- with readers working within the Consumer Industries industries
At the recent Employment Law Symposium held by Ward and Smith, three attorneys from the Labor and Employment Law Group plotted
The discussion was aimed at helping employers gain a competitive edge and reach the checkered flag, by providing an overview of the Worker Adjustment and Retraining Notification (WARN) Act, insights about recent decisions from the Supreme Court, and potential changes slated to impact the workplace.
The WARN Act: Cautionary Signals
Avery Locklear, a labor and employment attorney, set the pace for the event by offering useful guidance regarding the WARN Act. The Act requires employers to provide written notice at least 60 calendar days in advance for covered plant closings and mass layoffs.
"This is important because the purpose of the Act is to alleviate the stress that a job loss has on the community and the employee. Another reason is that it's expensive if you violate it. Among other penalties, an employee could be entitled to back pay and benefits for the period of violation up to 60 days," advised Locklear.
The definitions of what constitutes an employer, plant closing, and mass layoff have significant implications. An employer is defined as a business with 100 employees or more; however, as Locklear explained, "Part-time employees are included if your workforce collectively puts in at least 4,000 hours per week, excluding overtime." Employers are required to include employees at each location in the total.
Within the context of the Act, a plant closing refers to a permanent or temporary shutdown, resulting in an employment loss for at least 50 employees during any 30-day period at:
- a single site of employment, or
- facilities or operating units within a single site of employment
A mass layoff under the Act is defined as a reduction in force that is not caused by a plant closing and results in an employment loss at a single site of employment during any 30-day period for either:
- 50 or more employees who comprise at least 33 percent of active employees (excluding part-time employees); or
- 500 employees (excluding part-time employees)
An employment loss under the WARN Act is defined as an employment termination (other than a discharge for cause or a voluntary quit or retirement), as well as a layoff exceeding six months, or, similarly, a 50 percent reduction in work hours for an employee for each month in any six-month period.
Temporary employment, strikes/lockouts, and layoffs/closings under the WARN Act threshold would not require notice. The notice period is reduced in situations where the company is faltering and searching for capital to maintain solvency, facing a natural disaster, economic downturn or unforeseeable change.
The information provided in the notice must be based on the best information available to the employer at the time the notice is served. Information that is required to be reported under the WARN Act includes the expected date that the plant closing or mass layoff will occur and whether it will be permanent, the date when the affected employee(s) will be separated, whether bumping rights exist, and the name and telephone number of a company official to contact for further information. All employees impacted by the adverse employment action should receive notice.
An additional factor for employers to consider is that some states have mini-WARN Acts, which can have a variety of reporting requirements as well as differing employer/employee thresholds. "North Carolina does not have a mini-WARN Act at this time, however, this could have substantial implications for organizations with operations in multiple states," concluded Locklear.
Recent Supreme Court Decisions
Devon Williams, a North Carolina State Bar Board Certified Specialist in Employment Law, outlined recent cases impacting employers. "This is a high-level overview because some of these opinions and dissents can be hundreds of pages long and, let's be honest, you likely don't really want to dissect sentence structure or learn about how courts in England handled things in the 1600s," laughed Williams.
One of the most impactful recent decisions for HR departments, employers and employees was Ames v. Ohio Department of Youth Services. The case involved an employee with the Ohio Department of Youth Services, Marlean Ames.
Ames was denied a promotion to an open position for which she was qualified. She claimed the denial was due to her status as a heterosexual woman, indicating that the successful candidate was a gay woman.
Thereafter, Ames was demoted, and a gay man was hired into her previous position. She argued both candidates that received more favorable treatment were less qualified and she was discriminated against based on her sexual orientation.
The case went to the Sixth Circuit Court of Appeals, which found that Ames had a higher evidentiary burden to prove discrimination due to her membership in a majority class. The Supreme Court determined, however, that Title VII does not require any heightened evidentiary standard based on whether an individual is in a majority or minority class.
"The takeaway is that, and we've been saying for years that, it's imperative that your policies are facially neutral as well as neutral in operation...the workplace should be free of harassment and discrimination," added Williams.
Another recent Supreme Court decision resulting from E.M.D. Sales Inc. v. Carrera made it somewhat easier for employers to prove an employee should be classified as exempt. The case involved a sales team that argued they should have received overtime pay.
A district court held that the employer had to prove by clear and convincing evidence that the team was lawfully classified as exempt. The Supreme Court, however, determined that the appropriate burden of proof for FLSA exemption classification is preponderance of the evidence (i.e., more likely than not), a lesser evidentiary standard than clear and convincing evidence.
"This doesn't mean you should run out and classify everyone as exempt. If anything, the notoriety of the case may have raised awareness about this issue to your workforce, so it could be prudent to review your classifications and ensure they're accurate," Williams explained.
