Labor & Employment – WARN Act liability doesn’t extend to non-employer

Where employees constructing a nuclear station alleged the owner violated the Worker Adjustment and Retraining Notification, or WARN, Act when it halted construction at the facility, the owner wasn’t liable because it wasn’t the plaintiffs’ employer.

Background

In 2017, SCANA, an electric and natural gas public utility, halted construction at a nuclear station in South Carolina. As a result, Westinghouse Electric Company, or WEC, a contractor with SCANA, laid off its employees working at the project, as did Fluor, a subcontractor hired by WEC.

Employees of both WEC and Fluor then sued SCANA and Fluor, alleging that the companies had failed to give notice of the plant closure and layoffs as required under the WARN Act. The district court granted summary judgment to both defendants, holding that SCANA was not required to give notice to the employees of contractors working on-site and that Fluor had complied with the WARN Act.

SCANA

The basic premise of the WARN Act is that firms must provide their own employees with notice before closing a plant. The plaintiffs nevertheless contend that SCANA functioned as their “employer” for WARN Act purposes, even though they were employed by contracting firms entirely unaffiliated with SCANA. They contend that, by shutting down the plant without giving notice to WEC or Fluor, SCANA compelled the contractors to lay off employees without the required 60 days of notice. As a result, they suggest, SCANA should be held responsible as the “employer” of these laid-off workers.

The Department of Labor has provided a framework for determining whether independent contractors should be considered part of the contracting company for WARN Act purposes, “depending upon the degree of their independence” from the contracting company. Here, the district court carefully applied these criteria to the facts of SCANA’s relationship with WEC and Fluor and concluded that all five either favored the defendants or at least did not favor the plaintiffs. This court agrees with that analysis.

The plaintiffs rest their appeal almost exclusively on the de facto exercise of control factor. But even assuming, for the sake of argument, that this factor could somehow be dispositive on its own, the record makes clear that it is not satisfied here. SCANA was neither parent nor lender to WEC or Fluor. All three businesses were unaffiliated, contracting with each other at arm’s length. It is not unusual for one company to make a business decision that causes unaffiliated companies to modify their own operations. Indeed, the WARN Act regulations explicitly contemplate such a scenario.

In short, the five Department of Labor factors make clear that this case does not meet the standard for single-employer liability. Any different result would need to await the action of Congress. The district court’s grant of summary judgment to SCANA is affirmed.

Fluor

Unlike SCANA, Fluor plainly employed some of the plaintiffs here. But the district court concluded that Fluor was relieved of any obligation to provide 60 days of notice by the unforeseeable business circumstances exception. That statutory provision applies where “the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”

The plaintiffs do not contest the application of this provision on appeal, nor could they: it is undisputed that Fluor was taken unawares by SCANA’s sudden decision to close the plant. Instead, the plaintiffs contend that Fluor failed to provide “as much notice as is practicable,” as is required for employers who rely on the unforeseeable business circumstances exception. The plaintiffs suggest that Fluor violated this provision by giving notice belatedly and improperly.

The court is not persuaded. The record makes clear that Fluor took pains to provide the required information to its employees, even amid the unsettling circumstances of the sudden shutdown.

Affirmed.

Pennington v. Fluor Corporation (Lawyers Weekly No. 001-199-21, 20 pp.) (J. Harvie Wilkinson III, J.) Case Nos. 21-1141 and 21-1143. Nov. 30, 2021. From D.S.C. at Rock Hill (J. Michelle Childs, J.) Jack A. Raisner and Charles Anthony Ercole for Appellants. Charles Theodore Speth II for SCANA Appellees. John Hagood Tighe for Fluor Appellees.