Duane Morris Class Action Review - 2023 - Report - Page 378
gift or reward rather than a wage, so that the room bonus was not a factor to consider in
calculating a worker’s pay rate.
The court granted summary judgment in favor of Hyatt, and ruled that pandemic-related
layoffs did not fall within the definition of discharge under California labor laws. The
court found that by laying the employees off rather than terminating them, Hyatt had not
severed the employer-employee relationship, and therefore they were not eligible for a
payout of their accrued time under the California Labor Code. Instead, that Hyatt
maintained the employees’ health insurance benefits and room bonuses and continued
accruing vacation time indicated that Hyatt did not entirely sever the employeeemployer relationship, so the layoff was not a discharge.
The WARN Act may not be implicated in cases of furloughs, or temporary layoffs, as
long as the furlough does not extend beyond six months and the employer makes clear
to employees that the furlough is temporary and that there is an intended definite date
for employees to return to work. But if changing business circumstances cause a
furlough to extend beyond six months, or to become a permanent layoff, then WARN
Act requirements apply if an employment loss occurred and the employer did not
provide the required notices – either at the time of the initial temporary layoff decision
or, if the unforeseeable business exception applies, as soon as practicable.
For example, in Turner, et al. v. Rosen Hotels & Resorts, Inc., 2022 U.S. Dist. LEXIS
182365 (M.D. Fla. Oct. 5, 2022), a Florida hotel faced a putative class action brought on
behalf of employees who, in April 2020, were placed on what was to be a temporary sixmonth furlough. Because the furlough was supposed to be temporary, the employer did
not provide WARN Act-mandated notices. However, the layoff period extended beyond
six months, and an employee filed a WARN Act suit. The employer argued that the
plaintiff was not entitled to damages because “the extension of the layoff period beyond
six months was caused by business circumstances not reasonably foreseeable at the
time of the initial layoff . . . and notice [was] given at the time it [became] reasonably
foreseeable that the extension beyond six months [was] required.” 29 USC Section
2102(c). The employer ultimately settled the matter, and the court granted final approval
to the parties’ proposed settlement, under which the employer agreed to pay $2.3
million to resolve the claims of a 3,600-member class.
D.
Other Significant 2022 Rulings In Putative Class Actions Brought Under
The WARN Act
Courts also issued significant WARN Act decisions in 2022 that did not involve
circumstances relating to the COVID-19 pandemic. For example, with respect to
compelling WARN Act claims to arbitration, in Lynch, et al. v. Tesla, Inc., 2022 U.S.
Dist. LEXIS 173344 (W.D. Tex. Sept. 26, 2022), the magistrate judge issued a report
and recommendation recommending that the court grant the defendant Tesla, Inc.’s
motion to dismiss and compel individual arbitration. The plaintiffs brought a putative
class action lawsuit against their former employer, Tesla, under the WARN Act and the
California Labor Code. The plaintiffs alleged that Tesla violated the WARN Act by failing
to provide them and other potential class members with 60 days’ advance written notice
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Duane Morris Class Action Review – 2023
