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Former employees claim SpaceX failed to notify about layoff

On Behalf of | Aug 14, 2014 | Business Litigation

In California, if you have 75 or more employees on the payroll and you plan to lay off 50 or more, then you are required to give written notice to the employees at least 60 days before the layoff takes effect. Under the state’s Worker Adjustment and Retraining Notification Act (“WARN Act”), employers who don’t provide the required notification could have to pay as much as 60 days worth of benefits and compensation to the affected employees. Companies could also face civil penalties for failure to provide sufficient notice.

Former employees of Space Exploration Technologies Corp. — SpaceX — claim that the spacecraft manufacturer violated California law by failing to provide notification 60 days prior to a mass layoff. According to the lawsuit, between 200 and 400 employees were laid off in July. 

Under state labor law, a layoff is defined as a “separation from a position for lack of funds or lack of work.” The SpaceX president said that the employees who were let go were “low performers.” The question, then, is whether the terminations constitute a layoff under California law.

An attorney for the plaintiffs claimed that SpaceX is trying to mask a mass layoff to get around paying compensation and benefits to terminated workers. It was pointed out that many companies assess job performance when deciding which workers to lay off.

Two former technicians filed the suit, which seeks class-action status in addition to back-pay. The plaintiffs also claim that SpaceX’s way of terminating the employees constitutes unfair competition.

Whether you are on the employer side or the employee side of an employment law dispute, a cost-effective resolution is undoubtedly the goal. To learn more, please visit our employment and labor law overview.

Source: Los Angeles Times, “Former SpaceX employees sue over alleged labor law violations,” Chad Garland, Aug. 11, 2014