Indian claims that it is exempt from a California law requiring an employer to give 60 days' notice prior to terminating more than 50 employees at one time. Indian claims the exemption because at the time of the shutdown it was allegedly unable to continue operations due to its financial condition. However, under California law, in order to be exempt Indian must show that it was actively pursuing an investment that would have had a realistic chance of keeping the company solvent. Additionally, the company must prove that if notice was given to employees it would have ruined any chance of obtaining such an investment, a hurdle that attorneys for the plaintiffs indicated is very difficult to overcome.

Indian issued a new employee handbook one week before the closure of the plant and required employees issued the book to sign off on the book. The book deleted any mention of severance pay in the event of termination. However, not all employees were issued the new book and several of these are pursuing claims through California's office of Labor Standards Enforcement.

Indian has a history of labor issues, frequently terminating employees who pursued any form of unionization. In 2001, Indian settled a legal action with eight employees it had fired, four for accepting union literature and four for participating in a one-day strike to protest a supervisor's alleged mistreatment of employees.