WITHOUT WARNING: Effects and reform of the WARN Act

Reform overdue, WARN Act critics say

Worker advocates look to eliminate flaws, loopholes in federal law

Bill Tomko of Harrisville, Pa., who was laid off abruptly from Emery Worldwide in 1991, has grown weary of officials who promise to address workers’ concerns but fail to reform the WARN Act.

Special to The Blade/Don Wright
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Unlike many U.S. workers who abruptly lose their jobs, Mike Oszterling and others at a Ford Motor Co. plant in Brook Park, Ohio, received a two-year notice of the factory’s closing.

BROOK PARK, Ohio -- Two months ago, Ford Motor Co. gave the bad news to the 1,100 hourly workers at its casting plant in Brook Park, on the outskirts of Cleveland. The plant will close.

The workers, though, were given a two-year notice -- ample time to prepare for the loss of their jobs and to plan for the future -- before the factory closes in mid-2009. The move is part of a series of plant closings and job cuts that the automaker says is crucial to its survival.

Mike Oszterling, a plumber-pipefitter who has worked for Ford for 15 years, said he'll be ready when the plant closes.

"I will survive," Mr. Oszterling said. "If I have to, I will sell off everything. I have good family and friends to support me."

Ford's decision to give workers a two-year notice about the planned closing of the Brook Park plant had nothing to do with a federal law requiring companies to provide advance notice before closing facilities or laying off workers, Ford spokesman Marcey Evans said.

"Working with the union, we have consistently tried to provide in addition to time, financial packages to help workers move into other careers. It's a difficult time for the company and them," Ms. Evans said.

But that's not the way notice of impending layoffs is usually given to American workers.

READ MORE: Effects and reform of the WARN Act

A Blade investigation has found that thousands of workers are laid off each year nationwide with little or no warning, despite a federal law requiring many businesses to provide a 60-day notice to employees.

The federal law, the Worker Adjustment and Retraining Notification Act, or the WARN Act, is long overdue for reform, workers and activists said. The law should be amended to close loopholes that have protected businesses accused of skirting it, and it should be reformed to account for the nation's changing economy, they said.

They agree with the leading Democratic candidates for president -- Sens. Hillary Clinton of New York and Barack Obama of Illinois and former U.S. Sen. John Edwards of North Carolina -- as well as Sen. Sherrod Brown, (D., Ohio). All have called for an overhaul of the WARN Act as a result of The Blade's investigation.

Bill Tomko of Harrisville, Pa., who was laid off abruptly from Emery Worldwide in 1991, has grown weary of officials who promise to address workers’ concerns but fail to reform the WARN Act.

Reform proposals include:

• Lowering employee thresholds so more employers would be covered by the law and requiring businesses to provide notice if they lay off a large number of employees or shut down.
• Increasing the notice time from 60 days to 90 days or even six months to give workers more time to adjust and to provide additional time for the business to examine options to save jobs.
• Giving the Department of Labor the responsibility to enforce the law, while preserving the right of workers to hire attorneys if the government does not act.
• Boosting the penalties to provide a steeper consequence for employers that violate the law and punish employers that purposefully break it.

When Congress passed the WARN Act in 1988 lawmakers were "principally concerned about the effects of layoffs at large factories," Ms. Clinton said.

"The Blade's study reveals that 20 years later, the WARN Act is covering few workers in an effective manner and simply is not achieving its goals," Ms. Clinton said in a statement. "In my administration, I would support and pursue efforts to update the WARN Act to reflect the realities of the modern economy."

Mr. Obama said changes in the economy have "put new pressures on manufacturers that have eliminated the jobs of thousands of American workers."

"As we work to restore America's competitiveness and revive our manufacturing sector, we must also ensure that workers have the skills and training they need to perform their jobs in today's economy," Mr. Obama said in a statement. "We must give the WARN Act teeth, to ensure that workers are not left in the lurch without a job or a paycheck."

Mr. Brown, who on Monday introduced legislation in the U.S. Senate to overhaul the WARN Act, proposes that the U.S. Department of Labor and state attorneys general be given the power to enforce the law, increasing penalties, lowering its thresholds, and lengthening the notice period.

