Mass layoffs at Paramount Global have sparked a lawsuit from former employees, and the entertainment giant is now in hot water. The entertainment giant is charged with violating state law for allegedly failing to notify hundreds of workers who lost their jobs. The latest flare-up continues a growing rift between corporate cost-cutting tactics and workers’ rights and raises questions about how some of the biggest companies do such things.
The suit was filed in New York federal court and claims Paramount violated the Worker Adjustment and Retraining Notification (WARN) Act, which requires companies to give 90 days’ notice before mass layoffs. The legal complaint states that Paramount laid off at least 300 employees without advance notice. Paramount responded that it had given WARN notices to all employees required to receive them under federal or state law.
Behind the layoffs: Paramount’s cost-cutting measures
Management said layoffs were part of Paramount’s plan to cut 15 percent of its U.S.-based workforce and eliminate $500 million in costs. This move comes as Paramount, like many companies in the media industry, seeks to “accelerate streaming profitability,” according to a memo sent by co-CEOs George Cheeks, Brian Robbins, and Chris McCarthy. It also said 90 percent of the layoffs have been done, and the second phase begins on September 24.
In August, Paramount shut down Paramount TV Studios and parted with many high-ranking execs in the pack in the company’s first wave of layoffs. In the current legal action, filed on September 24, roughly 295 employees were let go from Paramount’s Manhattan headquarters and another 50 from nearby worksites, which was the first round of cuts.
What the ex-employees want
The former employees allege that Paramount did not pay earnings, salary, commission, bonus, holiday pay, and benefits for the 60 days. Paramount should have adhered to the WARN Act. Nationwide, and even in many states, the law encourages companies to give advance notice of large layoffs by protecting workers from unaccounted-for job loss.
In New York, the WARN Act applies when a third of the employees at a single location are laid off, or at least 250 people at a single location. Like California, other states have similar laws with employee reduction thresholds that give workers time until they adjust or find new jobs. If the lawsuit wins, Paramount could be in for paying back wages, benefits, and civil fines for each of its violations.
With Paramount still trying to structure and achieve financial stability, this lawsuit could continue to be another challenge. Legal disputes of these kinds can linger, harming the company’s reputation and the morale of an inflamed workforce. At no time did the company’s response indicate that it believed it had not complied with the WARN Act — the courts will decide whether ex-workers are entitled to compensation for the alleged breach. Paramount’s case could also be a cautionary tale for other companies considering laying off employees without triggering legal issues.
Image credits: Furkan Demirkaya/Ideogram
