Company Shutdown

AnaFL · April 2002

We heard the sad news that our company will be shutting down this year. We have 53 employees left in our Florida plant, and 450 in our Wisconsin plant. Only the Florida plant is shutting down. All the plans and preparations were done by the board of directors in Wisconsin, and even our top managers here did not know about the finality (we all certainly suspected it!) of the decision until we were called into a company-wide meeting by our GM/VP on Monday of this week. The GM said in the meeting that he was giving us notice (60 days), but he didn't say why of course, because he wants to keep everyone here and working and not have to pay them for the 60 days without receiving work from employees. He also said that everyone would receive a permanent layoff letter on a specific date (July sometime probably) and only when they received that letter would they then be eligible for all the benefits associated with a shutdown, such as unemployment, possible TAA, and a few more internal benefits such as health insurance free for 6 months, then cobra rates after that etc.

I read the WARN act and from what I read, I believe we covered the requirments. The problem I'm having is that some employees may and some have asked to leave a bit earlier than the permanent layoff date because they are moving out of State for example, and they are afraid to leave because they could lose out on the benefits, and our GM was suggesting they use vacation time etc. to try to make it through when in fact they should just get paid for it due to the 60 days notice requirement. Am I understanding this correctly or not? Help!

And on another note....anyone in need of an hr person in South Florida soon??

I would greatly appreciate any tips anyone could give me on shutdown procedures/federal/state requirements just to make sure we are doing everything legally. Thanks in advance....

Ana

Jen D · April 2002

Ana,

I don't have any answers for your questions, I just wanted to say that I'm sorry about the bad news. I hope wherever you end up you will continue to post on the site!

I'm in Cincinnati but if I ever hear of any positions in FL, I'll let you know.

Good luck!

Down_the_Middle · April 2002

I also share in the unfortunate situation you're in.
Plant closings are always more awkward than mass lay-offs (WARN Act) due to the exceptions that can be invoked with the faltering company and unforeseen business circumstances provisions which alter the 60 notification requirement and affect other issues. Also, at the risk of alarming you, it's important for you to remember than COBRA continuation rights for the health plan may disappear if the plan is d/c'd soon.......... All of this suggests to me that your questions are better answered by the legal counsel that is undoubtedly involved in this shutdown. They'll have a better handle on the cash reserves, state requirements and wind down strategy to answer your questions-----so you can answer employee questions. Someone might also be needed to remain employed during the shutdown period to handle all the post termination issues that will arise------maybe that will help bridge some time for you. Good luck with the process.

System · April 2002

It was my understanding that the WARN Act only applied if you had 100 or more employees that were losing their job.

I actually was in the same situation a few years ago when my company shut down. The employees were told on Monday and we shut down on Friday. The severance package was $1,000 per year of service and we lost all benefits completely because the company closed. It sounds to me like you are getting a good deal. The 60 days notice allows your employees to secure employment before they are out of work.

Best of luck.

Don D · April 2002

WARN also requires that the company notify "local government officials and the state dislocated-worker unit" so that their "rapid response team" (if Fla. has one) can come into play on a timely basis. I've worked on rapid response teams with a number of plant closures when I worked for the State. These teams are typically made up of very human, caring individuals and the series of things they scramble to put in place for the workers are very valuable. For your employees, it can mean somebody assembling speakers and materials relative to unemployment benefits, job training, credit counseling, group or individual counseling, job search assistance, resume preparation and on and on and all of that is free. Generally the ee is allowed to bring other family members to the meetings. And mass UI claims can be set up to keep your people from having to drive to the local UI claims center. People will attend thinking "why am I going to hear this?" but they will come away from it with valuable information. Also, under WARN, plant closing is defined as temp or permanent shutdown of (even) a single site of employment IF THE SHUTDOWN RESULTS IN AN EMPLOYMENT LOSS DURING ANY 30-DAY PERIOD FOR 50 OR MORE FULL TIME EE'S. If you like, I will fax you a 4-page summary letter describing the requirements of WARN. Your manager who made the announcement said you would be receiving a letter and "Only when you receive the letter would you be eligible for unemployment insurance and Trade Adjustment Assistance". He is wrong about that! Beyond responding accurately to the UI office's questionnaire or phone call, the employer has no role in determining eligibility for UI or TAA. The thing to remember is "The employer initiated the separation", not the employee. Employers will often say, "I'll see to it that you don't draw unemployment if you do this or that". And, more often than not, they overestimate their ability to manipulate that. Plant or company closures falling within the WARN Act parameters will more than likely automatically qualify the ee's for UI if they are otherwise eligible (monetarily, able and available, etc.) A call to the MANAGER (not a line claimstaker)of your local UI office will set you at ease with the details of that; but, if your manager is attempting to 'persuade' ee's to stay on or he'll see that they don't draw UI, he's mistaken about his ability to control that. Be sure you've documented the date, time, place, speaker(s), message and attendance at the announcement meeting you already had. That will perhaps be requested by the UI claimstaker. Also ask the UI manager if a Florida employee who has been notified of impending shutdown can go ahead and leave the job early to seek other work and still be eligible for benefits should they file later. The initiation of the separation by the EMPLOYER will be key in this process. Sorry this is so long, but, I wanted to do all I could in your unfortunate circumstance.

