Business & Economy

State WARN Act would require notice before mass layoffs

Employers planning layoffs in Vermont would be subject to new state notification requirements, under legislation going to a preliminary Senate vote this week.

A bill under consideration closely resembles federal rules that mandate 60 days notice before companies implement mass layoffs of 50 or more employees. The Vermont legislation would require 45 days advance warning to state officials and 30 days notice to local leaders, employees and any unions whose membership would be affected.

The advanced warning could give state agencies time to help prevent the layoffs from occurring, Labor Commissioner Annie Noonan said by email Monday.

“(W)e can make suggestions for assistance and/or funding that might alleviate the need for the business closing or layoff,” Noonan wrote. The Department of Labor also can jump-start the process of drawing down federal assistance for workers whose layoffs are imminent.

All Vermont businesses with 50 or more employees would be subject to the requirement. The number of employees counts full-time and part-time workers or a combination of both, as long as the part-time employees work at least 1,040 hours per year.

A seasonal employer whose layoff does not exceed 20 weeks is not affected. If an employee is offered the chance to relocate to a different site within 35 miles, that job would not count toward the “mass layoff” of 50 or more workers.

H.758 was drafted at Noonan’s request.

Labor Commissioner Annie Noonan (left) and Tracy Phillips, Unemployment Division Director, propose stricter requirements for layoff notices in Vermont. Photo by Hilary Niles/VTDigger
Labor Commissioner Annie Noonan (left) and Tracy Phillips, Unemployment Division director, propose stricter requirements for layoff notices in Vermont. Photo by Hilary Niles/VTDigger

“I would look for a state WARN Act because the department, and frankly many people in (the Statehouse), have asked questions that we can’t answer,” she told the House Committee on Commerce and Community Development in February, when the bill was first discussed.

Senate Economic Development Committee Chair Sen. Kevin Mullin, R-Rutland, said the bill would help the Labor Department respond more effectively to layoffs, including providing workers with job placement assistance or retraining.

“There was a lot of frustration last year after not being able to get information from IBM about the layoffs there,” Mullin said Monday. He said the bill as it stands is a compromise between what the Labor Department asked for and how the business community responded.

William Driscoll, vice president of Associated Industries of Vermont, said by email Monday that his organization still feels the legislation is unnecessary, but he said the bill is a compromise.

Bill Driscoll, vice president of Associated Industries of Vermont, testified before the House Fish, Wildlife and Water Resources Committee against a bill to regulate toxic chemicals in children's products. Photo by John Herrick/VTDigger
Bill Driscoll, vice president of Associated Industries of Vermont, testified before the House Fish, Wildlife and Water Resources Committee against a bill to regulate toxic chemicals in children’s products. Photo by John Herrick/VTDigger
“We appreciate how both the House Commerce and then the Senate Economic Development Committee made a number of improvements to the bill to address practical compliance and fairness issues,” Driscoll said.

H.758 would grant subpoena power to the labor commissioner, who would be authorized to determine whether a violation of the so-called WARN Act had occurred. WARN stands for Worker Adjustment and Retraining Notification. The state would be prohibited from revealing information deemed proprietary for the company.

The bill originally called for 90 days notice from businesses with 20 or more employees.

Driscoll asked lawmakers to dial back the mandate.

“The smaller the company affected,” Driscoll told the House committee, “the more hazard you’re entering of companies just not being able to comply as a practical matter.”

Less than 3.5 percent of Vermont employers would be subject to the new law, Noonan said.

About 725 private firms in Vermont employed 50 or more workers in 2013, according to data from the Vermont Department of Labor. They collectively employed more than 137,000 people — more than half of the state’s private industry workforce. Smaller companies accounted for about 108,000 positions in all, among almost 20,000 private firms.

Had the lower threshold of 20 or more employees been retained, it would have added about 1,310 more companies employing nearly 38,500 workers last year.

As it stands, the legislation would apply to layoffs that occur within a 90-day period, even if the employees work for the same company at different Vermont sites.

Noonan said the 90-day window was important because she has sensed that rolling layoffs in the past have been timed to strategically avoid triggering the notice requirement.

In the event of violations, the commissioner could impose fines on the employer of up to 10 days of severance pay for each employee whose layoff was not properly warned, and up to one month of extended medical or dental insurance coverage for that employee, depending on other payments and compensation offered to laid-off workers.

An administrative penalty also could be levied — up to $500 per day for each day the employer fails to notify the Department of Labor in time.

The labor commissioner would have the authority to reduce the fines if the employer acted in good faith.

Some circumstances that would exempt a company from facing fines include layoffs due to a strike or lockout, a disaster beyond the employer’s control, or if “dramatic business circumstances” simply could not have been foreseen by the time the 45-day notice would have been required.

In the event the business is trying to secure capital to avoid layoffs, the fine also may be avoided. This exemption would depend on the commissioner’s determination of whether the employer “in good faith” believed knowledge of a pending layoff could have dissuaded needed investments.

Noonan said advance notice is important not just for employees whose income will be affected, but also for regional economic development planning, for local town and school responses to budget decisions, and for her department’s management of the unemployment trust fund.

CORRECTION: This article was corrected at 3:30 p.m. on April 23, 2014. An earlier version referred to the number of “establishments” in Vermont in 2013 that would have been subject to a proposed state WARN Act. The WARN Act, however, would apply to “firms,” one of which can operate many establishments.

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Hilary Niles

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  • Wayne Andrews

    All this is only 60 days more pay employees will receive over and above the span for unemployment.

  • Josh Fitzhugh

    How many other states have similar legislation?

  • Bill Olenick

    What next?
    Telling us how to wipe our butts?

  • Cheryl Pariseau

    So lest than 3.5% of business in the state will be subjected to this new law and a 1/6th of the population. However, every single person in this state is effected by the high taxation and what is being done about that??? NOTHING! It would seem that, once again the legislature has their priorities messed up. It is really time come November to clean house and get some elected officials in there that are going to do something for the greater good of this state. Adding more regulations to business is not and should not be a priority.

    • Paul Richards

      Agreed! How about tightening up the system to reduce the fradulent unemployment applications? The unemployment division plays Judge and Jury in deciding who gets unemployment pay. If the employer fires an employee for gross misconduct and the employee says it was not, the state pays the unemployed anyways. They get to decide and they always side with the former employee. In some cases, they may not charge the former employer but they will still pay the former employee so we all pay.
      Instead of focusing on problems like this they would rather focus on yet more regulations and even more handouts.
      Keep driving the business out of Vermont!

  • Wayne Andrews

    One can only guess at the sabotage the laid off employees will perform, items going home in the lunch box and sudden workers comp claims the employer will face.

  • Well, if there were any jobs to help laid off workers find, this proposal might work, BUT:

    http://truenorthreports.com/chamber-leader-denies-shumlins-rosy-jobs-outlook-warns-of-death-spiral

    When people aren’t told the truth, how can they make a decision….about anything?