United Furniture Industries, Inc., a Mississippi-based furniture manufacturer, abruptly stopped production at its facilities, including 5 in the North Carolina Triad, leaving almost 600 area residents and 2,700 people nationwide without jobs.
United Furniture Notified Employees Via EMAIL
Employees were notified about the facility closings via 2 emails. The first email, received Monday, November 21st at 11:49 pm stated, “we ask that all employees report to their work locations tomorrow November 22, 2022. That email was rescinded and replaced by a second email, received Tuesday, November 23rd at 12:42 am stated, “your layoff from the company is expected to be permanent and all benefits will be terminated immediately without provision of COBRA.”
The North Carolina Commerce Department and Winston-Salem Mayor Allen Joines both confirmed that neither of their offices had received a WARN notice of the closure. However, when the company experienced “unforeseen business circumstances” in June, which resulted in the loss of over 250 local jobs and another 220 in Mississippi, the company filed WARN notices in both states.
What is the WARN Act?
The WARN Act, or the Worker Adjustment and Retraining Notification Act, was passed in 1988 to give workers an adjustment period between losing their current jobs and getting a new one. It required employers to provide at least 60 calendar days written notice of plant closing and mass layoffs. It applies to employers with 100 or more employees and where 50 more employees at a single site are affected or at least 33 percent of the active employees. The act can also provide other benefits to affected workers, including 60 days’ pay, benefits, and access to COBRA insurance. (NOTE: This is a very simplified definition. As with most laws, there are exceptions, otherwises, heretofores, and more legalese. If you’re interested in learning more about the WARN Act, please click here.) By providing advance notice, states can deploy Rapid Response Dislocated Worker units to provide assistance to affected employees, including employment opportunities, retraining services, educational assistance, etc. It basically gives a community time to help those in need and keep the community stable.
WARN Act Filed in June
Since the company filed a WARN notice in June for production that was ending in July, they were aware of the process and its importance to affected employees. Instead, they chose to NOT file a WARN notice for the November shut down, placed padlocks on their Triad facilities, and sent emails to their employees informing them that they had lost their jobs.
We understand the challenges businesses have faced since the start of the pandemic. We understand high gas prices, supply chain issues, and inflation. None of those things appear to be at the root of United Furniture’s issues, and they definitely aren’t valid excuses for treating employees and whole communities like this.
There were clear signs the company was in trouble. In addition to the layoffs in June, United Furniture fired its chief executive, chief financial officer, and the executive vice president of sales, while also restructuring its sales organization. According to United general counsel Andrew Payne, the Triad plants were affected by United customers ordering substantial amounts of inventory based on forecasts. The inventory was made by United, but its customers unexpectedly decided not to purchase from United, causing the June layoff notice. It appears they weren’t able to right the ship with the June moves, as Robert Cottam, a former United consultant, believes the board is likely to file for either Chapter 7 or Chapter 11 bankruptcy, depending on whether they plan on staying in business (Chapter 11) or not (Chapter 7).
WARN Act Exceptions – Does This Qualify?
The government does provide for exceptions to the 60-day notice requirement. These include:
- The company is faltering and a notice may interfere with good faith negotiations to obtain capital.
- The company had unforeseeable business circumstances (sudden, dramatic and unexpected actions) that weren’t reasonably foreseeable when the notice would be required.
- The company was affected by a natural disaster.
Considering the company filed a WARN notice in June and implemented major staffing changes at the top level in June, it’s hard to image that the resulting domino effect wasn’t foreseeable.
American companies must find a balance between financial obligations to stockholders, boards, and executives and moral and ethical obligations to workers and communities. Our citizens and communities deserve better than this.
Full Text of United Furniture Email
Here is the full text of the United Furniture employee memo, as posted by Furniture Today trade publication:
“At the instruction of the Board of Directors of United Furniture Industries, Inc., and all subsidiaries (the “Company”), we regret to inform you that due to unforeseen business circumstances the Company has been forced to make the difficult decision to terminate the employment of all of its employees, effectively immediately, on November 22, 2022, with the exception of over-the-road drivers that are out on delivery. Your layoff from the Company is expected to be permanent and all benefits will be terminated immediately without provision of COBRA.
Over-the-road drivers that are out on delivery will be paid for the balance of the week. Whether or not you have completed your delivery, please immediately return equipment, inventory and delivery documents for those deliveries that have been completed to one of the following locations: Winston-Salem, N.C., Verona, Miss., or Victorville, Calif., location. To be clear, do not complete any additional deliveries.
We regret that this difficult and unexpected situation has made this necessary. Additional information will be provided shortly.
Thank you for your service and dedication.
UFI/Lan Corporate Communications”
Fallout Has Begun
According to Furniture Today, a former employee from Mississippi has filed a lawsuit alleging that the company violated the WARN Act. The attorney representing the case, Jack Simpson with Langston & Lott in Booneville, MS, has asked the court to certify the case as a class action case.
To date no one from United Furniture or its general counsel has responded to requests for more information.
If your company is faced with layoffs, buyouts (see our previous post on Twitter) or business closings, please consider your employees and the surrounding communities. These things have a rippling effect, and there are resources and support available to lessen the impact. Contact Paradise for assistance, or get in touch with your local Department of Labor for local resources.