When Elon Musk bought the social media website Twitter last week, he pledged to make it profitable. In an attempt to do so, he has announced widespread layoffs of Twitter employees.
However, a federal law, the Worker Adjustment and Retraining Notification (WARN) Act, regulates the process for implementing mass layoffs at large corporations.
There are serious doubts that Mr. Musk is complying with it.
Twitter Announces Mass Layoffs Soon After Musk's Purchase
After purchasing Twitter on October 27, Mr. Musk fired numerous top level executives at the social media company. On November 3, a week after he bought the company, Twitter informed employees that a round of layoffs was to begin. Workers were told that they would be informed of their future at Twitter the following morning and were told not to come in to work.
While it is unclear how many workers would be affected, estimates and rumors suggest that half of Twitter's 7,500 employees around the world could be let go.
The Federal WARN Act Requires Advance Notice of Mass Layoffs
The WARN Act (29 U.S.C. §§ 2101 – 2109) is a federal law that requires large employers – those that have 100 or more full-time employees – to provide at least a 60-day advance notice before a mass layoff. A “mass layoff” is a reduction in workforce of at least:
- 500 full-time employees, or
- 33 percent of the workforce, with a minimum of 50 employees affected.
The notice has to go to a union representative, if there is one, or to each affected employee. It also has to be sent to state and local government officials.
The goal is to minimize the fallout from the layoffs and give workers and their families the time they need to find new jobs or to get retrained for a new career.
The only three exceptions to this 60-day notification requirement are if the mass layoff was caused by:
- A natural disaster
- Business circumstances that were not reasonably foreseeable when the notice should have been issued
- A failure to obtain capital or business that, had it been obtained, would have kept the company open for longer and the employer had a good faith belief that providing the notice would have prevented it from securing the capital or business
None of these exceptions appear to be in play with regards to the Twitter layoffs. Even if one was, though, the WARN Act still requires that the employer provide as much warning as possible to affected workers, and state why the employer was unable to provide the full 60 days.
Failing to provide a required WARN Act notice comes with penalties. The employer has to provide back pay, with benefits, for every day that the notice was required but not given. These penalties are sometimes referred to as “pay in lieu of notice.”
Already, a class action lawsuit has been filed against Twitter for not satisfying its WARN Act obligations.
It is not the first time that Elon Musk has been accused of violating the WARN Act. Barely six months ago he was accused of violating the same law when he conducted mass layoffs at his other company, Tesla. He dismissed that lawsuit as “trivial,” though it was unclear whether he was referring to the potential settlement or to his unlawful behavior.
The Katz Law Group Helps Employers in Massachusetts Comply With the Law
The employment lawyers at the Katz Law Group help businesses resolve employment contract disputes, including severance and separation issues, throughout Massachusetts. Contact them online or call them at (508) 480-8202 for legal advice in Marlborough, Worcester, Framingham, or in Middlesex or Norfolk County.
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