Could WARN Act exemptions work in United’s favor?

UNC labor and employment law expert discusses how some employers can legally avoid giving employees 60-day notice of a facility closure

HIGH POINT — Questions involving United Furniture Industries’ alleged violations of the WARN Act relating to its sudden layoff of some 2,700 employees just before Thanksgiving likely will have to be resolved in court.

At present, there have been four lawsuits filed on behalf of these workers that seek 60 days of back pay the suits say workers are entitled to by federal and state laws. The suits also seek other benefits they believe they are entitled to such as unused vacation time.

At a glance, the employees appear to have a pretty good shot at claiming their pay as the WARN Act is a clear-cut federal law that requires companies to give advance notice not just to the workers but also government entities in places where the plants are located. There could be additional daily penalties for failing to give notice to those entities as well, observers note.

Yet there are some exemptions that could work in the favor of United and its current ownership.

To get a better understanding of the WARN Act and its provisions, Home News Now spoke with Jeffrey M. Hirsch, a professor specializing in labor and employment law in the School of Law at the University of North Carolina at Chapel Hill.

He told us that while he hasn’t seen any facts that would suggest they would be applicable in United’s case, there are a few exemptions an employer could use in defense of it not providing the typically required 60-day notice.

One, which clearly wouldn’t apply here, would be a natural disaster affecting the business.

A second would be an exemption for a “faltering company” that is trying to get an infusion of capital to support the business. Providing a WARN Act notice would effectively squash that type of cash infusion because it lets the lender know the company plans on shutting down anyway.

The thinking is “‘We’ve got a shot here and if we give a WARN notice now, we are going to lose it — there is no chance,'” Hirsch said.  “‘So we are going to reasonably in good faith make an effort and we have got to hold back on the WARN Act notice as a result.’ That is a possibility.”

A third WARN Act exemption would be an unforeseen business circumstance such as a major contract falling through, or a major supplier falling by the wayside in a way that disrupts the business overnight.

At this stage, company executives including owner David Belford have not responded to Home News Now’s request for comment. Thus, it was unclear what if any extenuating circumstances may have occurred to avoid giving the advance notice of a companywide shutdown.

It’s also likely that the facts won’t emerge until the employee class action lawsuits continue their way through the court system.

“They might settle it, but if it doesn’t get settled, it will go to court,” Hirsch said, adding, “Unless they have an argument for an exemption, it is pretty straightforward. … They are going to owe money.”

Thomas Russell

Home News Now Editor-in-Chief Thomas Russell has covered the furniture industry for 25 years at various daily and weekly consumer and trade publications. He can be reached at and at 336-508-4616.

View all posts by Thomas Russell →

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our Newsletter for breaking news, special features and early access to all the industry stories that matter!

Sponsored By: