University of the Arts Staff Sue Over Mass Layoffs Amid Closure

University of the Arts employees sued the institution alleging it violated federal and state employment laws after giving them just a week’s notice ahead of its closure.

The lawsuit is the first to target the private college over its closure, which was announced May 31 and it will be effective June 7. “There is no precedent for a nonprofit college closing so abruptly,” the lawsuit, filed Tuesday in the US District Court for the Eastern District of Pennsylvania, says.

The private nonprofit university is under fire for allegedly violating Pennsylvania’s Wage Payment and Collection Law and the Worker Adjustment and Retraining Notification Act, which requires employers with 100 or more workers to provide a written notice at least 60 days before a mass layoff.

The proposed class action was filed by eight employees, including professors and program directors, who seek damages equivalent to 60 days worth of wages, accrued holiday and vacation pay, and retirement plan benefits, in addition to other benefits under the Employee Retirement Income Security Act. The school terminated over 100 faculty, staff and other employees on or about the day President Kerry Walk announced the closure, the lawsuit says.

The University of Arts had 77 full-time faculty that served approximately 1,300 students before President Walk announced the school’s closure and resigned earlier this week. The arts school, which describes itself as “the largest of its kind in the nation,” was established in 1876 and earned university status in 1987.

President Walk and Judson Aaron, the chair of the university’s board of trustees, said the university has faced financial hardship from “many years of declining enrollments, declining revenues, and increasing expenses.”

“We could not overcome the ultimate challenge we faced: with a cash position that has steadily weakened, we could not cover significant, unanticipated expenses,” the university said May 31 in a written statement. “The situation came to light very suddenly. Despite swift action, we were unable to bridge the necessary gaps.”

Small US colleges across the country are facing financial pressure as costs rise, enrollment declines, and demographics changes.

The university was downgraded to C from B+ by Fitch Ratings on Tuesday.

The University of Arts didn’t respond to Bloomberg Law’s request for comment Wednesday.

The case is Schutts v. University of the Arts, E.D. Pa., No. 2:24-cv-02420, complaint filed 6/4/24.