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Stop corporate abuse and fix layoff warning law

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Opinion pieces and speeches by EPI staff and associates.

[THIS OP-ED ORIGINALLY APPEARED IN THE DETROIT NEWS  ON AUGUST 24, 2007.]

Stop corporate abuse and fix layoff warning law

by Ross Eisenbrey

When Donald Trump says “You’re fired” on TV, the stars of his reality show can go back to their regular lives, grateful for their stint as celebrities. But, in real life, when a business lays off a large group of employees, the workers, their families and their communities are all in a world of hurt. How will they pay their mortgage or their rent? Put food on the table? Pay their utility bills? And what if they have kids in college?

The least the business owes these workers is the dignity of advance notice, a chance to get their lives in order before they’re out on the street. Decisions to close or relocate a facility require planning, legal work and negotiation and are usually made long in advance. Yet despite a federal law passed almost 20 years ago, most businesses don’t believe they have a duty to warn. They continue to treat the workers they’re laying off as problems to be disposed of as quickly as possible.

Three lawmakers, U.S. Sens. Sherrod Brown, Hillary Clinton, and Barack Obama, recently introduced legislation to toughen the law. It’s time for Congress to follow their lead and demand fair treatment for the victims of these corporate abuses.

At the end of the Reagan administration in 1988, after 10 years of hearings, votes in Congress and a presidential veto, a compromised Worker Adjustment and Retraining Notification (WARN) Act finally became law.

The original legislation required businesses to give notice 60 to 180 days before a plant closing or mass layoff, depending on the number of employees affected, and to consult with employee representatives and local officials about ways to prevent the loss of jobs. As enacted, however, the WARN Act requires only 60 days notice and no consultation or information sharing with stakeholders.

Despite the law, thousands of businesses shut down suddenly every year, taking employees by surprise, sometimes even locking them out with their personal possessions still inside. The Government Accountability Office found that less than one-third of mass layoffs are even covered by the WARN Act because of its many loopholes. And most employers who are covered fail to comply with the law, either out of ignorance or because the penalties and enforcement are so weak that they can be ignored.

The consequences are enormous. Social service and job placement and retraining agencies are swamped, and local businesses caught off guard. Local governments can see their tax base wiped out with no time to plan and prepare.

Why do so many businesses act so shortsightedly? Once businesses decide to sever relations with a community, many want a clean break, with no opportunity for those being left behind to make demands, inquire into finances, or organize protests. A few businesses fear sabotage, though it is extremely rare. Businesses rarely imagine that their employees could offer ideas or help attract investment that could save jobs. And especially when relocating operations to a foreign country, businesses want a minimum of publicity and as little opportunity as possible for political leaders to get involved.

What can be done? First, close the law’s loopholes and ensure that every mass layoff or closing involving 50 or more employees is covered by the Act. Second, double or triple the notice period for the largest closings so there is time to intervene and save jobs that can be saved, while requiring the business to meet with employees and local officials and provide relevant financial information.

Third, there has to be real enforcement. Currently, no government agency has the authority to prosecute WARN Act violations, and the penalty — 60 days’ back pay — is so minimal that private suits are rare. The U.S. Department of Labor and state attorneys general must be given the power and duty to enforce the law, and penalties should include double damages and punitive damages in egregious cases.

Twenty years ago, the U.S. Chamber of Commerce and other business lobbyists told Congress no law was needed because businesses would do the right thing. The passage of time leaves no doubt that the lobbyists were wrong. Businesses look out for their bottom line. Government still has to look out for the employees, their families and their communities.

Ross Eisenbrey is vice president and policy director of the Economic Policy Institute, a nonprofit think tank in Washington, D.C. (www.epi.org).

[ POSTED TO VIEWPOINTS ON SEPTEMBER 10, 2007. ]


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