Employment Law Violations Cost Bankrupt Company | The Law Offices of Gregory D. Jordan

Employment Law Violations Cost Bankrupt Company

A bankruptcy judge clears the way for claims related to Arrow Trucking Co.’s violation of U.S. employment law.

Former employees of the bankrupt Arrow Trucking Co. may file additional wage claims against the bankruptcy estate because the former Tulsa flatbed carrier violated federal employment law, a federal judge has ruled. Judge Terrence L. Michael of the U.S. Bankruptcy Court for the Northern District of Oklahoma said Arrow violated the federal WARN Act when it closed its offices and discontinued operations Dec. 22 without giving prior notice to employees.

The Worker Adjustment and Retraining Notification Act requires companies that employ more than 100 people to give each employee at least 60 days written notice of a closure and the termination of their employment. Failure to provide the notice can make employers liable for 60 days of wages per employee, the law says.

Michael approved a stipulation by Arrow’s bankruptcy trustee, Patrick J. Malloy III, that Arrow violated the WARN Act before it filed for bankruptcy Jan. 8. The judge agreed with Malloy that Arrow’s former employees are entitled to file WARN Act wage claims against the bankruptcy estate.

When Arrow shut down, it had about 1,400 employees, including about 1,000 drivers, company executives said. Malloy said after the hearing that unpaid wages and delinquent taxes are priority claims in a bankruptcy case.

“They (former Arrow employees) have a right to file a claim of wages owed but not paid and (claims for) WARN Act damages,” he said. “The combination of the two cannot exceed $10,950.”

Malloy said it is possible for former Arrow employees who are not owed wages to still have WARN Act claims against the estate. Drivers, for instance, weren’t paid salaries but were compensated when they presented documentation establishing that they delivered freight. If a driver wasn’t owed wages by Arrow or couldn’t prove it, the driver still could have a WARN Act claim, the law says.

On Dec. 21, Transportation Alliance Bank of Ogden, Utah, cut off Arrow’s fuel credit cards, stranding hundreds of drivers around the country without fuel or money to get home.

The next day, Arrow executives told employees to leave the offices.

Gregory D. Jordan is an Austin business attorney, Austin employment lawyer, and Austin business litigation lawyer. To learn more, visit Theaustintriallawyer.com.

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