EMILY C. DOOLEY TIMES-DISPATCH STAFF WRITER, Published: February 6, 2009 When Qimonda North America laid off 500 workers and cut off their pay, health insurance and other benefits this week, the company may have violated a federal labor law. Some former employees of the Henrico County memory-chip manufacturing plant have contacted elected officials and attorneys about the issue, and a local delegate is investigating the case.
But the company says it was in financial distress, which it believes provides an exemption to the law. The Worker Adjustment and Retraining Notification Act requires employers to provide 60 days' notice of a layoff or 60 days' pay in lieu of notice. Qimonda laid off the 500 employees over the course of two days. In most cases, workers were given an hour to collect their belongings and turn in their security badges.
An additional 500 were given dates within the next 30 days; the remaining will leave in waves through April. Continued pay or benefits were not an option, employees say they were told. "It was one of the grossest things I've ever witnessed in my entire work life," said Eric Askew, 43, a manufacturing technician who was among the first 200 people hired in 1997 to work in the memory-chip plant in eastern Henrico. "I do believe they are in violation with the WARN act."
The law, dating to 1989, is intended to provide workers protection in the case of mass layoff or closure.
There are a few instances that trigger the WARN act, including cuts that involve 500 or more employees at a single site, said John Philo, legal director of the Sugar Law Center in Detroit, which specializes in the law. But the law also comes with exemptions. Natural disaster is one; so is the loss of a customer that is so significant the business cannot continue.
Another exemption, and one Qimonda believes applies, involves financial distress. That clause relates to companies trying to get investors or a loan. If issuing a notice of a layoff would scare off potential investors or lenders, the notice time can be shortened, said Ann C. Hodges, a law professor at the University of Richmond who specializes in employment law. "It's only if it's not foreseeable or they were trying to get capital," Hodges said.
Qimonda North America's parent company, Qimonda AG, filed for insolvency protection in Germany last month, which is akin to claiming bankruptcy. Since then, the company has not provided operating cash to the Sandston plant or been able to buy any memory-chip wafers the facility produces.
Qimonda North America spokesman Glen Haley said the company does not feel WARN applies based on the financial condition of the company. "We obviously would not have made this decision if there were legal issues with it," Haley said. "We are not in a financial position to be able to pay them for 60 days."
Several employees said they have made calls to an attorney specializing in class actions and are awaiting a response.
A local elected official questions whether the employees were treated fairly. "The WARN act could be an issue, and that is something I'm in the process of investigating," Del. Christopher K. Peace, R-Hanover, said yesterday. "The question will be whether . . . notice was timely."
Hodges and Philo said they believe employees have a claim, but they will have to pursue legal action against the company on their own.
The WARN act has no federal enforcement mechanism. "I would expect they could and should get a judgment here and try to recover [wages and benefits]," Philo said. Two bills introduced in the U.S. Senate and House of Representatives in 2007 to beef up WARN provisions and enforcement died without action. Sen. Sherrod Brown, D-Ohio, and then-senators Barack Obama and Hillary Rodham Clinton signed on to the bill, which added a provision allowing state officials to bring suit against companies on behalf of workers. A media aide in Brown's office said the senator was considering reintroducing the bill.
Peace said it is too late to submit legislation to the Virginia General Assembly this year, but he said he has contacted the attorney general's office and the governor's office about the Qimonda situation.
Contact Emily C. Dooley at (804) 649-6016 or email@example.com