Supreme Court Rules on WARN Act Statute of Limitations

The United States Supreme Court recently held that state law governs the statute of limitations for actions brought under the Worker Adjustment and Retraining Notification Act (WARN). State and federal statutes of limitation establish maximum time periods during which an aggrieved party may sue or otherwise enforce his rights, and when this time period expires, the complainant effectively surrenders all legal recourse regardless of the allegation's merits. With certain exceptions, the WARN Act requires that employers with 100 or more employees give notice to each employee or employee representative at least 60 days prior to a plant closing or mass layoff. Employers who violate the notice provision can be liable to each affected employee for "back pay for each day of violation," and the employee can sue in "any district court of the United States for any district in which the violation is alleged to have occurred, or in which the employer transacts business." However, the Act contains no explicit limitation period for employees to file complaints, so Crown Cork & Seal Company and North Star Steel Company, in separate lawsuits brought by former employees of the two Pennsylvania companies, argued that the WARN Act's limitation period should be six months, just as in the National Labor Relations Act. The aggrieved employees contended that the limitation period should be governed by Pennsylvania state statutes of limitation which, under different code sections, ranged from two to six years. The Third Circuit Court of Appeals ultimately agreed with the employees, holding that a period of limitations for the WARN Act should be borrowed from state and not federal law. The U.S. Supreme Court affirmed, stating that: [S]tate statutes have repeatedly supplied the periods of limitations for federal causes of action when the federal legislation made no provision . . . and in seeking the right state rule to apply, courts look to the state statute "most closely analogous" to the federal act in need. . . . [T]his penchant to borrow from analogous state law is not only "longstanding". . . but [is] "settled". . . . We decline to follow a state limitations period "only when a rule from elsewhere in federal law clearly provides a closer analogy than available state statutes, and when the federal policies at stake and the practicalities of litigation make that rule a significantly more appropriate vehicle for interstitial lawmaking." In this case, the Court reasoned that state limitation periods provide an aggrieved employee with a satisfactory opportunity to vindicate his rights and do not "frustrate or interfere with the implementation" of a national interest in "a relatively rapid disposition of labor disputes." Thus, the Court held that both companies' employees had timely filed their WARN Act lawsuits under any of the applicable Pennsylvania state limitation periods. Like Pennsylvania, South Carolina has codified several limitation periods of varying durations, but the applicable state statute of limitations for WARN Act violations perhaps could be as short as one year, if a federal court relies on S.C. Code 15-3-560(1), which gives aggrieved employees one year to bring "an action concerning or in any manner relating to wages claimed under a Federal statute or regulation." North Star Steel Co. v. Thomas, U.S. S.Ct. (5/30/95). Read More...