One of an estimated 250 Munchery employees laid off when the San Francisco startup shut down abruptly last week has filed a class action lawsuit against his former employer. In a legal complaint filed in US District Court, lawyers on behalf of ex-Munchery courier Joshua James Eaton Philips argue that the company violated the Worker Adjustment and Retraining Notification Act, known as the WARN act, which states that companies of more than 100 employees must give them 60-day notices before mass layoffs.
“Losing one’s job is a hardship in any circumstance, but losing it without any sort of notice is even more traumatic,” says Gail Lin Chung, an attorney at the Law firm Outten & Golden, which filed the complaint. “There’s no time to plan for alternate income. The WARN Act was specifically designed to alleviate that sort of hardship.”
Most of Munchery’s workers were based at its South San Francisco commercial kitchen space. When Munchery closed, many heard the news through word of mouth or from the media. The lawsuit seeks 60 days of unpaid wages for the employees, plus commissions, bonuses, holiday pay accrued, and more.
Under federal law, the WARN act makes exceptions for companies that prove unforeseen business circumstances led to more immediate layoffs — but California law does not. Still, state law does make an exception for companies that prove they were actively seeking financing at the time of the layoffs, and demonstrate that giving employees notice would have jeopardized that potential investment.
Munchery once raised $150 million and expanded nationally on the promise of inexpensive, quality meal delivery. But it closed on January 21 without settling up with employees or vendors like Three Babes Bakeshop, a small San Francisco pie bakery that says Munchery stiffed them $20,000. And in the state of Delaware, where Munchery was incorporated, it has yet to pay $143,429.63 in overdue taxes.
The company hasn’t filed for bankruptcy, but if it does, vendors like Three Babes are likely to face a long wait for a small percentage of what they’re owed — and cases like an employee class action suit will be put on hold, too.
Munchery complaint by on Scribd