Layoff warning law falls short

Rules don't apply to far-flung financial firms

A hard-won federal law that was designed to give workers early warning of layoffs, and time to prepare, is having little effect in Massachusetts because there are so many exemptions and exceptions to the statute, according to labor lawyers and activists.

So far, Fidelity Investments, State Street Corp., and other Massachusetts financial firms that have collectively announced thousands of layoffs recently have not had to provide state officials with early notification.

The law requires companies with 100 or more workers to give 60 days notice to officials in states where they plan to make wide-scale job cuts and facility closings. Adopted in 1988 after a wave of plant closings, the law is intended to give state and local officials time to help targeted workers move on - or even to try to save the jobs from elimination. Violators are liable for back pay and benefits, and penalties of $500 per day.

But labor leaders say the law, known as the Worker Adjustment and Retraining Notification Act, or the WARN Act, doesn't typically apply to financial firms, which unlike manufacturers with one or two plants, often have workers deployed at many smaller offices around the country.

"It's a pretty loose standard that hasn't worked in a lot of places," acknowledged Robert Haynes, president of the Massachusetts AFL-CIO, the state's largest labor organization.

For example, companies are required to give two-month notice of layoffs if they cut 500 or more jobs at one location, or if less than 500, only when the number of affected positions is at least one-third of its workforce. The law also exempts some cases if layoffs were caused by "unforeseeable business circumstances."

Indira Talwani, a lawyer at the Boston firm Segal Roitman who often represents laid-off workers, contends that exemptions from the early notification process make it cheaper and easier for companies to dismiss workers quickly, to the point of marching them out the door the day of the announcement.

"You're supposed to give people and government officials time to figure out their situation, and that's not happening," Talwani said.

Fidelity, which in November disclosed it would eliminate 3,000 jobs throughout its far-flung corporate network over the next few months, said in a statement that "none of the actions taken by Fidelity caused WARN or any state plant-closing law to be triggered."

The mutual fund firm hasn't said how many of those jobs would be in Massachusetts, where it employed 11,500 people as of November. A Fidelity spokeswoman added that the layoffs were spread among many locations and that the company provided generous severance packages beyond what the WARN law would have required.

State Street, which is eliminating up to 1,800 jobs through next year, also said its actions to date do not fall under the federal reporting requirement. The company employs nearly 14,000 statewide, mostly in Boston and Quincy.

"Should we reach the limits outlined in the WARN Act, we would comply by filing as necessary in the appropriate jurisdictions," the company said. A spokeswoman added, "The reason for this is it is an evolving process that will be taking place over the next quarter, so we don't yet have specific Massachusetts figures."

Laid-off workers will receive severance benefits and outplacement services, she added.

MFS Investment Management, which is laying off 90 people in Boston and Quincy -5 percent of its workforce - also says its actions haven't required early notification. Other firms disclosing layoffs, Wellington Management and Citigroup Inc., declined to comment.

The head of the state agency responsible for helping workers, Ken Messina, estimated his office learns of about 70 percent of large layoffs taking place around the state, but said company notices under the WARN Act account for just a third of those.

Suzanne Bump, secretary of labor and workforce development, said her office doesn't investigate whether companies are meeting the terms of the act and referred other questions to Daniel O'Connell, head of economic development for the administration of Governor Deval Patrick, who declined to be interviewed.

The WARN act has surfaced as a contentious issue as the pace of layoffs across the nation has increased rapidly. Workers at Republic Windows & Doors staged a six-day sit-in this month after owners announced the closure of its Chicago factory, contending Republic hadn't given them the required notice under the WARN Act. The sit-in ended when workers won eight weeks' pay and healthcare benefits.

In Massachusetts, former employees sued closed electronics retailer Tweeter Inc. in November for shutting down operations without due notice under the WARN Act.

Last year workers, of Quaker Fabric sued the company after it shut down its Fall River textile operation without warning and went into bankruptcy, seeking back pay they claimed they were owed under the WARN Act. One worker, Joe Aguiar, testified at a US Senate committee hearing this year that neither the company nor state officials gave them much information about their rights under the federal law.

"Certainly had I known 60 days prior that I would lose my job, I would have prepared myself for both the financial and emotional impact," Aguiar said.

This fall the workers won a settlement in bankruptcy court worth about $1,100 apiece.

Last year, Senator Sherrod Brown, an Ohio Democrat, unsuccessfully sought to update the law by reducing the number of layoffs required to trigger a notice, increasing penalties, and lengthening the pay period to 90 days. Companies with 50 or more employees, not 100, would be subject to its terms. A spokeswoman said Brown intends to reintroduce it next year.

One financial firm did notify Massachusetts of pending layoffs. Cleveland bank KeyCorp notified state officials of the pending layoff of 64 of its 200 employees here.

Bank spokeswoman Laura Mimura said she wasn't sure if the bank was required to notify the state, but would have anyway. She said KeyCorp is giving advance notice to local officials in any municipality where it has cutting 50 or more jobs.

"It's called being part of the community," she said.

Ross Kerber can be reached at kerber@globe.com.