Employment Law Daily Oil drilling locations can’t be aggregated into ‘single site of employment’ for WARN purposes
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Friday, June 3, 2016

Oil drilling locations can’t be aggregated into ‘single site of employment’ for WARN purposes

By Ronald Miller, J.D. A reasonable jury could not find that an employer ordered a mass layoff or plant closing as defined by the WARN Act, a federal district court in Texas concluded, granting summary judgment in favor of an oil drilling company against claims it failed to give the required 60-day notice. First, the employee failed to raise a genuine fact issue on whether the employer’s layoff “result[ed] in an employment loss at the single site of employment” for at least 50 employees. Further, the employer’s job sites could not be aggregated into a “single site of employment” because they were spread across hundreds of miles (Meadows v. Latshaw Drilling Co., LLC, May 31, 2016, Fitzwater, S.). A former employee of a drilling contractor alleged that it failed to give a 60-day written notice before a mass layoff or plant closing, as required by the WARN Act. The contractor provided drilling services to third-party oil and gas companies on a project-by-project basis. It had four fixed locations, including its corporate headquarters and three storage yards where it stored drilling rigs. “Stacked” drilling rigs. During the relevant time period, the employer had 39 drilling rigs capable of operation spread across three states. Approximately 22 to 24 employees worked on each rig at any given time. When oil prices began to drop in late 2014, oil companies stopped drilling wells and contracting for the employer’s services. As a result, between January 2015 and April 2015, the employer “stacked” 29 of its 39 drilling rigs and laid off many of its employees who were working on those rigs. In total, the employer laid off more than 500 employees. The employee filed a class action alleging the employer failed to give him and other former employees on his rig and at other rigs the required WARN Act notice before ordering a mass layoff. The employer moved for summary judgment, contending that it was not required to give WARN Act notice because no mass layoff or plant closing had occurred. Plant closing. The parties disputed whether a “plant closing” or “mass layoff” occurred. A “plant closing” is defined as “the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees[.]” A “mass layoff” is “a reduction in force” that “results in an employment loss at the single site of employment during any 30-day period for—at least 33 percent of the employees . . . and at least 50 employees[.]” Single site. In this instance, the dispute specifically focused on whether the employer’s shutdown or reduction in force resulted in an employment loss at a single site of employment for 50 or more employees. The employee alleged that the employer’s rigs were collectively a single site of employment, as defined by 20 C.F.R. Sec. 639.3(i)(3) and/or (8). Alternatively, he asserted that the employer’s corporate office constituted a single site of employment, as defined by Sec. 639.3(i)(1), (3), (6), and/or (8); that the employees worked at a single site or sites of employment in connection with a truly unusual organizational situation, as defined by Sec. 639.3(i)(8); or that each rig operating at the relevant single site of employment for the employees constituted an operational unit within such single site of employment, as defined by Sec. 639.3(j). The court examined whether the employer’s motion for summary judgment addressed all of the employee’s theories of liability under the WARN Act. Under either basis for liability, the employee was required to show that 50 or more employees were affected at a “single site of employment.” Accordingly, the court concluded that the motion addressed all of the employee’s theories of liability. Affected employees. Assuming arguendo that each of the employer’s job sites constituted a separate, single site of employment, the court considered whether a reasonable jury could find there were a sufficient number of affected employees at any one site to trigger WARN’s notice requirement. The employer contended that because fewer than 50 persons were employed at each single site, neither a plant closing nor a mass layoff within the scope of the WARN Act could have occurred. It also asserted that the employee was unable to show that the employer’s rigs, yards, or corporate office should be treated collectively as a single site. The court agreed that the employee had not raised a genuine issue of material fact as to whether a sufficient number of employees experienced an employment loss at any one job site to trigger a notice requirement, and so granted the employer’s motion for summary judgment in that respect. Aggregate of job sites. The employee had asserted that the employer’s rigs should be combined into three single sites of employment corresponding to its geographic divisions. However, the rigs were not in “reasonable geographic proximity” of one another because they were spread across hundreds of miles. Nothing in the WARN Act, its regulations, or any reported decision suggests that a single site of employment is to be analyzed according to broad geographical divisions utilized within, or defined by, companies or industries, the court noted. Thus, a reasonable jury could not find that any of the employer’s job sites could be treated collectively as a single site of employment.

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