High Court Issues 2 Pro-Labor Rulings

Siding with states fighting the effects of plant closings, the Supreme Court on Monday upheld a Maine law that requires an employer to provide severance pay to workers when a plant is shut or relocated.

In a second pro-labor ruling, the court said new owners of plants must negotiate with the unions that were in place at the previous company if they operate the same type of business.

The severance pay decision came on a 5-4 vote and prompted lawyers for business groups to predict that other states will soon move to pass similar laws.

“This gives states a green light to move in this area,” said Stephen Bokat, a lawyer for the U.S. Chamber of Commerce in Washington, which had filed a brief against the law.

11.5 Million Jobs Lost

Eighteen state legislatures have considered measures to forestall shutdowns or to aid victims of shutdowns, but none other than Maine has required severance pay. An estimated 11.5 million American workers lost their jobs between 1979 and 1985 because of plant closings, briefs filed in the case said.

The justices said Maine’s severance pay guarantee is not preempted by federal statutes that mandate a uniform national policy for “employee benefits plans.” A required one-time payment is not a “plan” and therefore not covered by the law, Justice William J. Brennan Jr. wrote for the court.

The Maine law requires a firm with more than 100 employees that closes or moves to provide a worker with “severance pay at a rate of one week’s pay for each year of employment.”

Business officials complained that they cannot afford the payments. “If you’re on the skids and are trying to preserve a dying company, this could represent a substantial amount of money,” Bokat said.

Senate Bill Advances

In Congress last week, the Senate Labor and Human Resources Committee passed a bill that would require plant managers to give workers at least 90 days’ notice of a shutdown or mass layoff, and the House Education and Labor Committee is expected to pass a similar bill this week.

The case decided Monday began when Fort Halifax Packing Co., a poultry processing plant in Winslow, Me., shut in 1981. More than 100 workers, 45 of whom had been there more than 10 years, lost their jobs.

But the company contended that Maine’s severance pay law was outside the limits of the 1974 federal Employee Retirement Income Security Act, which imposes uniformity on employee welfare benefit plans.

In this case (Fort Halifax Packing Co. vs. Coyne, 86-341), the court’s most liberal members--Justices Brennan, Thurgood Marshall, John Paul Stevens, Harry A. Blackmun and Lewis F. Powell Jr.--took the state’s position. Dissenting were the conservatives, including Chief Justice William H. Rehnquist and Justices Byron R. White, Sandra Day O’Connor and Antonin Scalia.

Union Negotiations

In the second labor-related ruling, the court extended the scope of a 1972 ruling that, after a change of ownership at a business, a “successor” company must negotiate with the previous workers’ unions.

The justices, in a 6-3 decision, said the requirement applied even if the previous plant had closed and even if some of the workers hired did not work there before.

Labor lawyers said that they were heartened by the ruling and that an adverse decision would have encouraged more companies to change ownership as a way around union contracts.

In the case in question, the Fall River Dyeing Corp., a Massachusetts textile firm, maintained that it was a new business and not a successor to the Sterlingwale Corp. because several months had elapsed between the time the Sterlingwale plant closed in February, 1982, and Fall River Dyeing opened at the site. Moreover, more than half of its employees did not work for the previous firm.

But Blackmun said that there was “substantial continuity” between the old and new firms and that a “representative complement” of existing workers also worked for the new firm.

In dissent were Rehnquist, Powell and O’Connor in the case (Fall River Dyeing vs. NLRB, 85-1208).