Yellow and Teamsters Reach Settlement Over WARN Act Claims
Yellow Corp., Teamsters settle WARN Act claims
Former Yellow Corp. employees will receive a partial payout on claims tied to the company’s 2023 shutdown under an agreement reached between the International Brotherhood of Teamsters and Yellow’s bankruptcy estate.
A Teamsters memo issued Tuesday said the settlement would allow approximately $17.2 million in additional claims related to the federal and New Jersey WARN Acts. The agreement still must be signed by both sides and approved by the U.S. Bankruptcy Court for the District of Delaware.
The settlement provides five days of damages under the federal WARN Act. Employees covered by the New Jersey WARN Act, which has different provisions and defenses, will receive 30 days of damages.
The Teamsters said the difference reflects defenses available under the federal law that do not apply under New Jersey’s statute. Union leadership chose a partial recovery on the WARN claims rather than continuing years of litigation with an uncertain result, according to the memo.
“The Teamsters leadership chose full payment on contract claims and some recovery on the WARN Act over years of additional litigation on the WARN Act claims with an uncertain outcome,” the memo said.
Other employee claims included
The agreement also recognizes approximately $1.2 million in grievance claims that were pending when Yellow shut down operations. It includes about $1.75 million to $1.8 million for unused personal holidays owed to New York, New Jersey, Pennsylvania and Western Teamsters whose National Master Freight Agreement supplements provided for those payments.
The settlement follows an earlier agreement covering paid time off, sick leave and other contract-based claims. The estate previously agreed to recognize approximately $63.9 million in priority claims for paid time off and $1.9 million in general unsecured claims. Sick leave claims were valued at approximately $5.7 million in priority claims.
Combined with other employee-related claims, the Teamsters memo said the estate is expected to pay approximately $71.5 million for paid time off, sick leave and related claims.
Teamsters who worked for Yellow are expected to receive full payment on eligible PTO and sick-time claims, subject to a per-person cap of $22,650. The cap includes $15,150 in priority claims and $7,500 in additional benefit claims.
A small number of employees have claims above the cap, according to the memo. Amounts above the cap will be treated as general unsecured claims and are projected to recover less than 20% of their value.
Yellow shutdown and WARN litigation
Yellow terminated approximately 3,500 nonunion employees on July 28, 2023. About 22,000 union employees were terminated two days later, as the less-than-truckload carrier ceased operations. Yellow filed for bankruptcy protection on Aug. 6, 2023.
The federal WARN Act generally requires covered employers conducting a mass layoff or plant closing to provide 60 days’ advance notice, or pay certain workers for the notice period when advance notice is not provided. The Teamsters and other unions pursued claims after Yellow’s shutdown, but the company argued that exemptions applied because it was in the process of winding down its business.
The bankruptcy court previously found that Yellow was acting as a “liquidating fiduciary” rather than as an operating company at the time of the layoffs. Based on that finding, the court concluded that Yellow was exempt from the WARN Act’s notice requirements. The court also found that Yellow appeared to have acted in good faith and said that, if its interpretation of the law were overturned, damages should be limited to 14 days rather than the 60 days sought by the unions.
On June 29, 2026, the U.S. District Court for the District of Delaware affirmed the bankruptcy court’s decision. The district court also held that Yellow qualified for the separate “faltering company” exemption under the federal WARN Act and that the company’s notice was sufficient to invoke that defense.
Despite those rulings, the settlement gives former union employees some recovery on their WARN claims. The agreement does not change the courts’ findings on Yellow’s liability under the federal law; instead, it resolves the remaining claims through the bankruptcy process.
What employees can expect
Payments are expected to be distributed within months after the bankruptcy court grants final approval, assuming there are no further appeals or objections. The Teamsters memo said no additional objections are expected and noted that MFN Partners, Yellow’s largest shareholder, had withdrawn its objection to confirmation of the bankruptcy plan.
For former Yellow drivers and other employees, the settlement separates WARN damages from contract-based benefits. A worker whose WARN claim was rejected or limited may still have a valid claim for unpaid vacation, sick leave, personal holidays or grievance-related pay under the applicable union contract.
Priority claims receive payment ahead of general unsecured claims in bankruptcy, although priority status does not guarantee recovery in every case. The agreement gives former employees a clearer expectation of what they may receive while bringing the long-running dispute over Yellow’s shutdown-related WARN claims closer to resolution.
