Two employees who were terminated Tuesday as part of mass layoff by ITT Educational Services Inc. have filed a lawsuit claiming the Carmel-based firm violated federal law by failing to provide 60-days notice.
ITT Educational announced Tuesday morning that it would permanently “discontinue academic operations” at all ITT Technical Institute campuses.
Allen Federman, a business analyst at ITT Educational's Carmel headquarters, and Steve Ryan, an instructor for ITT Technical Institutes at two locations in California, filed the suit in U.S. District Court in Delaware the same day they were fired.
The lawsuit seeks class-action status on behalf of the 8,000 employees who are losing their jobs as a result of ITT Educational’s decision to shut down more than 130 ITT Technical Institute campuses in 38 states.
The lawsuit claims ITT violated the federal Worker Adjustment Retraining and Notification Act, or WARN Act, which requires 60 days advance written notice in the case of mass layoffs or plant closings.
The law affects employers with more than 100 employees and plant locations (or business sites) with more than 50 workers. ITT Tech campuses with fewer than 50 employees might not be responsible for following the law.
The suit also claims the layoff violates California labor laws, which also require 60 days notice during mass layoffs. ITT Educational operated 15 ITT Tech campuses in the state.
The lawsuit seeks a judgment to each affected employee equal to the sum of their “unpaid wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions and other ERISA benefits” that would have been paid over a 60-day period.
"We’re involved in a complicated process of closure of our academic institutions right now," ITT spokeswoman Nicole Elam said in an email response to IBJ about the lawsuit. "All matters involving students and personnel are priorities."
One of the attorneys representing the plaintiffs is Jack A. Raisner of Outten & Golden LLP of New York, who represented employees of Corinthian College, another for-profit education chain that closed down, in April 2015, after the government withdrew aid.
ITT's closure followed years of scrutiny by the federal education department over the school's recruiting methods and students’ educational performance, and recent actions that made it ineligible to accept new students who relied on student loans.
In its statement Tuesday morning, ITT called the federal sanctions “inappropriate and unconstitutional."