Former employees that were laid off from NS8, the Las Vegas-based cyberfraud prevention startup embroiled in a federal investigation, have filed class action lawsuits against the company.
Joshua Hoover, a former NS8 employee, filed the class action suit in Nevada District Court earlier this week, days after being let go.
The lawsuit alleges that NS8 did not comply with the federal Worker Adjustment and Retraining Notification Act, which is meant to ensure employees have 60 days notice before significant layoffs so they have time to find work elsewhere.
Genevieve Haldeman, a spokeswoman for NS8, said the company does not comment on pending litigation.
According to the U.S. Department of Labor’s website, a 60-day notice is required if a company with at least 100 full-time employees plans to lay off at least 50 people at a single site. Employers who do not comply with the WARN Act are liable to pay each affected employee an amount equal to back pay and benefits for the violation period, which can last up to 60 days.
In NS8’s Sept. 10 WARN Act notice to employees, the company said, “While we would have preferred to give you more advance notice of this decision, we were not in a position, 60 days ago, to anticipate the sudden change to our business circumstances, nor the decisions that were necessitated by them.”
Employees were laid off the next day.
Hoover’s attornery, Kaine Messer of Las Vegas-based Gabroy Law Offices, told the Review-Journal that the lawsuit was filed to protect the communities where a company operates, “specifically because when a company does have these mass layoffs, the community itself is put in danger of harm.”
There are exceptions to the WARN Act, though, according to the DOL’s website: “WARN makes certain exceptions to the requirements when layoffs occur due to unforeseeable business circumstances, faltering companies, and natural disasters.”
Messer said that “what we do take issue with is not adhering to the law, particularly when the exceptions don’t apply, and it’s our position that there are no exceptions that apply to the current situation.”
On Thursday, federal agents arrested NS8 co-founder and former CEO Adam Rogas. The Securities and Exchange Commission charged Rogas with defrauding investors, alleging he falsified bank statements to obtain over $123 million in financing for his company, of which he personally received approximately $17.5 million.
Rogas resigned Sept. 1 soon after an employee in NS8’s finance department discovered the true balance of funds in the company’s revenue account and the transactions were uncovered.
Another NS8 employee filed a separate class action suit in Delaware District Court.