Is an Offshore Rig a Single Site of Employment Under WARN?

A federal judge in the Eastern District of Louisiana recently issued an important ruling for oil field employers conducting layoffs. In Voisin v. Axxis Drilling, Inc. (October 21, 2015), the court held that for the purposes of the Worker Adjustment and Retraining Notification Act of 1988 (WARN Act), each offshore rig is a single “site of employment.” Plaintiffs’ lawyers have filed multiple class actions alleging that a dispatch or administrative office from which work is assigned is a single site of employment for purposes of triggering the WARN Act. Judge Feldman’s ruling blocks that theory.

WARN’s Requirements

The WARN Act requires employers with 100 or more full-time employees to provide 60 days’ advance notice before a mass layoff and allows employees to recover damages for an employer’s failure to give the required notice.  A “mass layoff” is a reduction in force resulting in a loss of employment for at least 33 percent of full-time employees and at least 50 full-time employees at a “single site of employment” during any 30-day period.

Background

The issue in the Axxis case was the definition of a “single site of employment,” which is not defined in the WARN Act. Axxis Drilling, Inc., “operated a fleet of five floating drilling rigs in the territorial waters of Louisiana and Texas.” Each rig was manned by 24 to 43 employees. Axxis also had an office with 20 employees that “functioned as Axxis’ headquarters for its drilling operations.” 

Occasionally, when the rigs were between jobs, a boat would tow them to the dock outside of the Axxis office where they were “stacked”, or parked while out-of-service. The employees would continue to work their normal shifts and would continue to live and sleep on the rigs when the rigs were stacked at the dock. Two rigs that were fully staffed with employees were stacked at the dock at the time Axxis laid off 101 employees.

The Court’s Decision

The court, quoting a 1997 Fifth Circuit case, noted that the office together with the rigs would be considered a single site of employment if three factors from the regulations are satisfied:

1) the separate facilities are in “reasonable geographic proximity of one another”; 2) they are “used for the same purpose”; 3) and they “share the same staff and equipment.” 

The court found that the office and rigs did not satisfy the second and third factors. The office and each rig had their own employees and functioned independently from each other, even when a rig was stacked at the office dock. Accordingly, the court found the rigs were separate employment sites.

The plaintiffs argued that regulation subpart 29 CFR § 639.3(i)(6), which provides a broad definition of “single site of employment” for employees “whose primary duties require travel,” applied in this case. But the court disagreed with the plaintiffs, finding that “the purpose of a drilling rig is not to move people or cargo from point to point,” and that the rigs in this case “were not even self-propelled.”

The court held that for the purposes of the WARN Act, “[e]ach Axxis rig was a ‘single site of employment.’” Accordingly, the employees were unable to muster the 50 employees needed to satisfy the “mass layoff” provision. Therefore, the 60 days’ advance notice before the layoff was not required.