Laid-Off Brokerage Staffers Sue Under New Law

Laid-off workers from a Wall Street brokerage firm have sued their former employer under the new federal plant closing law, saying they were dismissed without the required 60 days’ notice.

A lawyer for the workers said Monday that he did not know of any other suits filed under the Worker Adjustment and Retraining Notification Act, which took effect Feb. 4. The workers were laid off March 10 from L. F. Rothschild & Co.

Though the act is known popularly as the plant closing law, it applies to any company with at least 100 employees in all and at least 50 at one site. Such firms must give workers 60 days’ notice of a shutdown or mass layoffs.

The lawyer, Jeffrey G. Smith, said L. F. Rothschild laid off about 250 workers at its Manhattan headquarters without warning. The suit, seeking back pay and punitive damages, was filed Friday in U.S. District Court in Manhattan by seven former employees as a class action.

The suit said Rothschild was one of the 20 largest brokerage houses in the nation, with more than $300 million in capital, before the October, 1987, stock market crash.

The firm suffered heavy losses in the crash and was purchased in June by a subsidiary of Franklin Savings Assn., a savings and loan based in Ottawa, Kan. But it continued to lose money, and the layoffs ensued.

In a letter announcing the layoffs, Rothschild told its employees that the plant closing law did not apply because the company had been “pursuing a realistic opportunity” to have a lender bail it out and avert the layoffs.

Smith said the law did offer such an exemption, on grounds that a layoff notice would scare off potential lenders.

But he said in this case the bailout apparently was being considered by Franklin, the parent company. Smith said that would not qualify for an exemption because Franklin already was aware of Rothschild’s condition.

Kevin Hoffman, Rothschild’s attorney, declined to discuss the case, saying the company would respond in court.

He did say Rothschild gave severance pay to the workers. But Smith said the law requires notification regardless.