University of the Arts Sued Over Abrupt Closure

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Lawsuit Alleges Violation of Employment Laws

Employees of the University of the Arts have filed a lawsuit against the institution, claiming it violated federal and state employment laws by providing only a week’s notice before its closure. This marks the first legal action targeting the private college following its sudden announcement on May 31 that it would cease operations by June 7. The lawsuit, filed in the US District Court for the Eastern District of Pennsylvania, underscores the unprecedented nature of a nonprofit college shutting down so abruptly.

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Allegations of Legal Violations

The university is accused of breaching Pennsylvania’s Wage Payment and Collection Law and the Worker Adjustment and Retraining Notification Act (WARN Act). The WARN Act mandates that employers with 100 or more workers must provide at least 60 days written notice before a mass layoff. The proposed class action was brought by eight employees, including professors and program directors, seeking damages equivalent to 60 days of wages, accrued holiday and vacation pay, and retirement plan benefits. These employees were among more than 100 faculty and staff terminated around the time of the closure announcement.

  

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Impact on Staff and Students

Before the closure, the University of the Arts had 77 full-time faculty members serving approximately 1,300 students. The arts school, which prides itself on being the largest of its kind in the nation, was established in 1876 and attained university status in 1987. President Kerry Walk, who announced the closure and resigned earlier this week, cited long-standing financial difficulties as the cause, including years of declining enrollments and revenues coupled with rising expenses.

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Financial Hardships and Sudden Closure

In a written statement on May 31, President Walk and Judson Aaron, chair of the university’s board of trustees, explained the financial challenges the university faced. “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 statement read. The situation reportedly became critical very suddenly, and despite rapid efforts, the university could not bridge the financial gaps.

Broader Context of Financial Struggles in Higher Education

The closure of the University of the Arts is reflective of a broader trend affecting small US colleges nationwide, which are grappling with rising costs, declining enrollments, and demographic shifts. This financial strain has led to Fitch Ratings downgrading the university’s credit rating from B+ to C on Tuesday.

Current Status and Legal Proceedings

The University of the Arts did not respond to Bloomberg Law’s request for comment on Wednesday. The lawsuit, filed under the case name Schutts v. University of the Arts, E.D. Pa., No. 2:24-cv-02420, is seeking redress for the affected employees.

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