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WARN Act: Elon Musk’s Twitter Faces Lawsuit for Mass Layoffs

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Here’s All You Need to Know About WARN Act

Twitter is already facing a proposed class action for its decision to retrench over 50% of its workforce. The Lawsuit claims the layoffs violate US and California laws if employees are not given advance notice or severance pay.

On Friday, Twitter sent a mail to its employee informing them of the board’s decision to cut the size of the workforce, barely a week under its new owner, Elon Musk. The social media giant is expected to terminate up to 3,700 people — up to 50% of its workforce.

What does US law require?

The federal Worker Adjustment and Retraining Notification (WARN) Act requires businesses with 100 or more employees to provide 60 days’ notice before engaging in mass layoffs. The law defines mass layoffs as those affecting at least 500 employees during a 30-day period, or at least 50 employees if layoffs impact at least one-third of a company’s workforce. Employers can provide workers with 60 days of severance pay in lieu of giving notice.

What are the penalties for violating the WARN Act?

An employer found to have violated the WARN Act can be ordered to give laid-off workers 60 days of back pay. The law also imposes penalties of $500 (nearly #220,000) per violation per day. Comparable laws in California and other states impose similar penalties.

What has Twitter been accused of?

The lawsuit filed in San Francisco federal court late on Thursday claims Twitter locked employees out of their accounts on Thursday, signaling that they will soon lose their jobs. One of the five named plaintiffs, who is based in California, says he was terminated on November 1 without notice or severance pay.

The lawsuit claims the layoffs violate the WARN Act and a similar California law. The plaintiffs say they are concerned that Twitter will ask workers targeted for layoffs to sign releases waiving their ability to sue in exchange for modest severance pay.

Have other Elon Musk-run companies been sued under the WARN Act?

Tesla’s recent layoffs have brought attention to the dangers of private arbitration, which forces workers to resolve their claims behind closed doors, often without a lawyer.

In Texas, Tesla was sued in June for allegedly violating the WARN Act through an abrupt nationwide purge of its workforce, including 500 layoffs at a factory in Sparks, Nevada. The law firm behind that case, Boston-based Lichten & Liss-Riordan, also represents the Twitter workers who sued on Thursday. The firm did not immediately respond to a request for comment.

Tesla has said it was merely “right-sizing” by firing poorly performing workers and not engaging in layoffs that required advance notice. Last month, a federal judge said Tesla workers must pursue their claims in private arbitration rather than court. The same issue could arise in the lawsuit against Twitter, as more than half of US private-sector workers have signed agreements to arbitrate employment-related legal disputes.

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