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Resignation In Light Of Plant Closing Not “Voluntary” Under WARN

Just today, the Ninth Circuit Court of Appeals ruled that, if an employee leaves a job because the business is closing, that employee has not “voluntarily departed” within the meaning of the WARN Act.  Rather, that employee has suffered an “employment loss.”

In Collins v. Gee West Seattle (9th Cir., January 21, 2011), a company called Gee West Seattle (“GWS”) decided it would be shutting down its operations, effective October 7, 2007.  The company provided its employees with notice of the closure on September 26, 2007, just 11 days before the anticipated closure date.  Prior to September 26, 2007, GWS employed approximately 150 employees.  Following the announcement on September 26, 2007, however, many employees resigned and/or just stopped reporting to work.  By October 5, 2007, only 30 employees were showing up for work at GWS.

Under the WARN Act, employers must provide their employees with 60 days notice of a closure, if the closure will result in an “employment loss” for 50 or more employees.  In this case, GWS argued it was not required to provide 60 days notice under WARN, because it had only 30 employees at the time it closed its doors.

The Ninth Circuit ruled that GWS was required to provide the WARN notice at least 60 days prior to the closing in this case.  In reaching its decision, the court noted that the starting point for determining whether there is an actual or reasonably expected employment loss is to determine how many positions will be eliminated by the closing.

The court then ruled that an employee who resigns from a job because the business is closing is not “voluntarily” departing from his job.  Rather, that employee is resigning because his employer will be ceasing operations.  Therefore, the 120 employees who resigned from GWS after September 26, 2007 all suffered an “employment loss,” and GWS was required to provide the proper WARN notices to all the employees.

A copy of the court’s decision can be read here.