A former Red Lobster employee at the recently shuttered Ledgewood location is suing the now-bankrupt casual dining chain for allegedly laying her off without notice.

In a potential federal class action suit filed May 17 in U.S. District Court for the Middle District of Florida, lead plaintiff Donna Lowe says the Orlando-based seafood brand violated federal and state employment laws when it terminated her without warning earlier this month.

Under the federal statue, employers with 100 workers or more must give at least 60 days’ notice before a planned mass layoff. New Jersey’s recently updated law calls for 90 days’ notice of a plant closure, reduction-in-force or large-scale layoff.

In her complaint, the Warren resident said she previously spoke with her manager about Red Lobster bankruptcy rumors circulating and was “assured” that Ledgewood “was profitable and … had received assurances from their corporate office that there was nothing to worry about.”

“On or around May 14, 2024, Defendants notified employees that they would be ceasing operations and that employees would not be permitted to work scheduled shifts,” the lawsuit said. “Plaintiff Lowe was informed of the closure of her location through the scheduling app used for employee shifts. Plaintiff Lowe was terminated without prior notice on or around May 14, 2024.”

Closing doors

The action stems from Red Lobster’s closure of dozens of its locations across the country before its May 19 filing for Chapter 11 relief. 

Lowes’ complaint seeks certification of a nationwide class and a New Jersey subclass of Red Lobster employees who were fired “on or around May 14, 2024 or whose employment was terminated as a reasonably foreseeable consequence of the mass layoff on or around May 14, 2024.”

Its also looking for declaratory and injunctive relief, as well as damages, attorneys’ fees and costs.

A media representative for Red Lobster did not immediately respond to a request for comment.

In recent years, Red Lobster has struggled with a significant debt load, executive turnover and unfavorable lease terms. Last year’s all-you-can eat shrimp promotion also resulted in a significant loss for the company when it was permanently added to the menu.

In its petition, Red Lobster estimated $1 billion to $10 billion in liabilities owed to over 100,000 creditors. Since 2019, guest count is down 30%. Last year the company lost $76 million, according to court filings.

In an attempt to cut losses, Red Lobster closed nearly 100 restaurants nationwide earlier this month. The shuttered locations include four in New Jersey: Ledgewood, Lawrenceville, East Brunswick and Bridgewater.

Despite the smaller footprint, Red Lobster remains the largest seafood restaurant chain in the U.S. It said its 600 remaining locations would continue to operate thanks to a $100 million debtor-in-possession financing agreement from existing lenders.

Other steps

The company also said it entered into a so-called “stalking horse” agreement to sell the business to an entity formed and controlled by its lenders.

Jonathan Tibus – Red Lobster’s fifth CEO since 2021 – said he believes the restructuring “is the best path forward.”

“It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth. The support we’ve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests,” he said in a statement.

The bankruptcy filing comes five months after Red Lobster owner Thai Union Group announced plans to sell its stake in the brand. It cited the impact of a “combination of [the] COVID-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labor costs” on profits.