A lawsuit filed by former employees of First Guaranty Mortgage Corp. was granted class action status by a federal bankruptcy judge. The suit contends that the lender failed to comply with Worker Adjustment and Retraining Notification (WARN) Act requirements when it laid off 471 employees “without cause” or notice in June 2022.
The WARN Act requires businesses that employ at least 50 people to provide 60 days’ notice in writing of a mass layoff or plant closing if the total number of employees laid off represents at least one-third of the total workforce. Failure to comply typically requires payment to affected employees. The more than 400 employees potentially in the class for this suit make up approximately 80 percent of First Guaranty’s workforce on the date of the layoff.
The lawsuit was originally filed in U.S. District Court for the Eastern District of Texas but was refiled in the U.S. Bankruptcy Court for the District of Delaware following First Guaranty’s chapter 11 bankruptcy filing less than one week after the layoffs were announced.
The court order certified the class action, appointing the five plaintiffs as class representatives, and included a list of 425 former employees who are part of the class. The order does not indicate why 46 employees who were laid off at the same time were not included in the list of class members.
The order required First Guaranty to provide “an electronic spreadsheet containing the names and last known addresses, as noted in First Guaranty’s records of the former employees” included in the provided list within 10 business days of the order being issued. It also ordered that attorneys for the class must mail a notice to each member of the class at their last known address within 15 days of receiving that list.
The lawsuit seeks to require First Guaranty to pay each member of the class “unpaid wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions” and other benefits for the “60 days that would have been covered and paid under the then-applicable employee benefit plans had that coverage continued for that period” as required by the WARN Act.