Yellow Corp. has won a major legal battle after a U.S. court ruled that it does not have to pay compensation to thousands of former union employees over the way it handled its mass layoffs in 2023.
The ruling means the bankrupt trucking company is not liable under the federal WARN Act, which normally requires employers to give workers 60 days’ notice before large-scale job cuts.
Judges agreed that Yellow qualified for an exception because, by the time the layoffs happened, the company was already winding down its business rather than continuing normal operations. The court also found that Yellow met the conditions of the law’s “faltering company” exception, despite earlier arguments over the wording of the notices sent to employees.
Yellow dismissed around 3,500 non-union employees on 28 July 2023, followed by roughly 22,000 union workers two days later. Less than a week afterwards, the company filed for bankruptcy, marking the collapse of one of the largest less-than-truckload (LTL) carriers in the United States.
The company has long argued that its financial situation deteriorated rapidly after the Teamsters union threatened strike action over unpaid pension and healthcare contributions. Although a strike was avoided, Yellow said many customers had already moved their freight elsewhere, leaving the business unable to recover.
In a separate decision, the U.S. Supreme Court also declined to hear Yellow’s appeal over pension withdrawal liabilities, leaving a number of remaining pension disputes to continue through the courts.
As Yellow’s bankruptcy process moves toward its final stages, the company’s remaining assets will be distributed to creditors, while employee claims for paid leave and sick pay are expected to be paid first under priority rules.
