are covered by WARN if they have 100 or more employees, not counting employees who have worked less than six months in the last 12 and not counting employees who work an average of less than 20 hours a week. Employees entitled to notice under WARN include hourly and salaried workers, as well as managerial and supervisory employees.

The Case

Likes worked as a driver for Wood Airfreight Inc., one of three companies that contracted with DHL out of the Birmingham facility. He was laid off in 2008 and later filed suit against DHL on the grounds that it failed to comply with the WARN Act by giving him sufficient notice of layoff.

DHL admitted that it did not provide the 60-day notice of termination, but it argued that Wood Airfreight, the plaintiff’s direct employer, did not have 100 or more employees and therefore was not subject to WARN Act liability.

Likes argued that DHL had more than 100 employees working from the facility in aggregate—by combining the workforces from the three contractors—was his joint employer under Department of Labor (DOL) regulations and was therefore obligated to provide notice.

Because less than 100 employees worked for Wood Airfreight, however, and the court rejected the argument that the DHL facility should be considered a single site of employment for workers from the three contractors. It was also undisputed that Wood Airfreight laid off fewer than 50 employees, so its reduction in workforce alone could not result in WARN Act liability. Without combining workers from the three entities as a single site, Likes could not eclipse the 50-worker benchmark to bring a viable WARN Act claim, according to the ruling.

Defining Single Site of Employment

The court cited DOL regulations which explain that a “single site of employment can refer to either a single location or a group of contiguous locations. … There may be several single sites of employment within a single building, such as an office building, if separate employers conduct activities within such a building. … Contiguous buildings owned by the same employer which have separate management, produce different products, and have separate workforces are considered separate single sites of employment.”

The court reasoned that the proper focus of the single-site analysis is on day-to-day management, administration and personnel flow. Even though DHL’s contractors worked out of the same Birmingham facility, the court said that each had distinct day-to-day management and employee structures.

“The evidence is undisputed that Wood Airfreight hired and fired its own employees, maintained its own personnel policies, rented its own delivery equipment, and ran its own payroll. Although they operated out of a common facility, the Birmingham contractors lacked the ‘operational connection’ the DOL regulation deems necessary to constitute a single site of employment.”

Roy Maurer is an online editor/manager for SHRM.

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