BRATTLEBORO — State and local officials are scrambling to help the 91 employees of Vermont Bread Company who suddenly lost their jobs when its owner, Burlington's Koffee Kup Bakery, shut down operations on April 26.
In the aftermath of the closing, one former employee, Matthew Chaney of Brattleboro, is the first plaintiff in a class action suit that alleges the abrupt shutdown was a violation of the federal Worker Adjustment and Retraining Notification (WARN) Act.
The closure came after a majority of shares in Koffee Kup were acquired by American Industrial Acquisition Corporation (AIAC) on April 1.
The state received a WARN notice from AIAC on April 26, stating that Koffee Kup was shutting down its operations in Vermont.
According a news release from Jeff Sands, a senior advisor to AIAC, Koffee Kup “suffered substantial financial losses” over the past four years, and “was unable to find a way out of their troubles.”
However, questions have been raised over whether AIAC complied with the provisions of federal and state labor law, which requires that workers receive adequate notice before a company shuts down.
Vermont Labor Commissioner Michael Harrington said at an April 27 news briefing in Montpelier that the state Department of Labor was reviewing how the WARN notice was issued.
“Vermont's Notice of Potential Layoff Act requires that employers notify the state 45 days prior to closure and municipalities and affected employees 30 days prior to closure,” said Harrington.
“In specific instances, employers may qualify for an exemption to the prior notice clause,” he said. “We'll be having conversations with the company to better understand what activities were occurring prior to issuing the [WARN] notice.”
In an April 28 news release, Harrington said that the Labor Department's Workforce Development and Unemployment Insurance divisions have begun the process of coordinating rapid response services, and that “a number of employers across the state have contacted the Department of Labor interested in hiring individuals who were impacted by this closure.”
Legal action begins
A class-action lawsuit filed on April 30 in U.S. District Court in Rutland against Koffee Kup and AIAC states the closures and resulting layoffs were “without cause,” and were a violation of the WARN Act because they failed to give employees at least 60 days' advance written notice.
Representing Chaney, the lead plaintiff in the suit, is Thomas P. Aicher, of Cleary Shahi & Aicher in Rutland, in collaboration with Lankenau & Miller in New York City, the Gardner Firm in Mobile, Ala., and the Sugar Law Center for Economic and Social Justice in Detroit.
The suit alleges that “the Defendants failed to pay the Plaintiff and each of the Class Members their respective wages, salary, commissions, bonuses, accrued holiday pay and accrued vacation for 60 working days following their respective terminations, and failed to make the pension and 401(k) contributions, provide other employee benefits under ERISA, and pay their medical expenses for 60 calendar days from and after the dates of their respective terminations.”
This could amount to as much as $5 million in damages, according to the lawsuit, which would be paid to the more than 500 workers at Koffee Kup's bakeries in Brattleboro, Burlington, and North Grosvenor Dale, Conn.
In its WARN notice to the state on April 26, Sands wrote that AIAC was unable to provide an earlier notice to the state ”as we were uncertain of the success of the efforts that we have been making to continue operating.”
“Earlier notice of this unfortunate outcome would have been premature and would have jeopardized those very efforts,” Sands continued.
According to the U.S. Department of Labor's website, the WARN Act, which requires employers with 100 or more workers to provide 60 days' notice of a plant closing and mass layoffs of 50 of more workers at a single site, “makes certain exceptions to the requirements when layoffs occur due to unforeseeable business circumstances, faltering companies, and natural disasters.”
At an April 30 news conference, Harrington said employers may also qualify for exemption to state and federal closure laws if a good-faith effort is made to salvage the business, in which early notice of the possibility of closure could harm those efforts.
Sands made such claims.
Harrington said the department is giving formal notice to AIAC that it did not comply with the timeline and needs to provide additional information.
“It will be up to them to show us they made a good-faith effort,” he said.