Red Lobster employee sues chain saying she was laid-off without notice amid 50 restaurant closures

Red Lobster filed for chapter 11 bankruptcy on 20 May

A former employee is suing now-bankrupt Red Lobster for allegedly laying her off without notice.

Red Lobster filed for chapter 11 bankruptcy on 20 May, and announced the closure of more than 50 locations across the US.

Donna Lowe, a former worker, claims she was fired without warning in the new lawsuit. The filing — which is seeking class action status — accuses Red Lobster of violating the WARN Act and the New Jersey WARN Act. It is seeking declaratory and injunctive relief as well as damages, attorneys' fees, and costs, Bloomberg News reports.

The WARN Act is federal legislation requiring companies with 100 or more full-time employees to give workers at least 60 days' notice before a planned mass layoff. States like New Jersey have their own labor protections, often mirroring the federal WARN Act.

A former employee is suing Red Lobster for allegedly firing her without proper warning (stock image) (Copyright 2024 The Associated Press. All rights reserved)

Former employees who were told they were being let go took to social media to express their frustrations with the embattled seafood restaurant.

“I’m trying so hard to put on a smile right now. I feel like I could break at any moment,” a former worker posted on X, according to HR Grapvine. They claimed that the company broke federal labor laws by failing to give them a proper notice.

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

It is not immediately clear how many people lost their jobs ahead of Red Lobster's bankruptcy filing.

“I lost my job today without warning and working Mother's Day yesterday,” another former employee posted 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.”

Because Red Lobster filed a chapter 11 bankruptcy it can continue operating while it restructures its business. The chain announced that it would transfer control to its lenders, who have agreed to provide $100m in financing to support its continued operation.

A person reads a sign taped to a door announcing the closure of a Red Lobster in Silver Spring, Maryland (REUTERS)

Red Lobster has been fighting to stay afloat since 2010, when it saw a decrease of 30 per cent in its customer visits. Sales continued to plummet over the last year, resulting in a $76m loss for fiscal year 2023.

Thai Union Group became a minority owner in Red Lobster in 2020, purchasing 49 per cent of the company, and its decisions have been blamed for contributing to the restaurant's current financial state.

One of those decisions was making the restaurant's "endless shrimp" promotion permanent. In the past, customers had a couple of weeks window in which they could visit the restaurant, pay $20, and receive "endless shrimp."

By making that offer permanent, the company lost an estimated $11m.

Earlier this year, Thai Union Group said it planned to sell its stake in Red Lobster, representing a $530m loss.

“Thai Union forced huge cost reductions, including many that were penny wise and pound foolish because they hurt sales,” an executive told CNN, requesting anonymity to avoid company backlash.

Since 2021, Red Lobster has had five CEOs.