June 12, 2006 – A bill designed to close loopholes in the local plant closing law was held in the Labor and Agriculture Committee on Monday after testifiers said that some of the bill's provisions were "anti-business."
"What new anti-business wind blows at the time when our beleaguered economy needs new business and new employers more than ever?" attorney Adriane J. Dudley, who is representing the Hotel and Tourism Association, asked senators.
Dudley said that under the current law, a plant closing is triggered when 50 percent of employees working at a particular company are terminated after that company is sold. At that time, the employees – if they are not rehired by the buyer – are given severance packages and a 90 day notice of termination.
"The definition of employee under the present law is someone who has worked in a plant for a period of one year; likewise, the employer in question would have existed or operated for one year," she explained.
Dudley said that if the new law is amended to incorporate the provisions included in the bill, those definitions would change, allowing employees working for less than one year to receive severance pay if a plant closing is triggered.
Furthermore, she said the bill allows for a "partial plant closing," and awards severance pay to any employee terminated when a business is bought or sold. "Severance will also be given to employees who lose nothing and keep their jobs in the transfer of ownership," Dudley said.
Diane Butler, president of the St. Croix Chamber of Commerce, added that this provision would provide a "windfall to employees who might not have lost one day of work."
"This bill goes too far and does not protect businesses in these struggling times," Butler said. She explained that the bill forces companies looking to sell their businesses to factor the cost of the employees' severance packages into the asking price, since potential buyers would not want to assume the responsibility of paying for severance.
"So, while the intent of the bill may have been to assist and retain as many local employees as possible, it would instead discourage potential employers to the territory," she said.
Dudley said, "Severance is for employees who are severed."
Testifiers said that the new definitions of "employer" and "employee" were unnecessary, and that the provision relating to "partial plant closings" was ambiguous. They also said the bill did not specify what thresholds, in terms of cost and time, apply to employees who are able to collect severance pay after working for less than a year.
"If an employee is working for a week when the company is transferred, do they get severance pay?" Dudley asked. "Once you start going away from the established statute, it's like you're saying severance could be given to anybody anywhere at anytime."
Dudley and Glenn Smith, director of Labor Relations at the Department of Labor, said the current plant closing law goes far in protecting the rights of employees.
"While there are a few loopholes, it's an excellent piece of legislation," Smith said. "Not many states have established something like it."
However, Smith said that while some of the bill's provisions are "controversial," the department was in favor of the increased fines and penalties included in the measure for employers who violate the law.
The bill raises the penalty cap for violators from $100 to not more than $3,000.
While senators said they understood the concerns of testifiers, they also commended the intent of the bill. "This bill touches on the cornerstone of labor in the territory," said Sen. Ronald E. Russell. "And we want to strike a balance in our economy in this very delicate time of American jurisprudence, where even the U.S. Supreme Court is anti-labor, Republican and making sweeping changes that affect us. It's up to us to decide what laws we want here in the territory to protect both the employees and the employers."
Committee Chairman Terrence Nelson said that the bill keeps certain employers from "sliding under the radar."
"Some companies, when they want to sell their business, say that they aren't closing but 'transferring' from one owner to the next while remaining open," he said. "That way, a plant closing isn't triggered, employees don't have to get their severance pay and the purchasing employer can choose to downsize later on and hire their own employees."
After the meeting Nelson said that purchasing employers have also been "buying out the seniority of employees" by rehiring them after a company is purchased and stripping them of all their previous benefits. "They won't be getting seniority, but they would be keeping their job," he said.
"And this bill seeks to address that by stating that those employees who don't retain their seniority after they're transferred would at least by paid severance when they move from one agency to the next," he continued.
At the end of the meeting, senators said they would hold the bill in committee until the bill's sponsor, Sen. Shawn-Michael Malone, was present to discuss the measure. Senators also said they wanted to hear from testifiers who are in favor of the bill.
Present during Monday's meeting were Sens. Craig W. Barshinger, Norman Jn Baptiste, Nelson and Russell. Sens. Pedro "Pete" Encarnacion, Neville James and Celestino A. White Sr. were absent.
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