At a Senate hearing in Frederiksted Thursday, the Rules and Judiciary Committee approved a bill to enhance severance pay, establish rehiring preferences and increase notification rules when companies lay off large numbers of employees.
Current law requires companies that close, relocate or lay off 10 or more employees to give 90 days’ advance notice and pay severance equal to a week of pay per year of employment. The bill, proposed by Sens. Shawn-Michael Malone and Usie Richards, would add severance pay for time at "predecessor" employers, where companies take on new ownership but continue with the same employees.
Both the seller and buyer of the company would have notification requirements, and the volume of required information would increase. According to the bill’s provisions, laid-off employees would have "permanent preference in hiring and employment at other workplaces of the employer," and rehired employees would retain seniority and its accompanying benefits in their new position.
In written comments to the committee, Hovensa oil refinery and the St. Thomas/St. John Chamber of Commerce both opposed the bill’s provisions on the grounds it will drive away new businesses.
"The Chamber appreciates the bill’s intent to provide greater protection to local residents against unannounced employment losses," wrote Adriane Dudley of the Chamber of Commerce. "(B)ut its effect would unreasonably restrict the growth of existing small businesses and repel any new business development."
In May, before retiring June 1, Hovensa Vice President Alex Moorhead penned a letter to the Senate listing a string of specific objections and recommendations for parts of the law. For instance, the bill defines a "plant closing" to include any shutdown costing a loss of at least 10 jobs over a 30-day period, creating a lower threshold for a plant closing than a "mass layoff," according to Moorhead.
Moorhead echoed the Chamber of Commerce’s concerns about economic impacts.
As written, the bill mandates employers provide severance benefits to employees who lose their jobs—even if they were hired for a construction job of a fixed term or contract, he said.
"This … will have an adverse impact on the cost of construction projects," he said. Also, an employer would have to pay severance benefits even if the employees are out of work because of a union labor contract dispute, he said.
Malone responded that V.I. workers need more protection against layoffs than their stateside counterparts, because "workers cannot simply move down the road" to find new jobs.
Sen. Neville James said the bill was to some extent aimed at Hovensa, because it is the territory’s largest employer.
"I fully understand why Hovensa would be apprehensive about what we are trying to do,” James said. "But I believe at the end of the day we are moving in the right direction."
Voting to send the bill on to the full Senate were: James, Richards, Sens. Carlton "Ital" Dowe, Sammuel Sanes and Michael Thurland. Sens. Patrick Sprauve and Celestino White were absent.
