Just a day after folding, embattled startup The Messenger has been sued by former employees.
The proposed class action, filed in New York federal court Thursday, alleges that the Jimmy Finkelstein-led news outlet failed to give more than 300 employees proper notice of their terminations in violation of the state’s Worker Adjustment and Retraining Notification Act, which requires at least 90 days notice of a mass layoff.
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Workers at The Messenger discovered Wednesday the company was shutting down for good from The New York Times. Hours later, the site only returned a white screen with “The Messenger” and an email address. No articles could be searched. Employees are not receiving severance.
The suit was brought by producer Pilar Belendez-Desha and seeks to represent all former workers impacted by the terminations. It seeks to recover up to 60 days in unpaid wages and benefits.
The complaint notes that the ex-workers were terminated without cause as a “foreseeable result” of mass layoffs.
The WARN Act applies to private business with 50 or more full-time employees and covers mass layoffs involving 25 or more workers. Businesses that do not provide notice must pay back wages and benefits in addition to paying a civil penalty.
Under the federal version of the law, there’s an exception for faltering companies actively seeking capital to stay in business and believe that advance notice would hamper its ability to do so. There’s also a carveout for unforeseeable business circumstances.
In a note to staff Wednesday, Finkelstein noted that the company “exhausted every option available” to “raise sufficient capital to reach profitability.”
The company also sent staff a WARN notice the same day notifying employees that the publication will be immediately shutting down. It noted that it’s permitted to send less than 90 days notice because it was “unsuccessful” in raising the capital necessary to continue operations.
“For some time, the Messenger has been actively seeking additional capital necessary to continue operations, including trying to obtain additional equity from existing and new investors, and/or loans and other debt financing arrangement,” the notice stated. “Our efforts to raise additional financing, if obtained, would have enabled The Messenger to continue operations for the next several months.”
The Messenger did not immediately reply to requests for comment.
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