Former employees and truck drivers for FreightWorks LLC claim the Rutherfordton, North Carolina-based truckload carrier violated federal law by failing to give a 60-day advance notice of a planned shutdown before firing nearly 200 workers on March 6.
The two named class representatives, Martin Oshea and Misty Chapman, along with 18 named plaintiffs, filed a 17-page amended class action complaint against FreightWorks LLC and its nine entities on May 15, nearly two months after initially filing suit against the trucking company and its entities on March 23.
The plaintiffs claim to have been laid off without cause amid a “mass layoff and/or plant closing” as defined in the Worker Adjustment and Retraining Notification (WARN) Act.
The suit alleges that FreightWorks is covered by the WARN Act because the trucking company employed 100 or more workers at the time of the mass layoffs. The former employees state that FreightWorks failed to pay their wages, salary, commissions, bonuses and holiday and vacation pay for 60 days following their terminations.
Attorney Julian H. Wright Jr. of Robinson Bradshaw is representing FreightWorks in the WARN Act litigation.
“I can tell you that FreightWorks disagrees with the allegations in the complaint,” Wright told FreightWaves on Monday. “They disagree with how the complaint attempts to spin WARN Act obligations and FreightWorks intends to defend itself vigorously in the litigation.”
He continued, “The plaintiffs filed this amended complaint and we are in discussions with them to accept service of the amended complaint and then we’ll presumably proceed with the litigation.”
FreightWorks filed a WARN Act notice on March 31 with the North Carolina Department of Commerce, eight days after the initial lawsuit seeking class action status against FreightWorks LLC and its entities was filed in the U.S. District Court for the Western District of North Carolina.
The Warn Act notice, which was issued 25 days after FreightWorks’ mass layoffs, states, “As previously discussed, FreightWorks did not understand that the WARN Act applied to the company’s situation earlier this month.”
While Joshua Farmer, president of FreightWorks, is listed as a contact in the WARN notice, the letter was signed by Lori Cornelius, human resources manager for FreightWorks.
“The layoffs took place in stages, depending upon the need for workers as the company completed its freight contract obligations, assessed the full impact of the general business downturn affecting the company, analyzed the impact of a large customer’s decision to curtain its business and began considering restructuring alternatives,” Cornelius wrote in the notice.
As of publication, Cornelius had not responded to FreightWaves’ request to clarify whether the trucking company had any prior discussions with the North Carolina Department of Commerce about FreightWorks’ failure to file a 60-day notice with the government agency prior to its announcement that it was ceasing operations.
However, within days of the initial class action complaint being filed, former employees of FreightWorks were sent a release of claims form, offering them $1,500 if they “hereby irrevocably and unconditionally release and fully discharge FreightWorks Holding LLC, FreightWorks Admin, FreightWorks LLC, FreightWorks Real Estate LLC, FreightWorks Staffing LLC and PropertyWorks II, their subsidiaries and affiliates and its and their predecessors, successors and assigns, as well as its and their officers, directors, employees, attorneys and agents from any and all causes of action under the lawsuit.”
While Wright was unable to provide an exact number of how many ex-employees signed the release of claims form, he said a “significant number took the $1,500 settlements.”
Wright confirmed he has reviewed materials including proposed releases that he “understands have gone out to former employees.”
Shutdown or restructure?
Former FreightWorks employees say they were blindsided on March 6 after receiving a video message from Joyce Siqueira, vice president of operations for FreightWorks, who said the “most honorable path that we can take for the benefit of our employees, our customers and our other stakeholders is an orderly closing of the company.”
A former FreightWorks employee also shared the memo sent to employees and drivers on March 6 — dated for “immediate release on March 10” — but it appears the truckload carrier was forced to cease operations earlier than expected.
“It is with the heaviest of hearts that we announced to our team that FreightWorks is shutting down,” the unsigned memo states.
At the time of the mass layoffs, Siqueira said FreightWorks would no longer be picking up loads.
Siqueira said the company was unable to see a path forward after a few of its core contract customers abruptly demanded significant rate reductions, amounting to millions of dollars. The death knell occurred when one of FreightWorks’ largest contract customers “pulled a significant percentage of the company’s freight” on Feb. 28.
However, eight days after FreightWorks announced it was shutting down, the carrier updated its MCS-150 form to state that it had 186 power units and 140 drivers. A month later, on April 12, FreightWorks updated its MCS-150 form to state that it has 186 power units and 25 drivers, leaving ex-employees confused about the operating status of the company.
And many ex-FreightWorks employees and drivers say the company is continuing to operate, but on a smaller scale and has no plans to “cease operations.”
Farmer, who serves as president of FreightWorks LLC and its other entities, told FreightWaves in early April that it had sold its freight brokerage, FreightWorks Logistics, to an unnamed buyer prior to the company’s plan to wind down operations.
While he failed to provide the name of the new brokerage owner, the phone number and post office box number for FreightWorks Logistics, which was granted its broker authority by the Federal Motor Carrier Safety Administration in October 2014, is the same as its trucking company, FreightWorks Transportation & Logistics. The brokerage’s insurance policy is also listed as belonging to FreightWorks Logistics.
Wright said he is unable to comment on the claims of the freight brokerage and trucking company’s operations as he was hired to litigate the WARN Act lawsuit.
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