The price of oil has dropped significantly from its 2014 highs and the effect of this drop is trickling down to the oil field service providers. Energy exploration and production companies are drastically cutting their capital expenditure budgets for the coming fiscal year. Today, Schlumberger announced that it was laying off 11,000 employees in addition to the 9,000 previously announced. Noble Energy announced a 10 percent reduction in force earlier this week.
In the list of newly filed cases I receive, I noticed a new case filed against an oilfield service provider for alleged violations of the federal Worker Adjustment and Retraining Notification Act. WARN is the federal law that requires certain employers to provide up to 60 days of advance notice. Many service providers are mid-sized companies where WARN may not apply. However, prior to making any layoff decisions, the company should consider whether the 60 advance notice requirements of federal law are required.
WARN requires an employer to provide at least 60-day advance notice to employees and governmental officers of a plant closing or mass layoff. A plant closing is a shutdown of an employment site (or one or more facilities or operating units within an employment site) that will result in an employment loss for 50 or more employees during any 30-day period. This does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer although these employees are entitled to notice. A mass layoff is a layoff not resulting from a plant closing but which will result in an employment loss at the employment site during any 30-day period for: a) 500 or more employees; or b) for 50-499 employees if they make up at least 33% of the employer’s active workforce. Again, this does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer.
One exception to WARN’s advance notice requirement exists when the employer orders a mass layoff or plant closing before the conclusion of the 60-day period when the closing is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.
Employers that fail to provide the 60-day advance notice can be required to pay employees back pay to each of the employees that should have received notice but did not (up to 60 days); benefits during the required notice period; civil penalties, court costs, and attorney’s fees.
Texas does not have a state law equivalent to the WARN Act, but service providers operating in other states should also determine whether those states may impose additional notice obligations in addition to the WARN Act. Any employer considering a reduction in force or mass layoff should consider partnering with its labor and employment counsel at the early stages of planning to reduce the likelihood of missteps in the planning and implementation process.
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