Pace Sued Under WARN

Richard Craver
October 16, 2009

A former employee of Pace Airlines Inc. filed a class-action lawsuit this week that accuses the company of violating the federal WARN Act.

Gregory Hensley was an inspector at Pace until his job was eliminated Sept. 8 in the first of two mass layoffs by the company. Operations were suspended on Sept. 11.

The lawsuit was filed Tuesday in the U.S. District Court for the Middle District of North Carolina.

The WARN Act applies to businesses with 100 or more full-time employees. About 400 Pace employees — here and in Dallas and New Jersey — were affected by the suspension of business.

The intent of the Worker Adjustment and Retraining Notification Act is to prevent situations where employees show up for work only to discover that their employer has shut down without notice.

Companies planning large layoffs are required to notify their state and local governments, as well as the affected workers, at least 60 days in advance of the layoffs.

“I doubt very much that we’ll see a dime of money, but the lawsuit spells out 60 days’ wages as written into the WARN Act,” Hensley said yesterday.

William Rodgers Sr., the owner of Pace, faces at least one felony charge of willful failure to pay group health-insurance premiums. Other charges are pending, according to officials with the N.C. Department of Insurance.

Rodgers’s next court appearance in Forsyth District Court is set for today.

The lawsuit does not cover the issue of back pay owed to most Pace employees for work they did in August and September. Instead, it asks for payment of 60 days’ worth of wages and benefits that Hensley says the WARN Act requires Pace to provide for the 60 days beginning Sept. 11.

The U.S. and N.C. labor departments are investigating the nonpayment of wages.

Dolores Quesenberry, a spokeswoman for the state labor department, said that the agency has received more than 400 complaints against Pace.

Jack Raisner, an attorney with Outten & Golden LLP of New York, is Hensley’s attorney.

Raisner said that the WARN Act lacks significant enforcement teeth.

Several studies have shown that the act has lots of loopholes and virtually no enforcement authority from federal, state and local officials.

Raisner said he plans to let labor officials conduct their investigations on the back pay, but said he would consider filing another lawsuit if the departments “dragged their feet.”

Walter Holton, an attorney representing Rodgers, said he could not comment until he had reviewed the lawsuit.

Michael Walden, an economics professor at N.C. State University, said that the lawsuit could be moot if Pace is depleted of assets and funds.

“That’s the likely case since they have ceased operations,” Walden said. “If the lawsuit goes forward, and even if it is successful for the plaintiffs, it could be an empty victory if there are no monies for compensation.”

Hensley said that the current management team, “so-called aviation experts, auger a viable company straight into the ground.”

“The lives that they have damaged are almost incomprehensible to me,” he said. “I would like to know the truth as to why they would want to destroy a company and hurt so many people.”