SpaceX facing labor suit over layoffs

Plaintiffs allege the company violated California’s Worker Adjustment and Retraining Notification Law

California is well known for labor regulations that are typically more stringent than elsewhere in the United States, and as a result it is often a hot bed of activity for labor and employment suits. These suits have increasingly focused on the employment standards of tech companies, including well-known names in the Silicon Valley and Southern California. Most recently they’ve targeted Elon Musk’s SpaceX operations, with allegations that the company did not follow state regulations before a layoff.

In early August, two former Space X technicians filed suit against the company, saying that it did not follow state law when it laid off between 200-400 workers. Under California’s Worker Adjustment and Retraining Notification Law (WARN), companies must give employees notice of an impending layoff so they have an opportunity to seek employment elsewhere.

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According to that law, a company “may not order a mass layoff [defined as 50 or more employees in a 30 day period], relocation, or termination at a covered establishment unless, 60 days before the order takes effect” the employer gives written notice of the order to the employees, California “Employment Development Department, the local workforce investment board, and the chief elected official of each city and county government within which the termination, relocation, or mass layoff occurs.”

Failure to comply with the law can result in the offending company paying up to 60 days worth of salary and benefits to the terminated employees. Plaintiffs are seeking class action status with their complaint.

According to the L.A. Times , SpaceX spokesman John Taylor said July 25 that the company conducted a “headcount reduction” of less than 5 percent of its work force after an annual review cycle and “some rebalancing of resources.” Other representatives of the company have indicated that the terminations were performance related; however, plaintiffs lawyers have argued that this was a tactic to get around WARN regulations.

Recently, other well-known Californian tech companies have also felt been the subject of labor and employment probes. Linkedin announced that it would pay $6 milllion in unpaid overtime to sales staff members in California, Illinois and New York. Adobe Systems, Intel, Google and Apple also recently settled a three-year-old class action lawsuit with 64,000 employees for allegedly conspiring to suppress worker pay.

Managing Editor

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Chris DiMarco

Chris DiMarco, Managing Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content for...

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