Without Notice: Shop-Vac Hit with WARN Act Class Action Over Sept. 2020 Layoffs

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Shop-Vac Corporation faces a proposed class action over its abrupt termination of more than 400 employees last September. 

The nine-page case alleges the wet-dry vacuum manufacturer ran afoul of the Worker Adjustment and Retraining Notification Act (WARN) by executing a mass layoff or plant closing without providing affected workers with at least 60 days’ advance written notice. 

The plaintiff, who worked for Shop-Vac for five years until the company shuttered its Williamsport, Pennsylvania production, warehouse and distribution facility on September 15, 2020, looks to recover 60 days’ wages and benefits to which the case asserts proposed class members were entitled. 

Established as a family-owned company in 1953, Shop-Vac had until last year two locations in the United States, with its headquarters in Williamsport and another facility in Binghamton, New York, the lawsuit begins. Several years ago, the defendant made the decision to close its Binghamton factory and dedicate the Williamsport facility to making higher-end products for customers such as W.W. Grainger, the suit says. With this move came Shop-Vac’s decision to shift its mass-market consumer products manufacturing operations to Shenzhen, in the People’s Republic of China, according to the complaint.

Until Shop-Vac moved its mass-market production operations to China, the company had been “relatively debt free,” with J.P. Morgan providing the defendant with operating capital in a $50 million revolving credit facility, the lawsuit says. Per the case, however, Shop-Vac, under margin-challenging pressure from retailers to lower prices, decided to move its lower-end production to Hanoi, Vietnam, a move that the complaint says served to cut costs but also entailed a heavy investment.

The lawsuit says Shop-Vac, due to the investment involved with relocating to Vietnam and supply chain problems, was forced to effectively draw down its entire credit from 2018 to 2020. Although the company’s American-made consumer goods remained profitable, Shop-Vac “lost money on the overseas items it sold to the discount retailers,” the case states. 

With revenues falling and Shop-Vac’s manufacturing equipment and computer data overseas, J.P. Morgan, according to the lawsuit, “demanded collateral to support availability on its credit line.” The lawsuit relays that Shop-Vac, in the face of ongoing liquidity problems, retained an investment firm to engage in the refinancing/sale process, a decision that the case says led right up to the defendant’s termination of hundreds of workers last September. 

“On or about September 15, 2020, [Shop-Vac] discharged the over 400 employees from its Williamsport Facility and discontinued their health care coverage without notice or severance pay,” the complaint says, adding that Shop-Vac, around that time, also allegedly provided retention bonuses to those who it continued to employ as a condition of the release of any WARN Act claims against the company. 

Per the suit, Chinese conglomerate Hangzhou Equipment Holdings announced it had acquired ownership of Shop-Vac in late December 2020. Although the defendant claimed it would hire back a number of employees who were terminated in September, Shop-Vac has not done so, the lawsuit says. 

The suit claims Shop-Vac has failed to pay those who were terminated their respective wages, salaries, commissions, bonuses, accrued holiday pay and accrued vacation for 60 days and provide employee benefits under COBRA as required by law. 

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