“Just so terrible” | Red Lobster files for bankruptcy as ex-workers lodge lawsuit claiming they were laid off without notice

Red Lobster files for bankruptcy as ex-workers lodge lawsuit claiming they were laid off without notice

Red Lobster has been hit with a lawsuit by former employees, alleging the company laid off workers without notice.

The embattled seafood restaurant chain closed over 50 restaurants across the US last week, before filing for bankruptcy on May 20.

Many employees took to social media last week, venting that they were terminated without any prior notice.

“red lobster just laid all of us off without notice,” one disgruntled former employee wrote on X on May 14. The same user added that nobody was told until 8am on Monday morning, including managers.

“Im trying so hard to put on a smile right now. I feel like I could break at any moment,” another ex-worker posted, before going on to claim that their former employer broke the law by failing to give proper notice.

“What Red Lobster did in New York is illegal. They closed their doors with no warning. So now we are unemployed.”

It’s not clear exactly how many people lost their jobs, with some stores closing temporarily and others for good, though the Orlando Business Journal has estimated the number to be some 6,500 workers.

Some workers have expressed concern for those who lost their jobs without the time to find other work.

“I lost my job today without warning and working Mother's Day yesterday,” a further individual shared on X. “I'm one of the lucky ones who don't have kids or a house to pay off. Just so terrible leaving all those employees with nothing, no notice, anything.”

But beyond social media outrage and amid the expectancy of a bankruptcy filing that has since taken place, some experts also predicted the possibility of a lawsuit.

"By shutting its doors without any advance warning to its employees that the company was shutting down, Red Lobster could face litigation related to purported failures to properly notify employees of closures or layoffs under the Worker Adjustment and Retraining Notification (WARN) Act," Sarah Foss, Global Head of Legal at Debtwire told Newsweek.

The WARN Act requires employers with 100 or more full-time employees to give workers a minimum of 60 days’ notice for planned mass layoffs of closings.

And now such a lawsuit has been filed. Donna Lowe, the lead plaintiff for the suit, claims she was terminated without notice on or around May 14.

The filing alleges Red Lobster violated the WARN Act and the New Jersey WARN Act, and seeks declaratory and injunctive relief, damages, attorneys’ fees, and costs, according to Bloomberg Law.

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Red Lobster has struggled since 2019 with customer footfall dropping by 30%. In 2020, seafood distributor Thai Union Group became the company’s largest shareholder, owning 49% of Red Lobster.

Some have criticized the management of Red Lobster under its minority ownership, including the decision to make the previously limited-time offer $20 endless shrimp deal into a permanent menu item, a move which cost the company an estimated $11million.

Earlier in 2024, Thai Union announced plans to sell its stake in Red Lobster at a $530million loss.

“Thai Union forced huge cost reductions, including many that were penny wise and pound foolish because they hurt sales,” a confidential ex-executive at Red Lobster told CNN in May.

The company has had a huge amount of disruption at the leadership level, having rattled through five CEOs since 2021.

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