"While notice of a layoff is no substitute for a job, the WARN Act was supposed to give employees time to find a new job and for help to be provided," said Mr. Brown, a member of the Senate Health, Education, Labor, and Pensions (HELP) Committee. "Under current law, fair notice has proven to be the exception, not the rule. Employers have laid off workers in phases to avoid threshold level, used subsidiaries to evade liability, and pressured workers to sign documents to waive their rights. This needs to change now."

Since Congress passed the WARN Act, hundreds of companies each year have given their workers a 60-day notice before a massive layoff or plant closure. The warning allows the workers time to look for new jobs and put their finances in order before their paychecks and benefits disappear.

But when companies don't give employees notice of impending layoffs, the consequences for the workers can be devastating, said Julie Hurwitz, the former executive director of the Detroit-based Maurice and Jane Sugar Law Center for Economic Justice, which focuses on the WARN Act.

"It takes years to wind its way through litigation, and by the time you get through all of the motions, and the defenses and court rulings that whittle away, by the time they end up with the few pennies that they do end up getting . . . they walk away feeling just as bitter as they started," said Ms. Hurwitz, who now works in private practice.

Testimony to Congress

In 1993, Bill Tomko, a former Pittsburgh-based employee of Emery Worldwide, an air cargo company, testified before the U.S. Senate's subcommittee on labor and human resources about the ineffectiveness of the WARN Act.

Members of Congress listened to Mr. Tomko, but they never amended the law.

Julie Hurwitz, formerly of the Sugar Law Center, says workers who sue often end up with bitter feelings.

"Our country was built with American workers," said Mr. Tomko, 54, a Vietnam veteran, who was laid off abruptly on April 13, 1991, along with 950 employees at more than 20 Emery Worldwide terminals nationwide. "But we have nothing. We have no say-so."

Mr. Tomko and about 54 other employees laid off at two Pittsburgh terminals sued Emery Worldwide under the WARN Act. After more than two years of litigation, the company reached a settlement with the employees.

But the WARN Act was of no use to most of the other 950 laid-off workers because there weren't enough employees at the other Emery terminals to qualify as violations of the law.

"I believe that the WARN Act must be strengthened in order to protect people like me and my former co-workers," Mr. Tomko said during his 1993 testimony. "I hope that my testimony will help to prevent other working people from having to go through the kind of emotional and financial hardships that I have gone through and to protect me from ever having to go through this again."

More than 14 years later, Mr. Tomko has grown weary of government officials who promise to address the concerns of workers but fail to reform the WARN Act.

"You have to look at this," he said. "These are people who have lived here for two or three generations and worked in the coal mines or wherever. Treat 'em with respect, honor, dignity, and be there for them. It's just a hard road to travel."

Time for alternatives

Thomas Croft, the executive director of the Steel Valley Authority, a Pittsburgh-based economic development agency, believes that notice requirements under the WARN Act should be extended from 60 days to six months to allow more time to examine alternatives to layoffs or plant closings.

Mr. Croft's agency was incorporated by the city of Pittsburgh in 1986 to assist in economic revitalization and to help save jobs as western Pennsylvania dealt with the deterioration of the steel industry and its manufacturing base.

Pittsburgh attorney Jay Hornack says it’s often tough to collect money for workers who didn’t get proper notice.

The agency also publishes the Layoff Aversion Guidebook, a book of job-retention strategies.

"I don't even think 60 days is enough time for assisting dislocated workers, and it is certainly not enough time to prepare for a turnaround plan in a situation where a company is in a crisis," Mr. Croft said. "Six months is certainly a better framework."

That extra time, Mr. Croft said, would give the public and the company's stakeholders -- its suppliers, its workers, and local government -- time to look for alternative solutions that avert the layoffs. If the layoffs are unavoidable, he said it would give the displaced workers more time to adjust and even seek retraining.

Access to job training

Edward Fletcher, the former mayor of the village of Camillus in upstate New York, wishes he had more warning before Camillus Cutlery Co. suddenly closed its doors in February.

Camillus Cutlery, one of the oldest knife manufacturers in the nation, was the most recognizable business in the 1,250-person village of Camillus, about 10 miles from Syracuse.

Mr. Fletcher said he wishes the village could have done more to work with the owners to try to save the plant and the jobs.

"I feel really bad for the people," Mr. Fletcher said.

"It really hurts me to know that I could have done something, or [U.S. Sens. Charles] Schumer or Hillary [Clinton], they could have done something . . . or gave them some initiative to say, 'We'll stay open and maybe we can get this thing to work out better,' " the former mayor said.

