Yellow Blames Sudden Mass Layoffs on Abrupt Ending, Labor Dispute

Former trucking company Yellow Corp. closed its doors back in August, but legal battles will continue to follow this once prominent industry giant into the foreseeable future. 10,000 plus claims have been filed by hundreds of companies and municipalities against Yellow in a Delaware bankruptcy court. At the heart of many grievances is the claim that Yellow failed to provide 60-day notice to its former employees ahead of the company’s mass layoffs before its bankruptcy last summer.

WARN Act: Federal law requiring 60-day notice before mass layoffs, closures

The specific number of days refers to a mandatory law which requires all U.S. employers (with more than 100 employees) to provide notice of closings and mass layoffs to their employees 60 days in advance. This federal law is called the Worker Adjustment and Retraining Notification (WARN) Act.

Courtesy of law firm Schneider Wallace Cottrell Konecky LLP, if a company fails to provide the mandatory 60-day notice, it must pay back pay and benefits to the affected employees for each day that the employer failed to give notice.

That said, there are a few exceptions to the WARN Act requirement. In Yellow’s case, the former trucking company could argue that its closure was unforeseeable and abrupt. Furthermore, it could add that announcing advanced warning of mass layoffs would jeopardize last-ditch efforts to raise capital and keep operations afloat.

Yellow asks court to dismiss claims it failed to provide advanced notice of layoffs

Last week, Yellow did as such. The former less-than-truckload (LTL) carrier submitted a filing to the bankruptcy court requesting that claims surrounding the WARN Act violation should be dismissed. Representatives for Yellow argued one of the exceptions laid out above—the company’s shuttering was abrupt. The company claims the closing was unforeseen, adding that even in the final days it planned to keep the business alive with capital from private investors.  

Within the filing, Yellow also blamed the Teamsters union, which represented some 22,000 unionized Yellow employees, for refusing proposed changes within the company’s operative structure that, the carrier asserts, were necessary to saving it from closing.

According to a March 2023 article by FreightWaves, the turnaround plan consisted of consolidating its LTL operations, trimming the fat of excess properties, and transitioning some of its drivers to dockworker positions. Yellow attributes the company’s eventual fate to Teamsters failing to comply with operational adjustments. Courtesy of another article by FreightWaves, the union rebutted that it had conceded countless times in the past regarding changes impacting wages and benefits. This time around, Teamsters made it clear that it was not going to bail out the LTL carrier.

Yellow concluded its filing asking the court to grant the order with an Apr. 4 deadline on responses from those who filed the claims against the company’s violation of the WARN Act. The company also requested a hearing date of Apr. 11.

Final Thoughts

The bankruptcy of Yellow Corp. was the largest filing in U.S. trucking history. The defunct LTL carrier had some 30,000 employees, including 22,000 Teamsters rank-and-file members. In its August bankruptcy filing, Yellow estimated assets of $2.15 billion and liabilities of $2.59 million.

After entering a debtor-in-possession financing agreement, the carrier has been selling of its trove of properties and equipment. Many of Yellow’s former competitors, including Estes Express, have been top spenders at these auctions. 

Contact one of our team members if you have any questions regarding this topic or any others in domestic logistics.

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