In December 2006, 247 union workers went on strike at the Kohler manufacturing plant in Searcy, Arkansas. Three months later, Kohler hired 123 replacement workers.
Kohler and the Union settled their dispute in March 2008. As part of the settlement, Kohler agreed to reinstate the striking strikers. Kohler then fired the replacement workers and returned 103 of the original 247 striking workers to their former positions. 111 of the replacement workers then filed suit under the Worker Adjustment and Retraining Notification Act (“WARN”) alleging that they should have been given at least 60-days notice before being laid off.
Did Kohler violate WARN? Find out after the jump…
WARN does not apply to a “mass layoff” of workers who are replaced.
The WARN Act provides that covered employers must give at least 60-days notice of a “plant closing” or a “mass layoff”. A “mass layoff” is defined as a “reduction in force…which results in an employment loss…of at least 50 employees in a single site of employment.” Drawing from a decision from the Sixth Circuit, the Kohler Court reasoned that only workers who are fired and not replaced, i.e. those whose positions are eliminated, count against the 50-employee threshold. By this logic, Kohler had a net loss of 20 workers (123 replacement workers gone; 103 union workers return) and did not have to abide by the WARN Act’s mandate.
The case is Sanders v. Kohler Co.
That’s not how we roll in the Third Circuit.
The Third Circuit has said that if an employee is given no notice of termination, fired without cause, not transferred, and is not expected to be rehired for at least six months, the employee has suffered an “employment loss.” Applying the facts of Kohler to the law in the Third Circuit, it appears the WARN Act was triggered. That is, the replacement workers were not transferred and received no notice of separation. Further, none were transferred or promised the possibility of being re-hired at a later date. Thus, there is an “employment loss” and Kohler would have had to give notice under WARN.
Dafney Dubuisson, a summer associate at Dilworth Paxson LLP, contributed to this post.