Testing the NH WARN Act

BrandPartners Inc., a Rochester marketing company that closed its doors last April and laid off 80 employees without notice, is subject to as much as $1.3 million in fines and restitution to former employees. It is the first business to fall under New Hampshire’s new WARN act provisions.

The Gonic Mill complex in Rochester, where BrandPartners was formerly a tenant, is now for sale.

The state Department of Labor held a hearing Tuesday into whether BrandPartners violated the NH Worker Adjustment and Retraining Notification Act, which was passed in 2009 with bipartisan support and went into effect Jan. 1. Senate Bill 40 was based on the Federal WARN Act to protect employees against sudden closures and mass layoffs, but was a stricter version that applies to more companies, as described below. It also increased the financial penalties for employers who do not comply with the notice requirements.

Back in 2009, the NH WARN Act was passed after two high-profile plant closings in Bedford (2005) and Clarmeont (2008) without notification to employees. As the BrandPartners case shows, New Hampshire’s law also gives the state Department of Labor the ability to assert a lien on a company, which gives the state ability to better pursue compensation for the workers.

Department of Labor legal counsel Martin Jenkins told Front Door Politics that the $1.3 million figure broke down to around $500,000 in fines to the state and as much as $800,000 in pay restitution to the 80 employees who were suddenly laid off. Jenkins said “as a general rule,” a final determination would be made in 30 days.

According to New Hampshire Business Review, the lawyer for BrandPartners told the Labor Department’s investigating panel that the company should fall under one of the law’s exceptions because the company acted in good faith and was seeking capital to keep the company viable. The story also said that BrandPartners claims it has no assets, which could render a determination moot either way.

Both federal and state WARN Acts require 60-day notice of any plant closure or mass layoffs to employees of companies subject to the law. The difference is that the state WARN Act applies to businesses with 75 or more employees (Federal law requires a warning to be issued for businesses with 100 or more employees.) The state law also lowered the required number of affected employees from 50 employees being laid off to 25 (provided it is at least 1/3 of the full-time non-seasonal employees).

Though SB 40 was sponsored by 18 senators, the merits and contents of the bill were strongly debated before it passed. During testimony before the Legislature in spring of 2009, Business and Industry Association President Jim Roche raised concerns from opponents who believed the bill would be too anti-competitive. “Companies in today’s economy have never had more options about where they locate,” Roche said. “If this bill passes in New Hampshire, it will put the state at a competitive disadvantage compared to other states that do not have a WARN Act.”

When Gov. John Lynch signed the bill into law in August 2009, he said, “I have seen firsthand what a sudden closing of a business can do to the workers, their families and the entire community. The impact of a sudden closure is even more severe if a company fails to provide the proper warning or compensation.”

This Daily Dispatch was written by Michael McCord.

Posted by Hilary Niles on Dec 10 2010. Filed under Commerce, jobs & unemployment, Justice, Weekly Briefing, white collar crime, Work, workforce. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry