News reports indicate that Fisker Automotive is now facing a class action lawsuit related to its mass employee termination last week.
The struggling hybrid carmaker announced last week it laid off 160 employees or roughly 75 per cent of its staff. The move was described by sources as a “final effort” to conserve cash and delay a potential bankruptcy filing.
In a related statement, Fisker confirmed the mass layoff terming it “a necessary strategic step in our efforts to maximize the value of Fisker's core assets.”
Published reports now say law firm Outten & Golden filed a class action lawsuit alleging that Fisker violated the Warn Act, which requires U.S. companies with 100 or more employees to provide at least 60-days notice before conducting mass layoffs or closing plants.
According to U.S. business tech blog GigaOM, Outten & Golden won a $3.5 million settlement against solar panel company Solyndra using a similar suit.
Reuters said Fisker, which raised $1.2 billion from investors and tapped nearly $200 million in government loans, has “at least” $30 million in cash, plus $15 million due after settling a claim this week with bankrupt battery maker A123 Systems Inc.
Roughly 160 employees were terminated late last week at Fisker's Anaheim, California, headquarters. An unnamed sources quoted by the news agency said the automaker told staff it could not afford to give them severance payments.
Fisker, which makes the high-end plug-in hybrid Karma, has not produced a car since last summer and has been seeking a financial backer to help finish the development of a second plug-in hybrid, the Atlantic.
There are four Fisker dealerships in Canada with stores in Toronto, Calgary, Vancouver and Montreal.
- with files from Reuters News Agency