With the drop oil prices several years ago, many energy companies conducted reductions in force. Some of those headcount reductions triggered litigation under the Worker Adjustment and Retraining Notification Act (WARN). WARN requires employers with 100 or more full time employees conducting plant closings and mass layoffs to provide at least 60 days advance notice of the employment actions. A plant closing occurs when an employer permanently or temporarily closes “a single site of employment, or one or more facilities or operating units within a single site of employment,” resulting in an employment loss for at least fifty employees over a thirty-day period. A mass layoff occurs when an employer cuts its work force at a “single site of employment” during a thirty-day period by at least fifty employees, an amount which must also constitute at least thirty-three percent of its workforce at that single site of employment. If two or more groups of employees (each less than fifty employees) at a single site of employment experience employment loss aggregating to fifty or more employees within any ninety-day period, then, subject to limited exception, a plant closing or mass layoff has occurred. Litigation under WARN resulting from those reductions in force is now reaching the court of appeals. The Fifth Circuit recently addressed whether a drilling operator’s layoffs of employees on its multiple drilling rigs could be aggregated for purposes of triggering WARN’s notification obligations.
In Meadows v. Latshaw Drilling Co., a former employee brought a putative class action against his employer following a sizeable layoff of employees. Latshaw Drilling Co. provides crews for drilling companies drilling oil and gas wells. Latshaw employees were typically assigned to a specific drilling rig. Each drilling rig had 22 to 28 employees assigned to it. Employees on the rig worked 12 hours shifts for 14 days followed by 14 days off. Each shift consisted of a driller, derrick hand, motor hand and two floor hands. At its peak, Latshaw operated 39 drilling rigs in project locations in Texas, New Mexico, Oklahoma, Arkansas and Kansas. When oil prices dropped, Latshaw saw a dramatic decrease in the need for its services and stacked (removed from service) 29 of its 39 drilling rigs and laid off 398 employees over a six month period.
Following his layoff, Johnny Meadows brought a putative class action alleging that he and other workers were laid off in violation of WARN without being provided sixty days’ written notice. The determinative issue in this case focused on whether the drilling rigs were collectively a single site of employment or whether each specific rig was a single site of employment. If each rig were a single site of employment, the layoffs were insufficient to trigger WARN’s advance notice requirements. The company moved for summary judgment arguing that each drilling rig, yard and the corporate office were separate sites of employment and could not be treated collectively as a single site of employment under WARN. Because no individual rig, yard or the corporate office had more than 50 employees, a plant closing or mass layoff could not have occurred as a matter of law. The trial court agreed and granted the motion for summary judgment.
The Fifth Circuit affirmed the trial court summary judgment holding that the operator’s separate drilling rigs each constituted a separate site of employment for WARN purposes. The Court noted that a general rule exists under WARN that “separate facilities are separate sites”. The Court further explained that a narrow exception exists for “geographically separate sites” with “an inextricable operational connection’”—that is, separate sites that “are used for the same purpose and share the same staff and equipment”—can constitute a single site of employment.” Relying a prior precedent, the Court explained that “two plants across town will rarely be considered a single site.” Because the Court concluded that the summary judgment record lacked evidence of the geographic proximity of the various wells or the extent to which drilling rigs shared employees, the Court affirmed the trial court’s judgment that each drilling rig constitute a separate site of employment and that WARN’s notice requirements were not satisfied.
A copy of Meadows v. Latshaw Drilling Co. is here.