In Neal v. United Furniture Industries, Inc. (In re United Furniture Industries, Inc.), the U.S. Bankruptcy Court for the Northern District of Mississippi ruled that United Furniture Industries violated the federal WARN Act by failing to include a sufficient explanation for the lack of advance notice before terminating approximately 2,700 employees. The Court granted partial summary judgment in favor of the plaintiffs.
WARN Act Notice and Communications
The company ceased operations on November 21, 2022, without issuing 60 days' advance notice as required under 29 U.S.C. § 2102(a). It sent three communications to employees on or around the termination date, referencing "unforeseen business circumstances" and an inability to obtain financing. These communications, however, did not include a "brief statement" explaining why the company qualified for an exception to the standard notice period under § 2102(b)(3).
Evaluation of the Brief Statement Requirement
The Court emphasized that the WARN Act mandates more than a general reference to statutory terms. It requires employers to state specific, factual circumstances explaining why notice was shortened. The Court compared the company's language to statutory boilerplate and found that it lacked detail about the timing, nature, and causes of the alleged circumstances.
Even when considered collectively, the communications did not meet the required level of specificity. For example, they did not indicate when financing efforts began or failed, or identify the business circumstances said to be unforeseen. As a result, the Court found that United Furniture Industries could not rely on any of the statutory exceptions to avoid liability.
Consequences of the Insufficient Notice
The Court ruled that failure to include a qualifying brief statement precluded the company from asserting defenses such as the faltering company or unforeseen business circumstances exceptions. This outcome underscores the importance of compliance with all notice components under the WARN Act.
Legal Support for WARN Act Compliance
When issuing layoff notices or plant closure notifications, employers must follow the full set of requirements under the WARN Act. Our attorneys at Whitcomb, Selinsky, PC assist clients in preparing compliant notices and addressing WARN Act disputes involving notice content and statutory obligations.
Joe Whitcomb
