Closing up shop and winding down a business can have significant legal ramifications for employers if not handled appropriately.  The WARN Act was designed to prevent surprise upon unsuspecting groups of employees, but the law is relatively straightforward as to which employers must comply with these rules and under what circumstances.

In this instance, however, the courts were presented with a unique inquiry: whether the WARN Act is applicable in a joint employer situation where the terminating employer, on its own, would not ordinarily be required to comply with the WARN Act?

Until 2009, DHL maintained a network of independent contractors who, in turn, employed delivery drivers in the United States for the purpose of delivering DHL packages.  Darriest Likes worked as a driver for one of these contractors, Wood Airfreight, Inc. in Birmingham, Alabama. 

Likes was laid off in late 2008, and later filed suit against DHL on the grounds that it failed to comply with the WARN Act by giving him sufficient notice of layoff.  Under the WARN Act, any employer with 100 or more employees is required to give 60 days’ notice before a mass layoff of 50 or more employees from a single site. Likes worked for Wood Airfreight, which had less than 100 employees, however Likes argued that DHL had more than 100 employees and was the joint employer of all of the delivery drivers at the Birmingham facility and therefore he and others were entitled to notice before they were laid off. 

The trial court granted summary judgment in favor of DHL, and the U.S Court of Appeals for the Eleventh Circuit affirmed.  The court first looked to the regulations, and noted that under 29 C.F.R. § 693.(i)(1)-(2), “a single site of employment can refer to either a single location or group of continuous locations” but that there can be several single sites of employment within a single building if separate employers conduct activities within that building.  The court also related that even contiguous buildings owned by the same employer which have separate management and workforces are each considered separate single sites. 

With these principles in mind, the court, assuming but not deciding that DHL was a joint employer, found that each contractor constituted a single site because each had distinct management and employee structures.  For example, each contractor hired and fired their own employees and maintained their own personnel policies.  The court likened the arrangement to contiguous buildings owned by the same employer with different management in each building.  Thus, DHL was not responsible for providing WARN Act notice to the employees of Wood Airfreight who were laid off.

This decision clarifies that in Florida, Georgia, and Alabama, large companies can structure their operations so as to utilize multiple smaller contractors in the same location without incurring an obligation to provide WARN Act notice each time one of these contractors engages in substantial layoffs. Understanding your obligations as an employer under the WARN Act and corresponding state provisions is critical.  Consult with counsel before planning any mass layoffs to ensure compliance with the law.