Twitter (TWTR) employees filed a federal lawsuit on Thursday, accusing the company of violating federal and state laws that govern notice of employment termination.
The employees, based in Twitter’s San Francisco and Cambridge, Mass., offices, are asking a California district court to grant class-action status on behalf of thousands of employees expected to be laid off from the company on Friday. One named plaintiff was terminated on Nov. 1, days after Tesla CEO Elon Musk’s acquisition of the company.
The Twitter workers claim that mass layoffs, if carried out on Friday, would violate a federal law called the Work Adjustment and Retraining Notification (WARN) Act, as well as California’s state WARN Act. They also pointed out that Musk’s electric vehicle company Tesla is facing a similar lawsuit from a group of workers laid off from a Nevada factory.
“Plaintiffs file this action seeking to ensure that Twitter comply with the law and provide the requisite notice or severance payment in connection with the anticipated layoffs and that it not solicit releases of claims of any employees without informing them of the pendency of this action,” the employees stated in the lawsuit.
Under the WARN Act, private for-profit companies with at least 100 full-time workers, such as Twitter, must give employees at least 60 days advance written notice when a mass layoff will affect at least 50 employees and a third of the worksite’s total workforce, or when a worksite is closing that affects 50 or more employees, according to Roger Feicht, a labor and employment attorney at Gunster Law Firm.
The law also applies when 500 or more employees at a single site of employment are terminated during any 90-day period.
“However, there are exceptions for unforeseeable business circumstances or faltering companies that allow for the notice as soon as ‘practicable,’” Feicht said.
That exception could provide a defense for Twitter. Feicht added that Twitter is also required to give advance notice of qualifying layoffs to the State Rapid Response Dislocated Worker Unit, which aids companies and affected workers to minimize disruptions from job loss, as well as to the chief elected official of each local government where mass layoffs occur.
For Musk, the strategy of conducting illegal layoffs now and worrying about the headaches of employee lawsuits later could be worth the risk.
“Unfortunately, the penalties for non-compliance with the WARN Act are not that steep,” Michael Oswalt, professor of law Wayne State University Law School Michael Oswalt, told Yahoo Finance. “So in many ways the larger obligation here is moral.”
If Musk fails to give the proper notice, the company would be liable for each employee’s back pay for a maximum of 60 days, Oswalt said. And California’s penalty would add a fine of $500 per day, plus keep Twitter on the hook for any of the laid-off employee’s medical expenses resulting from the loss of their Twitter-provided health insurance.
The point of the notice laws, Oswalt said, is to help employees adjust to the trauma of job loss by giving them a little time to rearrange family obligations, get new work, or even move.
“There’s no excuse for anyone — let alone the richest person in the world — to skirt that minimal level of decency,” he said.
At the same time, Musk must be careful establishing criteria for which workers are laid off to avoid terminations that trigger discrimination-based lawsuits, such as those alleging they were selected for the layoff due to race, religion, age, or disability.
In addition to complying with the WARN Act, Feicht said Twitter needs to comply with the Older Workers Benefit Protection Act (OWBPA). For employees at least 40 years old, the law requires that their severance and release agreements, which often include waiving the right to bring future age-based discrimination claims, include time to consider the agreement and revoke it, even after signing.
This story was amended to reflect a potential fine of $500 per day.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.