Courts Ruling on WARN Act Could Benefit Employers

In a decision that could be beneficial to employers, the 7th U.S. Circuit Court of Appeals in Chicago has ruled that DHL Express (USA) Inc. and its German parent company did not violate the federal Worker Adjustment and Retraining Notification Act when it reached severance agreements with hundreds of unionized drivers.

After a period of layoffs at its Chicago-area plants in December 2008, DHL, a subsidiary of Deutsche Post, offered severance packages to several hundred workers as well as to numerous already laid-off employees. Those accepting the severance were required to sign a waiver releasing the company from liability under any federal, state or local employment law.

Because the workers and former employees were given just a few days to either accept or reject the severance offers, two of the laid-off workers filed a lawsuit in U.S. District Court in Chicago alleging that DHL should have provided at least 60 days’ notice prior to the execution of those agreements, as is required under the WARN Act. The WARN Act requires employers with 100 or more employees to provide at least 60 days’ notice to workers of plant closings or mass layoffs.

Although the district court acknowledged that the DHL workers “had to make a tough choice in the face of daunting economic circumstances,” it concluded that “there was no evidence that they signed the severance agreements involuntarily” or in violation of the WARN Act. In granting summary judgment in favor of DHL, the court also granted summary judgment in favor of Deutsche Post and terminated the case.

Having lost the first round at the district court level, the workers appealed to the 7th U.S. Circuit Court of Appeals, which affirmed the lower court’s decision.

“While we recognize the unenviable positions in which DHL’s Chicagoland workers found themselves, we are unpersuaded by these arguments and cannot conclude on the evidence before us that the workers who accepted the union-negotiated severance packages did so involuntarily,” wrote Judge John Daniel Tinder on behalf of the three-judge panel of the 7th Circuit that reviewed the decision. “The severance agreements … were both negotiated by Local 705 with the workers’ interests in mind, and were written unambiguously in plain English.”

The decision should be helpful to employers in the 7th Circuit, which encompasses Illinois, Indiana and Wisconsin, because it is the first time that an appellate court has ruled on a WARN Act claim, according to Joshua Ditelberg, a partner at Seyfarth Shaw in Chicago, who represented the employer. “This is the first 7th Circuit case that confirmed that employers can waive WARN Act claims,” he said.

The lawyer representing the employees, Lee Winston, an employment attorney at Winston Cooks in Birmingham, Alabama, did not return phone calls seeking comment.  

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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