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Employees of contractors not owed notice of layoffs - 4th Circ.

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REUTERS/Mike Segar

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  • Federal WARN Act doesn't require notice for contractors' employees, court says
  • 4,000 workers lost jobs after nuclear plant closing
  • Business groups said case could impact COVID-19 litigation

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(Reuters) - A U.S. appeals court on Tuesday said a company that shut down construction on a nuclear power plant was not obligated to provide advanced notice that its contractors' 4,000 employees would be losing their jobs.

The decision by a unanimous three-judge panel of the 4th U.S. Circuit Court of Appeals may hold broader relevance for contract workers affected by large-scale COVID-19 era layoffs.

The court said South Carolina utility SCANA Corp was not the workers' employer under the federal Worker Adjustment and Retraining Notification (WARN) Act because SCANA did not control the contractors that employed them.

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Ruling otherwise would improperly stretch the law, which requires at least 60 days notice of mass layoffs, and would "subject plant owners to the prospect of uncertain and ill-defined liability," the court said.

SCANA was backed by trade groups including the U.S. Chamber of Commerce, which said in an amicus brief that a broad application of WARN Act liability could have a devastating impact on businesses involved in pending litigation over pandemic-related layoffs.

The plaintiffs' lawyers at Raisner Roupinian and Klehr Harrison Harvey Branzburg did not immediately respond to requests for comment. Nor did Dominion Energy Inc, which acquired SCANA in 2019. SCANA is represented by Ogletree, Deakins, Nash, Smoak & Stewart.

SCANA in 2017 abruptly ceased construction at the South Carolina facility, after exceeding its budget, forcing contractors Fluor Corp and Westinghouse Electric Corp to immediately lay off about 4,000 people.

A group of Fluor workers sued the company and SCANA that year, claiming they had not been given proper WARN Act notice.

SCANA argued that because it did not employ the Fluor workers, it could not be held liable. Fluor maintained that SCANA's abrupt cancellation of the project was an "unforeseen business circumstance" that exempted it from WARN Act notice requirements.

U.S. District Judge J. Michelle Childs in January granted summary judgment to the companies.

The 4th Circuit panel on Tuesday affirmed, saying SCANA had no ownership interest in Fluor and Westinghouse, had not integrated its personnel policies with those of the contractors and did not control the other companies or their workers.

"The scope of [WARN Act] liability is clear, since it extends precisely to a company’s own employees, so businesses need not make difficult judgment calls as to which unaffiliated firms are likely to have employees affected in some way by a plant closure," Circuit Judge J. Harvie Wilkinson wrote.

The panel also included Circuit Judges Paul Niemeyer and Diana Motz.

The case is Pennington v. Fluor Corp, 4th U.S. Circuit Court of Appeals, No. 21-1141.

For the plaintiffs: Jack Raisner of Raisner Roupinian; and Charles Ercole of Klehr Harrison Harvey Branzburg

For Fluor: Hagood Tighe of Fisher Phillips

For SCANA: Ted Speth of Ogletree, Deakins, Nash, Smoak & Stewart

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.

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