A class-action suit filed Tuesday against Yellow Corp. said the company failed to provide a required 60 days’ layoff notice to its 30,000 employees.
The complaint was filed on behalf of California dockworker and union steward Armando Rivera and other “similarly situated former employees” in the U.S. District Court for the District of Delaware. Approximately 600 employees at a terminal in Bloomington, California, were terminated on or around Friday without advance notice, according to the lawsuit.
The class action includes all affected employees at Yellow and its four operating companies — YRC Freight, Holland, New Penn and Reddaway — not provided Worker Adjustment and Retraining Notification (WARN) Act notices.
The suit seeks wages and benefits for the required notification periods (90 days in New Jersey compared with 60 days in other states). It also seeks severance pay of one week for each full year worked for employees in New Jersey. In addition, the state has a statute entitling employees to “an additional four weeks of severance pay” when companies fail to provide advance notice.
Yellow notified most of its 8,000 nonunion employees on Friday that they were being terminated. It posted signs at its terminals on Sunday saying the company had ceased all operations.
The company filed WARN Act notices in a couple of states, including filings on Monday and Tuesday, but none were filed 60 days in advance.
The Teamsters union said late Sunday night it was notified that the company was filing for bankruptcy.
Failure to reach an agreement with the Teamsters union over a change of operations likely accelerated the company’s demise.
When negotiating with the union, Yellow made it known that it would be out of cash as soon as last month. Its customers began diverting freight to other providers in efforts to avoid having shipments stuck in Yellow’s network should it shut down abruptly. The pace of those diversions surged when it didn’t make benefits payments, which triggered a threat of a work stoppage.
Plaintiffs will have to navigate the WARN Act notice exception for abrupt shutdowns of failing companies. However, California and New Jersey have more labor-friendly interpretations of the law.
A separation agreement issued to employees at Yellow also referenced its WARN Act obligations, or lack thereof.
“The Company was not able to provide earlier notice of the Shut Down as it qualifies under the ‘unforeseeable business circumstances,’ ‘faltering company,’ and ‘liquidating fiduciary’ exceptions set forth in the WARN Acts,” the agreement read.
Also, Yellow will likely argue that it was in the process of obtaining financing and that the issuance of WARN Act notices would have deterred potential investors.
The separation agreement also provisioned for two weeks of severance for employees with the company nine years or less, and 0.25 weeks for each year of service for employees with the company 10 years or more. The document showed employees would also be paid for earned wages and accrued paid time off.
On Tuesday, employees at Yellow Logistics said they were terminated abruptly after assurances the company had funds to keep the independent subsidiary afloat while its parent searched for a buyer.
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Jack hoff
And once again the Union’s crash a major company.. unions suck..
Mark
Joey, there’s a difference the US treasury owns 30% of Yellow.
Hardworking Yellow fellow
There’s plenty of blame to go around in this mess. Part of it is some of the workers who didn’t pull their weight. Part of it is the local management who didn’t hold those workers’ “feet to the fire”.
Part of it rests on the International Brotherhood of Teamsters. It is not OK to stonewall a signatory employer who wants to re-open a contract for reasonable cause. But Sean O’Brien did just that.
However, the vast majority of the fault lies right with Yellow’s corporate executives who made incredibly poor strategic and operational decisions for a very long time. Paying far too much with borrowed money for companies that remain competitors is just plain foolhardy. But that’s exactly what they did. Changing the names of two iconic truck lines to a single new name with virtually no marketing support is simply dumb. They probably should have named it YellowRoadway, not YRC.
Taking fat bonuses while your rank-and-file employees are getting “hosed” has only one effect on morale, and it’s not a good effect. But that’s exactly what they did.
Selling off real estate that was NOT surplus for “fire sale” prices, then leasing those properties back is absolutely foolish. But that’s exactly what they did.
Defaulting on your employees’ health insurance premiums when that is the only part of their compensation package that is still intact after 14 years of concessions is really dumb. But that’s exactly what they did.
Sending thousands of trailers to scrap, a significant percentage of them in roadworthy condition, while keeping a significant number that SHOULD have gone to scrap; and then disciplining your shop managers who tried to intervene is absolutely dumb! But that’s exactly what they did.
It goes on and on…
JF
Anyone who worked for or around Yellow knew this was coming for months. This wasn’t a layoff, it was a bankruptcy and cease of operations. I guess it is California though.
Daniel Dillard
Teamsters won the battle, lost the war (their jobs)….
Lesson in there somewhere…
luther
why sue, when the company has nothing to give, and you have nothing to gain
Joey
Question: What part of they are broke and have no ability to keep operating do the plaintiffs not understand. If they can’t continue to operate and pay labor, fuel, and debt then how can they give notice of shutting down? How will there be any money to pay a class action judgement?
This seems pretty stupid to me and just a way for lawyers to try to get a claim on a dead horse. They gave notice when they were going to shut down operations. I have seen companies shut down and leave drivers stranded on the road far from home with no way to get home. Does anyone remember Arrow?
GuateMom
I want a story on “where in the world is Darren Hawkins.” Living high on the hog in his Nashville mansion. All other senior management has shown their faces in Overland Park but not Darren.