A new law requiring employers to give workers 60 days’ notice of plant closings or mass layoffs could profoundly affect Wall Street, where many firms are considering a second round of post-crash staff reductions.
Labor lawyers said Thursday that the plant closing bill, which by its name suggests only blue-collar industries, applies to firms employing at least 100 people.
In the financial services business, that includes everyone from the $8-an-hour computer clerk to the $500,000-a-year securities research analyst.
“I don’t think the investment banking houses or brokerage houses have focused on this,” said Stuart Bompey, a labor lawyer at the New York firm of Baer, Marks & Upham, which represents some big financial services concerns, such as Merrill Lynch and Dun & Bradstreet. “People thought it affected only an industrial facility, but it clearly affects every employer.”
Moreover, considerable confusion surrounds the enforcement date of the bill, which became law Aug. 4 and is supposed to take effect Feb. 4. It remains unclear whether employers must notify workers of layoffs 60 days before the February date, which would be Dec. 6.
The new law and its uncertainties come at a vulnerable time in the financial services business, which has struggled since the October, 1987, stock market crash and has already laid off 15,000 to 20,000 people, about 10% of the total. Industry experts have predicted that an additional 4,000 to 5,000 will be fired by year-end unless interest in stocks recovers soon, which appears unlikely.
Some lawyers are telling Wall Street clients to send out the pink slips now in case the Labor Department’s Employment Training Administration, which is drafting regulations to implement the new law, decides that Dec. 6 is the effective date.
“I know attorneys within my firm are advising clients who are considering or planning layoffs that fall within the ambiguous period to be safe and provide the notice,” said Margaret Bryant, an associate attorney at Jackson, Lewis, Schnitzler & Krupman in New York, which specializes in labor law and counsels some of the biggest Wall Street firms.
The Securities Industry Assn., a trade group of brokerages, first sounded the alarm by telling members in a memorandum last month that the “new ‘plant closing’ bill applies to all firms.”
The memo warned executives and personnel managers that “the statute is complex and should be carefully reviewed by you and/or your legal counsel for its implications for your firm.”
The Worker Adjustment and Retraining Notification Act, as it officially is called, penalizes violators by making them pay affected employees for each day in which adequate notice isn’t given, which in effect could amount to a maximum of two months’ worth of severance pay. In addition, violators must pay the local community government $500 for each day’s violation.