For-profit college chain ITT Technical Institute faces three employee-driven lawsuits for closing without warning in the wake of a U.S. Department of Education decision to bar the college from receiving federal student loans.
The Indiana attorney general's office also is examining ITT’s closure to determine what, if any, action can be taken, spokeswoman Monica Hernandez said.
The lawsuits allege that ITT violated the federal Worker Adjustment Retraining and Notification Act, which requires a notice of 60 days in the case of mass layoffs. The law affects employers with more than 100 employees and business sites with more than 50 workers.
ITT Tech employed about 8,000 people nationwide. It’s unclear whether campuses with fewer than 50 employees would be subject to the law.
The suits were filed in Indiana and Delaware. The employees are seeking wages and benefits they would have received if ITT had given 60 days' notice before closing.
Legal experts said it’s anyone’s guess whether the complaints filed against ITT would hold up in court. They said the complaints have merit, but ITT is likely to counter with the fact that the U.S. government’s decision to bar it from accepting funds from federal student loans was an “unforeseeable event,” one of the exceptions to the WARN Act.
“There’s no doubt in my mind here that there is a plant closing or mass layoff and the employees did not get the 60 days' notice,” said Ken Dau-Schmidt, the Willard and Margaret Carr professor of labor and employment law in the Maurer School of Law at Indiana University. “The lawsuit seems fine on its surface.”
Jamie Prenkert, a professor of business law in the Kelley School of Business at IU, said ITT could be on the hook for more than back wages and benefits if the court rules against it.
“There can be an up to $500-a-day fine for each day they haven’t filed that notice to the local government,” he said. “They’re not supposed to just warn the workers, they’re supposed to warn the local governments as well.
“If you’re going to have an influx of unemployed workers, you need to give the government notice.”
The attorney general's office is directing former ITT students with questions about the school's closure to the U.S. Department of Education’s website and sending former ITT employees to the Indiana Department of Labor’s website.
ITT was banned Aug. 25 from enrolling new students who used federal financial aid because the company had become a risk to students and taxpayers, officials from the U.S. Department of Education said. The department also ordered ITT to come up with $152 million within 30 days to help cover student refunds and other liabilities if the chain closed.
ITT Educational Services Chief Executive Officer Kevin Modany told reporters on a conference call Tuesday that ITT was the victim of a “regulatory assault” and never had the chance to defend itself.
Tribune News Service