Are You Sure That Departure Is Voluntary? The Ninth Circuit Defines Voluntary Departure Under WARN

February 1, 2011

By: Erin S. Torcello

As many employers are aware, under the Federal Worker Adjustment and Retraining Notification (“WARN”) Act, employers must provide affected employees with 60 days’ written notice of a plant closing.  In Collins v. Gee West Seattle, the Ninth Circuit Court of Appeals had the opportunity to decide whether employees who left their employment after learning that their company was closing “voluntary departed” under WARN, thereby excusing the employer from sending out WARN notices.

In that case, Gee West, a car dealership that employed approximately 150 employees, experienced severe financial losses in July 2007, and decided to sell the company. Despite its efforts, the business was not sold, and on September 26, Gee West announced that it was closing 11 days later, on October 7. After the announcement, employees stopped going to work, and only 30 employees were present the day the plant closed.

The employer argued that it was not required to give WARN notice because at the time of the closing there were only 30 employees who suffered an employment loss -- not 50 as required by WARN. (The statute's 60-day notice requirement applies where the shutdown of a plant results in “an employment loss at the single site of employment during any 30-day period for 50 or more employees”). According to the employer, the other 120 employees had “voluntarily departed” prior to the closing and therefore had not suffered an employment loss.  WARN defines an employment loss as a termination of employment for reasons other than, among other things, a voluntary departure.

The Ninth Circuit rejected the employer's  argument, finding that “[e]mployees’ departure because of a business closing … is generally not voluntary, but a consequence of the shutdown and must be considered a loss of employment when determining whether a plant closure has occurred.” Therefore, Gee West was required to give 60-day notice to all 150 affected employees who the company reasonably expected would lose their jobs as a result of the closing on October 7.

In light of this case, employers should be aware that even if an employee’s departure after the announcement of a plant closing seems “voluntary,” a court may view it differently, and determine whether WARN applies based on the number of employees at the time of the announcement, not the actual closing.