Three former employees of American Apparel have filed a complaint accusing the Los Angeles retailer of failing to give adequate notice before laying off about 200 employees.
In a complaint filed in the Central District of California, the former employees accuse the company of violating both the state and federal Worker Adjustment and Retraining Notification Act by neglecting to give 60 days' notice of a mass layoff.
The company told the media a day or two before the layoffs, the first time employees heard of job cuts, according to the complaint. The lawsuit says the company pressured employees into signing separation agreements waving all claims against the retailer in exchange for "paltry" severance pay as low as $300.
The complaint seeks class-action status on behalf of employees who were let go in April in a layoff American Apparel said affected about 180 employees. That accounts for 3.8% of the company's approximately 4,800 manufacturing and office workers in the Southland. In all, the company employs nearly 10,000 people.
American Apparel said in a statement that "these claims are absolutely without merit."
"Workers' rights and respect for our employees are core principles of American Apparel," the company said Friday.
Chief Executive Paula Schneider said earlier this month the layoffs were necessary to improve the precarious finances of the company. American Apparel has lost about $340 million in the last five years and has more than $200 million in debt.
"We're in a turnaround," she told the Times. "This is a company that hasn't made money in years."
Schneider also said the company plans to improve healthcare benefits and offer a 401(k) plan in the second half of the year, as well as offering paid holidays and sick days.
But American Apparel workers who lost their jobs say executives including Schneider are awarding themselves stock options while eliminating blue-collar jobs. The lawsuit is seeking wages, holiday pay and other benefits for the 60 days following the workers' termination.
Follow Shan Li on Twitter @ByShanLi