AnaFL · April 2002

Don

Firstly, thank you so much for your detailed and helpful response. Thank you also to all of you that have responded with advice and well wishes so far. I am very appreciative of this wonderful site!

To get back to your response Don, on the day after the announcement by our GM, we did have meetings with two people, one from the Workforce Development Center (Unemployment office) and the other was a regional rep from R.E.A.C.T.(which is what you mention in your response I believe). Their visit was very helpful and they gave us a ton of invaluable information, and they also helped the employees so much with morale etc. However, they did state very clearly that since our employer was giving us notice and they had told us that permanent layoffs would only actually begin on a certain date (e.g. June 21st being the earliest date), if employees left early, they would not qualify for unemployment benefits or for the TAA (if our company is approved/certified), because they would be voluntarily quitting early by their own choice. So she warned us to not quit early because we would lose out on all benefits, not only any company benefits (such as 6 mo free med insurance, possible severance packages), but also State/Federal benefits such as UC and TAA.

So now that we have an employee requesting to leave early (for good reason - moving out of State, and his house is now under contract), I don't know how to respond to his request in this case. He is willing to leave on a certain date, and then put in for vacation to use up the time (in an active status), but he doesn't quite have enough vacation time to make it to that June 21st date. So he asked if he could use one week unpaid time, and then use the 10 days vacation after that, which would take him exactly to that date of June 21st. Our GM is saying that we cannot have him be unpaid so we would have to pay him for that one week of unpaid time, which would potentially open up the can of worms with all other employees, i.e. that should employees leave during the 60 days timeframe, they are entitled to receive pay. So nobody seems to know how to effectively handle this situation. This is a good employee, who's been with us for 13 years, and he doesn't understand why we would deny him this request etc. Are we not understanding the WARN Act correctly in this case? Because the way I see it is that just because the employee asks to leave early due to employment opportunities, moving etc., they are only ultimately doing that because we are shutting down, so the company are the ones that are actually initiating separation. Right?

Thanks,
Ana

Don D · April 2002

[font size="1" color="#FF0000"]LAST EDITED ON 04-26-02 AT 11:17AM (CST)[/font][p]
Sounds as if your company has complied with WARN: They've filed the appropriate WARN paperwork, have met with the local UC people and REACT, which I guess is the same as 'rapid response'. UC laws as you know vary from state to state since they are state laws rather than federal. The manager was correct that under WARN, TYPICALLY, if the employee leaves before the 60 days is complete, more than likely they are not eligible for UC. BUT,In my state, one wrinkle is that if the employee was in the 60 day period and had another offer and left for that offer and then it failed to materialize, was withdrawn or the new job ended shortly after taken, the employee who then files for UC, probably is eligible to draw, since they 'left for good cause'(another job when one is ending) and they are then out of work on the second 'through no fault of their own'. When an employer gives appropriate WARN notice and pays a person through that period and tells you "I won't be needing you, you can go ahead and leave", he can't draw since he's being paid and is considered employed through the period of notice. Even if employees do leave 'early' they can become eligible subsequently for UC by starting a new job and making 8 x weekly benefit amount (MS law anyway). Your ee who wants to quit early and exhaust his leave and sell his house; this is a personal decision he has to make. If he leaves early, he leaves early, and gives up the company benefits promised him if he stays. If he has a job to go to, he cares not about unemployment insurance. He has to weigh it. The company should not bend rules and keep him on as unpaid. That word spreads like wildfire, plus it could jeopardize your TAA petition. Disregard him being a long time employee. But again, if he makes that decision and has a tangible job offer, he would qualify for UC in MS, as stated above, if that job doesn't materialize. Be careful what you 'promise' him he'll be eligible for. Let the UC staff do that. Good luck to you!

Carol CA · April 2002

Your employee is making the decision to leave early, thus he is not eligble for the benefits. Period. Do NOT make any special exceptions for him or you are setting a precedent for your other employees. It is a tough balancing act that we need to perform sometimes. I know you want to help the employee, but on the other hand you have to be consistent and uniform in the applicantion of your policies and benefits. It is not your fault he wants to leave early. It sounds like this employees wants to have his cake and eat it too. He appreciated the early notice so he could find other employment, but now he also wants you to pay him all the benefits even though he is leaving early. Unfortunately, it just doesn't work that way.

Good luck to you and all of your employees.

Company Shutdown

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