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Ryan Winkler: Layoffs should never arrive unannounced

There's a law about this, but it's too often ignored. So let's make it stronger.

By RYAN WINKLER

Last update: November 5, 2009 - 10:38 AM

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At this time last year, the bottom fell out. Wall Street went bust, and multibillion-dollar bailouts became as common as home foreclosures.

Minnesota has lost more than 124,000 jobs. Reports from the Department of Employment and Economic Development record thousands more layoffs every month. This week economic experts expect the national unemployment rate to top 10 percent for the first time since 1983.

Around the time the economy hit free fall, Northern Engraving Company announced plans to close its Spring Grove, Minn., plant -- putting more than 200 Minnesotans out of work. In compliance with the federal Worker Adjustment and Retraining Notification Act (WARN), Northern Engraving gave employees 60 days' notice before shutting its doors. That gave workers more time to find new jobs before their old ones were eliminated.

Early warning for mass layoffs is important to all of us. According to the Journal of Labor and Economics, laid-off workers who receive ample notice have smaller earning losses and within three to five years will earn, on average, 10 percent more in wages. Early warning gives workers a chance to retool and regroup, and the whole economy is lifted when productive people find work more quickly.

But thousands of Minnesota workers who have lost their jobs over the last 12 months haven't received the fair warning the law requires. That's because employers sometimes ignore WARN, giving loyal workers just days, or even hours, before their job is terminated.

The problem is widespread. According to the Bureau of Labor Statistics, nearly 60 percent of the 3.6 million U.S. workers who lost their jobs between 2005 and 2007 did not receive notification.

Sometimes employees pool their limited resources and fight back. When Republic Windows and Doors laid off hundreds of employees at its plant in Chicago last year with just 72 hours' notice, workers locked the doors and wouldn't leave. By drawing attention to their situation, Republic employees were compensated with 60 days' back pay, as required under WARN.

More commonly, workers file class-action lawsuits against their employers to receive the wages they earned. In 2006, Deltak Corp., in Plymouth, laid off more than 100 employees without even a day's notice. So the workers took Deltak to court. After six months, Deltak was found guilty of violating WARN and was ordered to compensate dislocated workers 60 days' pay.

But after state and federal taxes and the legal fees needed to win the judgment, Deltak workers received only a fraction of what they were owed. Bob Swenson, a department supervisor who was laid off after working at Deltak for more than 20 years, was owed roughly $12,000 for 60 days' pay. In the end he received only $3,000. And that was after a successful lawsuit.

That's why I introduced a bill in the Legislature last session to level the playing field. If a Minnesota business abides by the WARN Act, it would face no penalty. But, if a business breaks the law by violating WARN, it would be required to pay treble damages. In other words, the business would have an incentive to follow the law, because it otherwise would owe workers three times their actual wages.

It shouldn't take a new law to make businesses follow existing law and treat their workers fairly -- particularly during these difficult times. But for the workers who are soon to lose their livelihoods, the failure of businesses to follow WARN adds injury to injury. If the WARN Act is stronger, businesses will have an incentive to give simple notice to their employees, and those workers will be back on the job sooner. This will make Minnesota's economy stronger -- one job at a time.

Ryan Winkler, DFL-Golden Valley, is a member of the Minnesota House.

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