BILL NUMBER: S8377

SPONSOR: MAYER
 
TITLE OF BILL:

An act to amend the labor law, in relation to requiring employers to pay
severance to employees when there is a plant closing, relocation, or
mass layoff

 
PURPOSE OR GENERAL IDEA OF BILL:

Guarantees severance pay for employees when there is a plant closing,
relocation, or mass layoff covered by the WARN Act.

 
SUMMARY OF PROVISIONS:

Section 1 amends the title of section 860-G.

Section 2 adds a new paragraph 9 to section 860-G to require that an
employer that must give notice to its employees in connection with a
plant closing, relocation, or mass layoff subject to the WARN Act is
              

required to pay severance to its employees at a rate of one week of pay
for each year of employment. In addition, if the employer failed to give
timely notice to its employees, the employer must pay an additional four
weeks of severance. If the employer is otherwise required to pay sever-
ance to an employee for any other reason, the employee will receive the
greater of: the amount provided for by this paragraph, or the amount of
severance otherwise required to be paid, but not both. The severance
obligations are offset by any back pay that is paid to employees pursu-
ant to the federal WARN Act.

Section 3 sets the effective date.

 
JUSTIFICATION:

When a worker decides to continue an employment relationship with a
single employer for a long period of time, that worker foregoes other
opportunities: other jobs, other skills, and other experiences. This can
significantly jeopardize their prospects for any other employment. They
may be seen by new prospective employers as lacking a bright future,
unable to be trained for a new job, or dismissed in the job market as
"past their prime". A worker that loyally sticks with an employer year
after year makes a sacrifice that should be respected and recognized by
the employer.

Too often, however, this does not happen, especially in the corporate
takeover context. Private equity, hedge fund, or other investor or cred-
itor pressures that result in layoffs have become commonplace. To name a
few: Toys 'R Us in 2019, Tops Markets in 2018, and the Doral Arrowwood
Resort earlier this year. In these situations, private equity, or other
investors with a "financialization" approach to business, acquired
control of the companies only to effect layoffs and closures that are
financially engineered to result in investor profits at workers'
expense. Imposing a severance requirement will have both a deterrence
effect on financially engineered layoffs, and provide additional compen-
sation to workers who suffer job losses as a result.

More importantly, regardless of the context, business closures and mass
layoffs necessarily entail widespread and enormous disruption of work-
ers' lives and livelihoods. Furthermore, because traditional unemploy-
ment assistance only pays a portion of a worker's typical wages, it does
not function as a true income replacement for workers who, through no
fault of their own, lose the job that allows them to meet their
expenses. For those who struggle to put food on the table and make rent
even before being laid off, full severance pay can be the difference
when it comes to surviving financially until new employment can be
found.

Ultimately, by requiring severance in such situations, this bill recog-
nizes the value of year upon year of loyal service, what other opportu-
nities workers have foregone to give that service, and the importance of
taking efforts to ensure that these job losses do not mean financial
ruin for workers.

 
PRIOR LEGISLATIVE HISTORY:

None.

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect immediately.