Loophole in the WARN Act? Remote workers laid off without notice
"Defendant Regent made the calculated decision, in consultation with its lawyers, that it could save money because of an alleged loophole in the WARN Act; namely, that it supposedly did not apply to fully or partially remote workers. However, that is not correct," the suit claims.
E-commerce retailer Zulily and its parent company, Regent, are facing a class suit over allegations that they failed to give notice under the WARN Act to remote workers during large-scale layoffs.
When Regent, a private equity firm, decided in December 2023 to liquidate Zulily and lay off all its employees, it provided notices under the federal Worker Adjustment and Retraining Notification Act of 1988 (the WARN Act) only to those employees working in-person, the suit claims.
But Regent’s management allegedly told some employees that the company’s lawyers found a “loophole” in the WARN Act, saying the measure does not cover remote workers impacted by a plant closing or mass layoff under the statute.
But the complaint, filed Monday in federal court in Seattle, disputes this point.
“Defendant Regent made the calculated decision, in consultation with its lawyers, that it could save money because of an alleged loophole in the WARN Act; namely, that it supposedly did not apply to fully or partially remote workers. However, that is not correct. The WARN Act does, in fact, apply to both fully and partially remote workers,” according to the suit.
Zulily had more than 1,000 employees at its peak, but after it went public in 2013, it was sold to a succession of new owners who struggled to keep it profitable, the suit claims. It was sold in 2023 to Regent, a private equity company, which decided to liquidate it. As part of the liquidation, Regent ordered layoffs of the last 839 employees—292 working at or reporting to company headquarters in Seattle, 273 working at a fulfillment center in McCarran, Nevada, and another 274 at a fulfillment center in Lockbourne, Ohio, the suit said.
Regent and Zulily gave WARN notices to employees who worked in person only. The suit filed this week was brought on behalf of former Zulily workers in Washington and Nevada who were wrongfully denied their rights under WARN and related state law. A separate suit, Douglas v. Zulily, is pending in the Southern District of Ohio.
The Seattle suit is filed by HKM Employment Attorneys of Seattle. That firm’s Jason Rittereiser did not return a call about the case. Willis Spangler Starling of Hilliard, Ohio, and Law Offices of John C. Camillus filed the Ohio suit and are co-counsel in the Seattle suit.
Defense counsel has not entered an appearance in the Seattle case. Regent did not respond to a reporter’s inquiry about the suit. A company now operating the e-commerce website Zulily.com, when contacted about the suit, said it was “new Zulily,” which acquired only the intellectual property of the prior operator. The suit pertains to “old Zulily,” said a company representative who gave his name only as Raphael M.
Related: PwC to lay off 2.4% of their workforce in October
Littler Mendelson represents Zulily and Regent in the Ohio case. That firm filed a motion to dismiss for failure to state a claim. The motion says the two named plaintiffs cannot claim they were entitled individually to WARN Act notice and because WARN Act back pay damages are not “wages” owed to employees for work performed.
The suit brings claims under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101, et seq. for failure to provide advance notice of a plant closing or mass layoff. Defendants violated 29 U.S.C. § 2102 when they failed to provide plaintiffs and all others similarly situated 60 days’ advance notice of the “plant closing” or “mass layoff” that resulted in plaintiffs and all others similarly situated suffering an employment loss. As a proximate result of defendants’ actions, plaintiffs and all others similarly situated have been and continue to be damaged in an amount to be determined at trial, and plaintiffs and all others similarly situated are entitled to their costs and reasonable attorney fees incurred, the suit claims.
This action was surfaced by Law.com Radar, which delivers artificial intelligence-enhanced case summaries and daily case reports from more than 2,200 state and federal courts. Click here to get started and be among the first to act on opportunities in your region, practice area or client sector.