United Workers Win WARN Act Victory in Baltimore ESPN Zone Case
January 23rd, 2013 | Kari Lydersen
When the ESPN Zone restaurant in Baltimore’s touristy Inner Harbor development closed abruptly on June 16, 2010, about 150 workers lost their jobs. Most were paid low hourly wages with few benefits, barely making ends meet and relying on the busy summer tourist season to get them through the slow winter months. Because they’d only found out about the closing only a week earlier, they had little chance to find new employment for the summer.
In October 2010, United Workers, a grassroots advocacy group running a larger campaign for economic justice and human rights at Inner Harbor establishments, helped some of the laid-off workers file a federal lawsuit alleging violations of the Worker Adjustment and Retraining Notification (WARN) Act. The lawsuit named the Walt Disney Company—which owned the Inner Harbor ESPN Zone, as well as four other locations around the country that also closed in summer 2010—and its subsidiary Zone Enterprises of Maryland LLC, which operated the Inner Harbor location. On Jan. 3, 2013, more than two years after the lawsuit was filed, a U.S. District judge issued a ruling that United Workers see as an important victory, stressing the importance of the federal WARN Act and launching a process wherein workers will be able to collect additional pay due to them under the act.
The WARN Act requires that companies give workers at least 60 days’ notice of mass layoffs and mandates that if a company fails to give adequate notice it must pay workers 60 days’ worth of wages from the date notice is given. The amount is to be based on the worker’s average wages over the last three years or their pay rate at the time of closing. When the Inner Harbor ESPN Zone closed, Disney gave the workers “notice pay”—in the form of weekly paychecks and an end lump sum—and based the amounts on the employees’ earnings during the previous six months. But since the restaurant closed in June, that meant the notice pay was based on a slow season, not the much higher pay for long summer hours they would have actually received had they worked in June, July and August.
The lawsuit argued that this was a violation of the WARN Act, and U.S. District Judge Catherine C. Blake agreed that workers were due additional pay, launching a second ongoing legal phase in which the pay due to each individual worker will be determined. Andrew D. Freeman, the attorney representing the workers, said they will also seek class action status, meaning all the laid-off workers could be eligible for compensation.
Emanuel McCray, who was a host at the Inner Harbor ESPN Zone, told In These Times that he loved his job and that it had inspired him to want to open his own sports bar and restaurant some day. But he felt betrayed and disrespected by his employers in the way the closing was carried out. “I felt disgusted with them,” McCray told In These Times. “I grew up as a kid watching Disney movies and dreaming of going to Disneyland. What happened killed all that. Now when I see Mickey Mouse or anything to do with Disney, I get really upset.”
Emanuel said that the not only was the pay rate unfair, but the company’s failure to give the workers advance notice was devastating because they couldn’t seek other jobs for the summer. By the time ESPN Zone closed, he said, “all the summer restaurant jobs were already locked up.”
McCray said some workers lost their homes and had to move to other cities with their families after the closing. He has struggled to find steady work since—he does D.J. gigs and was a service manager at Wal-Mart. He also does work with United Workers and the Waterfront Partnership, a company that works with city officials and business owners to promote sustainable development along Baltimore’s waterfront. (A silver lining in the ESPN Zone situation has been that McCray thinks he’s found his true calling as a social justice activist, building on his college major in political science. He is considering running for elected office and otherwise working to improve the local community.)
Freeman, the workers’ attorney, told In These Times that the situation laid bare larger disturbing truths about “the disrespect this country shows to hardworking people in low wage jobs.”
“What Disney failed to pay these workers is a couple hundred thousand dollars,” he said. “Disney has probably paid more than that to its lawyers to fight this case—and to my firm in attorneys’ fees. So the lawyers end up making more money than the workers this law was intended to benefit, who have been waiting for two-and-a-half years and will wait some substantial additional time, when they’re the ones who really need the money.”
Freeman told In These Times that about 35 ESPN Zone workers showed up to United Workers’ initial meeting about the situation, and he realized that all of them combined probably made less per hour than he charges as an attorney. “There’s something wrong with our society,” he said, “when you can hire 35 of those workers for the cost of one hour of my time or the time of Disney’s lawyers.”
In its response to the lawsuit, Disney argued that the WARN Act allows temporary pay reductions of up to 50 percent without notice, and said the workers got more in notice pay than they would have in such a situation. But Freeman noted that the pay reduction provision of the WARN Act is only supposed to apply during a temporary downturn when the business is ultimately remaining open—not in a closing situation like ESPN Zone’s. In her decision, Judge Blake agreed with Freeman that the provision did not apply to the case at hand.
Blake also agreed with the plaintiffs in finding that Disney illegally tried to get out of paying some workers the full amount due under its own corporate severance pay provisions, by essentially subtracting the WARN Act pay from the additional severance due the employees (Disney’s written severance pay policy specifically says that notice pay given under the WARN Act will count toward the severance pay the company owes workers). “I found that one of the most offensive parts of this,” Freeman told In These Times. “They wrote their severance plan in a way that explicitly compensated violating the WARN Act. As the judge said, that’s a violation of both the letter and the spirit of the law.”
Freeman said Blake’s decision should help strengthen the WARN Act for future litigation. “There’ve been arguments that ESPN Zone and some other employers have tried to rely on to avoid giving workers notice that the Act requires, or paying them less than their full wages if they did violate the Act,” he said. “The court in this case made clear that the Act means what it says.”
This article was originally posted on Working In These Times on January 15, 2013. Reprinted with Permission.
About the Author: Kari Lydersen, an In These Times contributing editor, is a Chicago-based journalist whose works has appeared in The New York Times, the Washington Post, the Chicago Reader and The Progressive, among other publications. Her most recent book is Revolt on Goose Island. In 2011, she was awarded a Studs Terkel Community Media Award for her work. She can be reached at firstname.lastname@example.org.