Companies lag on mass-layoff notices

Round about 11 p.m. just before Christmas, driver Daniel Blaylock pulled his loaded flatbed into a truck stop in Jackson, Miss., and slid his gas card into the pump.

"Not valid."

That's how Blaylock, 34, of Colorado, and the Arrow Trucking Co. trainee riding with him found themselves out of gas, out of cash, and out of luck, hundreds of miles from home.

"It was the worst way you could shut a company down," said Charles Ercole, a Philadelphia employment lawyer representing scores of Arrow truckers who were stranded on the road Dec. 22.

These days, Ercole often finds himself filing lawsuits that accuse companies of blindsiding their employees by not giving them proper notice before laying them off.

Under the federal WARN (Worker Adjustment and Retraining Notification) Act, companies with more than 100 employees are supposed to give workers and the state 60 days' notice before shutting down or laying off large groups. Large means 500 or more, or one-third of the workforce, as long as the one-third exceeds 50.

According to one government study, employers comply with the law one-third of the time.

If a company is in violation, it owes only back pay - there are no punitive damages. Workers have to sue to collect because no government agency enforces the law.

Federal legislation introduced in June, the Forewarn Act, could change that, bringing the rule closer to New Jersey's, one of the nation's toughest pro-employee laws.

Meanwhile, Ercole has been busy.

"It was really hot and heavy last spring, when the first fallout from the recession hit," said Ercole, a partner at Klehr, Harrison, Harvey, Branzburg L.L.P.

In May, the peak since the recession's start, 312,880 people filed initial jobless claims after 2,933 "mass layoff events," as the U.S. Labor Department reported.

"Then there was a quiet time," Ercole said. "Lately, it seems like there is a lot more activity. It's a sign that the recession isn't over."

On Jan. 8, Pfizer Inc. told Pennsylvania that it planned to cut 680 jobs, 450 in Collegeville and 230 at its Great Valley facility, which will close. Together, these were the largest WARN notices filed locally in a year.

The Pfizer cuts become effective March 12, but the pharmaceutical giant had been laying off steadily since October, when it acquired rival Wyeth for $68 billion. Pfizer said then that it intended to cut 15 percent of its combined global workforce of 130,000.

"Whole departments are being cleaned out," said one employee, a manager afraid her situation would worsen if her name were used.

"We see people disappearing all around us," she said, wondering why there had been no WARN notices. "There are a lot fewer cars in the parking lot."

Pfizer spokeswoman Gwen Fisher would not specify the number of layoffs so far, but she said it was below 500. If layoffs do reach the WARN threshold in the appropriate time period, 90 days, affected employees who have been laid off would be compensated, she said.

But Pfizer would not necessarily have to pay. Like many other employers, Pfizer required laid-off employees to forgo any WARN claims in return for a severance package of at least 26 weeks' pay.

Those releases are standard, said Todd Ewan, a partner in the Radnor office of Fisher & Phillips L.L.P.

The filing of a WARN notice triggers help for the soon-to-be jobless - in fact, that is a goal of the law.

"Right when folks need this information the most, our rapid-response teams are there to work with them," said Christopher Manlove, a Pennsylvania Department of Labor and Industry spokesman. Officials explain how to get benefits and job training.

The issue drew national media attention and the support of then-President-elect Obama in December 2008.

That is when, in Chicago, 250 employees occupied their factory after their employer, Republic Windows & Doors Inc., closed with three days' notice. After six days, workers settled for $1.75 million.

"There are a lot of ways for companies to skirt the 60-day requirement, and one of them is for the company to declare bankruptcy," said Mark Meinster, an official with United Electrical, Radio and Machine Workers of America, the Republic Windows workers' union.

"Once an employer declares bankruptcy, there are no assets available to pay the claims, and that includes the workers," Meinster said.

About 1,200 truckers are fighting that issue now in New Jersey. On Jan. 13 in Camden, U.S. District Judge Renee Bumb ruled in favor of former employees of Jevic Transportation Inc., of Delanco, saying their case for damages under New Jersey's mini-WARN Act could remain separate from the company's bankruptcy case in Delaware.

Last month, at the truck stop in Mississippi, with 4,200 pounds of coiled steel strapped on his Arrow flatbed, Blaylock did not have the $500 needed to fill the gas tank.

"The company told me to abandon my load," he said. Fellow truckers at the stop chipped in so he and the trainee could drive to the trainee's home in Arkansas.

"I was mad as all get-out," Blaylock said.

On Dec. 28, Ercole, representing at least 175 Arrow drivers, sought class action in a suit filed in Oklahoma, Arrow's headquarters. The company's Web site is no longer operational, and it could not be reached by phone for comment.

Ercole said he thought that some companies time layoffs to avoid WARN notice for financial or publicity reasons.

Former Wyeth human resources executive Geri Geckle, a longtime senior-level professional who lost her job along with most top management Oct. 15, disagrees.

She said most companies, including Pfizer, did not try to skirt the law. "Could it accidentally happen in a smaller company? Maybe. You could be off a person or two."

But, Geckle said, "business needs drive layoffs," so the WARN Act would become a consideration, but not the main one.

"It's not worth the risk," she said. "There are no financial damages, but it's the risk to your reputation. It isn't how you want to be known as an employer."

The 2001 General Accounting Office study of WARN practices found that the various timelines and other requirements make the law confusing to employers and employees.

For example, "faltering" companies negotiating with banks to assemble last-ditch financing do not have to tell their employees while there is still hope.

Some firms fear that providing notice will hurt their businesses by "causing employees to leave before the scheduled layoff or commit sabotage," the report said.

Ercole does not buy that.

"Your normal, run-of-the-mill employees are not going to leave until the day you tell them to go," said Ercole, "and that could never be more true than in this economy."