(WBBM NEWSRADIO) – A former employee’s lawsuit against the Dom’s and Foxtrot parent company, even if successful, could get tied up in bankruptcy court. A local attorney weighs in.
It’s being speculated that Outfox, the parent company of Foxtrot and Dom’s Kitchen and Market, will file for bankruptcy after nearly three dozen stores abruptly closed on Tuesday. A local attorney thinks this will have a negative impact on laid off employees who are now seeking a claim in a lawsuit filed Wednesday.
Employees of a company the size of Outfox are protected from hardship by a law called the WARN Act, which requires 60 days notice of mass lay off.
With many Dom’s and Foxtrot employees reporting little to no warning, a lawsuit has been filed on their behalf seeking 60 days severance pay and benefits.
“If these employees were to gain judgment under the WARN statute,” employment attorney Cass Casper with Chicago based Disparti Law Group said, “they still have to wait in line behind a bunch of other secured creditors before they get paid.
“And that is unfair because the entire purpose of the WARN statute was to provide an economic remedy for this kind of mass worker displacement.”
Casper said that it's not a question of who would win the case in court.
“If a judgment were to be entered in behalf of the Foxtrot employees, Outfox could try to clear it out in bankruptcy,” Casper said.
There are no special or complimentary protections under bankruptcy law for lost wage claims, Casper explained.
“They're treated with a little more priority than certain other kinds of unsecured claims.
So they'd be higher in the schedule of assets to be paid than other claims such as unpaid taxes.”
Casper says that while former employees could have to wait years to get paid out, if at all, this instance exposes the need for further protections.
“There's no way to speed up the bankruptcy court. There's no interim remedy to provide these workers with money that they're entitled to under WARN during the duration of the bankruptcy case.”
A lost wage claim would still take a back seat to secured creditors, like mortgage or other secured loans. In addition, while the WARN Act was put in place to protect low wage earners from hardship, bankruptcy proceedings could take years to sort out.
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