NEW JERSEY – Red Lobster Hospitality LLC has been accused of violating federal and state employment laws in New Jersey by laying off employees without prior notice, according to a recent federal class action lawsuit.
The lawsuit arises from the closure of several Red Lobster locations nationwide, which occurred just days before the company filed for bankruptcy reorganization. The lead plaintiff, Donna Lowe, was laid off without notice on May 14, 2024. The complaint was filed on May 17 in the U.S. District Court for the Middle District of Florida.
Lowe alleges that the company violated the Worker Adjustment and Retraining Notification (WARN) Act and New Jersey’s Millville Dallas Airmotive Plant Job Loss Notification Act (commonly known as the New Jersey WARN Act) by failing to provide a 60-day written notice prior to the layoffs.
The lawsuit seeks certification of a national class and a New Jersey subclass of Red Lobster employees who were laid off on or around May 14, 2024, or whose employment was terminated as a foreseeable consequence of the mass layoffs on that date.
In its bankruptcy filing, Red Lobster reported assets and liabilities ranging between $1 billion and $10 billion. This filing allows the company to continue operations while developing a plan to repay its creditors. The chain intends to transfer control to its lenders, who have agreed to provide $100 million in financing to support operations during the bankruptcy.
According to CEO Jonathan Tibus, Red Lobster has experienced a 30% decline in customer numbers since 2019. Despite signs of post-pandemic recovery, sales plummeted dramatically over the past 12 months, resulting in a $76 million loss in the fiscal year 2023.
So far, Red Lobster has not responded to requests for comments on the employee layoffs lawsuit. The complaint seeks a judicial declaration, injunctive relief, damages, as well as attorneys’ fees and costs.
The Red Lobster case highlights the importance of adhering to labor and employment laws, especially during financial hardships. The ongoing legal actions will determine the future of the affected employees and set precedents for similar situations in other companies.
