Two House Democrats want Pennsylvania to join New Jersey in requiring severance pay to employees impacted as part of a mass layoff.

Rep. Mike Zabel, D-Philadelphia, and Morgan Cephas, D-Philadelphia, have introduced House Bill 2179 in the state House of Representatives. The legislation has been referred to the House Labor and Industry Committee. They say since January 2020, the state Labor Department has received roughly 300 Worker Adjustment and Retraining Notification (WARN) Act notifications that resulted in tens of thousands of permanent layoffs in the state.

The 2021 closure of the Irvine Distribution Center by Bluestem Brands, the parent company of Blair, would have qualified the center’s employees for mandatory severance had House Bill 2179 been in effect this year.

“While corporate profits and CEO perks are higher than ever, most workers’ pay has stagnated or has gone down in recent years. By securing severance pay for our workers in Pennsylvania, we can ensure that those who have worked hard are treated fairly,” Zabel and Cephas wrote in their legislative memorandum. “This proposal would ensure that workers who lose their job in a mass layoff receive a fair deal and are not left behind. This bill would require that workers are provided with severance pay, health insurance coverage, and other necessary protections. These small benefits will help them start the next chapter in their lives. We need to put an end to the days where corporate executives collect large bonuses, while workers and their families suffer.

The legislation would not affect managerial, supervisory or confidential employees, temporary employees or part-time employees who have worked less than 20 hours a week for at least 90 days before the closure.

Businesses with 50 or more employees would be required to make the payments. A business could avoid the payments if there is a plan to reinstate the employee within six months of the layoff. Employees who leave voluntarily, who retire, who are discharged for cause, are suspended for misconduct, are laid off as a seasonal employee or who are offered a new job not m ore than 50 miles from the old job and refuse to move would also not receive mandatory severance pay. The legislation also includes a clause that a layoff that is originally scheduled to be six months can be extended for unforeseen circumstances as long as notice is given as quickly as possible. Closures because of fire, flood or other emergencies are also included as exceptions to a mandatory severance payment.

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Closure

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Gov. Phil Murphy, a Democrat, signed the New Jersey legislation in 2020 after the closure of Toys R Us, which cost 2,000 employees their jobs in New Jersey. Two of the private equity firms that owned the retail giant eventually established a severance fund.

“When these corporate takeover artists plunge the companies into bankruptcy, they walk away with windfall profits and pay top executives huge bonuses, but the little guys get screwed,” said state Sen. Joe Cryan, a Democrat who was a co-sponsor, according to the Associated Press.

The law, which passed along party lines with Democrats in favor and Republicans opposed, was criticized by the New Jersey Business and Industry Association, which said the severance pay requirement will add to state laws that make it harder for businesses, citing New Jersey’s phase-in of a $15 an hour minimum wage and tax increases for businesses earning more than $1 million that started in 2018.

John Schmidt Jr., a labor attorney based in New Jersey, shared the business association’s views with the Associated Press. He said he hears from clients that they’re considering leaving the state because of the mandates. Schmidt, who said he has practiced law for 40 years, added that he had seen too many cases that would fall into the category the law aims to address.

“They’ve used a sledgehammer to kill a fly,” he said.