Bill Summary for An Act Relative to Plant Relocation

Lead Sponsor: Senator Marc Pacheco

Bill Number: SB201

General Law Affected: Chapter 149. Deletes section 183 and 184. Creates a new 183

Current Law:  In 1998, the Massachusetts Supreme Court struck the plant closing law for being unconstitutional. As of now, employees have no protections against plant closings.

Proposed Law:  This act would provide severance for each employee of an “industrial, commercial or health care facility” with 100 or more employees. The relocation must be more than 100 miles from the current facility. For each employee with three or more years of service they will receive one-week severance for each year of service. There are several exceptions, including exempting the company if the closing is caused by a physical calamity or if the employee accepts employment at the new location.

Rationale:  Over 22,000 workers between July 2003 and April 2005 lost their jobs in Massachusetts alone due to layoffs and plant closings of 100 employees or more. In this most recent economic recession, the rate of plant closings and plant relocations is so rapid it is nearly impossible to keep up with the numbers. The November 2008 Massachusetts unemployment rate was 5.9%. We know that it has risen a full percentage point early in 2009, and will likely get worse. There are consensus fears that Massachusetts unemployment may reach the previous historical high of 10.9%, not seen since January 1976. Through November 2008, Massachusetts had experienced 124 mass layoffs, already only 4 short of the entire 2007 total of 128. These layoffs separated 10,622 workers, only 165 fewer than 2007’s total, and December’s report has yet to be included. Many of these workers had no protection against these closings. Workers at a Chicago manufacturer were forced to stage a sit-in to receive any compensation at all when their plant closed. While many businesses are closing due to the historically challenged economy, many of these companies are still relocating overseas for cheaper labor and larger profits. While the CEO’s still receive large packages (known as a “golden parachutes”) and generous salaries, employees are left with nothing. We remember years ago when Bradlees closed 150 stores in the Northeast region, 9,500 employees lost their jobs. Peter Thorner, then Bradlees’ CEO, sought a $2.3 million dollar severance package for the company’s executive officers, not including the $6 million dollars Thorner sought for his work. The most recent examples are well-chronicled, more frequent and more egregious.

Workers affected by the relocation of their company have rights to reasonable severance pay. One week’s severance pay for each year of service as a “tin parachute” is a reasonable severance package provided for with this legislation.