The tale of Telltale’s tragic end has received another twist. According to Polygon, what remains of the company is facing a class-action lawsuit from a former employee, alleging that Telltale broke local labor laws by laying off a majority of their employees without warning.
The lawsuit, which can be read in full here, was filed Monday in the San Francisco federal court by Vernie Roberts on behalf of himself and the other employees laid off by Telltale. The claim states that by letting go of their employees without warning, they violated the Worker Adjustment and Retraining Notification Act. The federal version of the WARN Act, first passed in 1988, requires companies with over 100 employees to give a 60-day warning of any plant closures or mass layoffs. “Mass layoffs” are defined as 50+ employees laid off over 30 days (if the total comprises at least a third of the work force) or any layoff of 500+ workers. Meanwhile, California’s state-level version of the WARN Act, passed in 2003, has more stringent requirements. The employee threshold is reduced to 75 full or part-time workers and applies to any reduction of at least 50 employees.
According to Roberts, the layoffs affected about 275 employees (the ~250 reported by the media plus the 25-worker skeleton crew.) The laid off employees did not receive any severance and are only receiving health benefits until the end of the month. If found liable, Telltale would have to give the affected employees pay and benefits for each day of violation.
As some have noted, the federal version of the WARN Act has an important clause that could protect Telltale. If the defendant was seeking funding or the circumstances of the layoffs were unforeseen, they are exempt from the WARN Act’s requirements. According to Variety, a major reason Telltale shut down was because of a failed round of financing. Lionsgate, who had invested $40 million in 2015, pulled their funding, and the company was cited during the closure announcement to the staff. There’s another catch, though. The “unforeseen circumstances” clause does not exist in the state level WARN Act. So even if the federal level finds Telltale exempt, they could still be found liable on a state level.
This is obviously a messy legal battle, and more details will be provided as they become available.