Potential Shareholder Liability Arising From Subsidiary WARN Act Violations

When a company begins experiencing financial difficulty, shareholders often ask whether they may be liable under the Federal Worker Adjustment and Retraining Notification ("WARN") Act for violations by the company. When the financial difficulty results in a quick shutdown and immediate layoff of the workforce, perhaps due to the very common scenario where a company's primary lender refuses to extend an existing line of credit, the answer is—maybe. Such was the situation addressed in Blough v. Voisard Mfg., 2015 U.S. Dist. LEXIS 9267, 1:14 CV 263 (N.D. Ohio, Jan. 27, 2015) where former employees claimed that their former employer and its shareholders were jointly liable for the employer's WARN Act violations.