Not everything casino owners in Las Vegas touch turns to gold. Sometimes, they make bad business decisions that cost their company millions in losses. One Las Vegas casino is now faced with further potential costs in the form of lawsuit damages.
A former employee of the Palms’ nightclub Kaos has filed a lawsuit seeking damages. The club was closed suddenly due to mounting financial losses. The staff learned of the casino’s plans through the media with no advanced warning.
Why Is The Palms Nightclub Kaos Closing?
The sudden closure sparked an immediate legal response from one of the lead cocktail servers. Alyssa Faulstick told the Las Vegas Review-Journal of the pending lawsuit soon after losing her job. She claims that this violates the Worker Adjustment and Retraining Act of 1988 (WARN). This is a federal labor law that requires 60-day advanced notice of pending layoffs. It applies to situations where there are 100 or more employees.
The lawsuit seeks $15,000 in damages for the lost employment. Ms. Faulstick is the only named plaintiff, but the losses could apply to several Koas employees. She was quoted as saying:
“It’s definitely been disheartening. We’ve all put our blood, sweat and tears to get the venue open. And try and turn it into what it could be.”
On Nov. 5, Red Rock Resorts announced the immediate closure of Koas. As part of a recent renovation of the Palms casino resort, the club first opened in April of this year. This was supposed to be the crowning jewel of the new entertainment scene at the Las Vegas off-Strip property. Executives at Red Rock Resorts cited heavy financial losses as the reason for closing down the club.
The company bought the Palms in 2016 for $312.5 million. It reportedly spent $679 million on the recent renovation. Frank Fertitta is the CEO of Red Rock. He said that company could no longer justify the expense of running the nightclub. He also cited excessively high costs for booking entertainment. The crossover traffic from Kaos was not benefiting the casino floor.
The termination letter employees received from the Palms contained two options:
A two week’s severance package
Work on an on-call basis over the next 60 days
The terminated employees were given just three days to render their decision. The letter went on to state: “We deeply regret the impact this has on individual Team members and their families. If you are interested in pursuing other opportunities within Station Casinos LLC, the Employment Recruiters will work directly with you to identify opportunities for which you may be qualified.”
The company went on to add:
“Hopefully the above will indicate our commitment to provide you with the necessary information, support and tools to allow you to make the appropriate decisions for yourself.”
In response to a Las Vegas Review-Journal request, Red Rock stated it does not comment on any pending litigation.
There are three specific exceptions to WARN including “unforeseeable business circumstances.” Mr. Fertitta added that Kaos may have had a negative impact on the “core gaming customer” at Palms.