Thomas Croft, a Pittsburgh-area development official, says notice requirements should be extended to six months.

U.S. Rep. Marcy Kaptur (D., Toledo) said the WARN Act's authors pushed for at least a 60-day notice so states could do a better job of getting workers access to training programs so they can get new jobs.

Ohio's failure to tap federal job-retraining funds, combined with the need to get more help to workers who lose their jobs because of free-trade deals, is another reason Congress needs to take action to overhaul the WARN Act, she said.

"The money I vote for doesn't get back to the workers who are losing their jobs under this law you are highlighting," Miss Kaptur said.

Acting in 'good faith'

Jay Hornack, a Pittsburgh attorney who represented Mr. Tomko and other Emery workers in their lawsuit in the early 1990s, said workers often come to his office believing that their employers made poor business decisions by laying them off.

"Had they been given notice, they really want to convince the business to try to change its mind," Mr. Hornack said. "They'd really rather have their jobs back.

"If it's not possible, or things have gotten to the point where there's a lot of resentment on the part of the workers," he said, "they'll just want to receive the maximum amount available under the law and that's when we tell them how little they can receive and where to go from there."

Mr. Hornack said it is often difficult collecting money for employees who didn't receive proper notice under the WARN Act.

"Those are the cases we most often turn down -- cases that are strong on merit, but collection was going to be difficult," Mr. Hornack said.

Courts have ruled in some cases that a company violated the WARN Act but awarded no damages to its former employees under the premise that the company acted in "good faith" to notify its workers.

Mr. Hornack believes a "bad-faith" provision that toughens the penalty for companies that purposely violate the law would be a welcome change.

"If you can show bad faith, that might on the one hand make even more employers comply with the law in the first place and on the other hand, make those cases more financially rewarding both for lawyers and the clients," Mr. Hornack said.

Employers often claim that the WARN Act shouldn't apply to their business because their layoffs were caused by a business circumstance they couldn't predict or they were in the process of negotiating with lenders. These common defenses often slow the litigation process and delay any damages that would be received by workers, lawyers said.

Stuart J. Miller, a New York City attorney who specializes in worker' WARN Act lawsuits, said there is nothing he or other attorneys can do when companies use "legitimate" loopholes, such as layoffs spread over time to avoid triggering the notice requirement.

But when companies give last-minute notice and assert they were seeking financing and on the verge of collapse, Mr. Miller said he presses for details.

"It's my job as an attorney to establish whether or not that defense had merit and whether or not the company had a reasonable belief it was going to obtain that financing, whether it had a reasonable belief it was going to save the company or was it just trying to sell the company anyhow, and was the whole thing a sham," he said.

Law never updated

Congress designed the WARN Act largely to assist blue-collar workers who were losing their factory jobs.

But with major changes in the U.S. economy over the last two decades, the victims of sudden company closings and major layoffs have spread from blue-collar workers to white-collar employees.

Marcus Courtney, a former Microsoft software test engineer, recently testified on Capitol Hill about the need to beef up the WARN Act as part of efforts to help workers who have lost their jobs.

"It came out of the plant closings in the '80s, and it's never been updated," said Mr. Courtney, who is president of a tech workers' union in Seattle. "It's not adapted for the economy of today.

"One of the shocks for the service workers is they call me and say, 'I lost my job and everybody lost their job without notice. Isn't this against the law?' It's a huge shock to white-collar workers," Mr. Courtney said.

Making it work

Macrina J. Gonzalez is among the high-tech workers who have been abruptly laid off.

Ms. Gonzalez lost her job without notice in December, 2005, when the compact disk manufacturer she worked for in Valencia, Calif., tumbled into bankruptcy. She said she suffered from depression, was unemployed for eight months, and now works at a warehouse for less pay.

"If they had followed this law, the employees could have looked around for something else and wouldn't have been on the street without a job," said Ms. Gonzalez, 48. "My life changed from one day to another."

After Bill Tomko testified on behalf of Emery Worldwide employees in 1993, he hoped Congress would take action to fix the WARN Act so that other workers like Ms. Gonzalez wouldn't have to endure the same pain he faced. "I prayed it did," Mr. Tomko said.

Mr. Tomko still believes Congress has a chance to make the WARN Act work for workers.

"Something has got to be done," he said.

Contact Steve Eder at: seder@theblade.com or 419-304-1680.