In Stanley v. City of Sanford, a retired individual sued the city for ending her disability health benefits, claiming she had been discriminated against based on her disability. The Supreme Court deemed that ADA protection only applies to people who are employed or actively seeking employment.
"Similar to the case with exemption status, this doesn't mean you should go out and terminate retiree benefits," noted Williams. "These decisions are narrowly tailored to the situation, and you may have ERISA standards that apply. Again, take it as a reminder to review your policies for compliance."
Trump v. CASA, Inc.
"At the beginning, I teased that we would delve into historical precedents set by English courts in the 1600s, and I don't want to disappoint anyone, so here it is," joked Williams.
English courts did not traditionally allow for universal injunctions. The Federal Judiciary Act of 1789 was based on that precedent, so the Supreme Court determined that federal courts do not have the power to issue universal injunctions.
"Now, injunctions are limited to the plaintiffs who brought the suit. This could make class action suits more prevalent, with states filing suits on behalf of their residents," explained Williams.
An essential point for employers to consider is that national injunctions may no longer apply. "Consider engaging with lobbyists and your trade organizations to see if there is an executive order or a proposed rule or law that could impact your organization," advised Williams. "Being proactive is critical right now because things are changing so quickly."
An example could relate to previous efforts by the Department of Labor to increase the salary threshold for a worker to qualify as exempt. "In the past, the courts have issued national injunctions pausing the enforcement of such rules. Now, it's possible that if you don't have a standing in that case, the law could be enforced against you, but not in other parts of the country," ended Williams.
Future Changes
Grant Osborne, a North Carolina State Bar Board Certified Specialist in Employment Law, was tasked with looking into the crystal ball and providing employers with a glimpse of future changes.
"Predicting the future is a daunting task," mentioned Osborne, "so you may wonder how I could possibly make it happen. First, I drank two Red Bulls, then I emailed my colleagues for advice and told them the most constructive response would get a Starbucks gift card. I'm pleased to say that person was Avery Locklear."
The use of AI for recruiting and screening applicants is a trend many expect to continue. The technology can streamline the sorting, ranking, and elimination of candidates, but employers must continue to comply with laws pertaining to employment relationships.
In terms of decision-making, the selection criteria that AI uses may be obscure. "AI can be like a 'black box,' meaning you may not know the basis of the decisions it made. This can be problematic since employers are often asked to provide a 'legitimate, nondiscriminatory reason' for an employment decision if they want to successfully refute a claim," commented Osborne. Use of AI can make the identification of such a reason difficult.
"The risk is no longer theoretical and lawsuits are beginning to appear in the courts," Osborne said.
Considering the Paycheck Fairness Act introduced in March of 2025, Osborne does not expect it to pass. "The proposed Act highlights gender-based wage disparities. It would also prohibit employers from using an applicant's wage history and retaliating against employees for disclosing salary information. The latter, of course, is already considered an unfair labor practice under the NLRA," added Osborne.
Another proposal with implications for the workplace is the Unlocking Benefits for Independent Workers Act. This Act would allow companies to offer health insurance and retirement benefits to independent contractors without reclassifying them as employees.
"What this means is that providing benefits can't be considered a basis of determining whether an individual should have been classified as an employee or an independent contractor," Osborne noted.
Osborne expects the accurate classification of workers to remain important, and employers should be alert to such issues, as there are significant implications for matters such as unemployment insurance, overtime pay, and workers' compensation coverage.
The Workforce Freedom and Protection Act is a bill that passed the first reading in the North Carolina legislature in March of 2025. Though it would apply only to employees earning less than $75,000 per year, the Act would void any contract that restrains anyone from entering a lawful profession, trade, or business.
"This would prohibit an employer from requiring a noncompete agreement with such employees as a condition of employment," Osborne explained.
Another recent development relates to a decision from the Fifth Circuit Court of Appeals, which held that the structure of the NLRB is probably unconstitutional. "Wait, what? This is startling, because it has vast implications for the agency's ability to enforce labor laws," said Osborne.
The basis for the decision pertains to statutory protections against removal of NLRB members and "administrative law judges." According to the lawsuit, which was filed by SpaceX and other employers, the structure of the NLRB violates Article II of the U.S. Constitution by undermining the President's executive authority.
"This is a bombshell that will likely go to the Supreme Court, but we don't think that it will end the NLRB, but the structure may have to change," concluded Osborne.
This article is part of a series highlighting our 2025 Employment Law Symposium. Get more insights below:
- Fast Pass Through the Employer's Legal Landscape: Lap 1
- Fast Pass Through the Employer's Legal Landscape: Lap 2, The State of DEI
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
