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Hedge-Fund Ownership Cost Sears Workers Their Jobs. Now They’re Fighting Back

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Valleys outside of Neptune

The Nation reports:

The bill, introduced by State Senator Joseph Cryan, a Democrat, aims to bolster financial security for employees in the state by making them less disposable. Currently, there is no law anywhere in the country that guarantees severance for workers after a layoff. His bill would mandate that laid-off employees of large companies in the state be paid a severance equal to one week of wages for each full year of employment. “It is critical for holding Wall Street accountable…to the retail employees they take over,” Ryan told assembled media and lawmakers, sporting a purple vest with the Babies “R” Us logo stitched in yellow.

The bill would also require companies to give employees more notice before layoffs, including at least 15 days’ warning ahead of a bankruptcy filing or change in ownership, and would prohibit mass firings for 180 days after such an upheaval. It would ensure that Wall Street firms—like KKR, Bain, and Eddie Lampert’s hedge fund—are responsible for severance claims by classifying them as joint employers along with the executives who run their portfolio companies, and would classify severance as wages so that such payments would get top preference in the bankruptcy process alongside creditor claims.

“The genesis point for this legislation,” Cryan said, “was me standing with hundreds of Toys ‘R’ Us workers, listening to stories of folks who dedicated 27, 28, 31, 32 years and were basically getting nothing.” Democratic State Senator Nellie Pou, who backs the bill, noted that when Toys “R” Us laid off employees with little to no warning and refused to give them severance, it wasn’t “doing anything technically illegal, but they did something I believe to be reprehensible.”

The measure would be “game-changing,” said Carrie Gleason, the policy director of United for Respect. It would mean more than giving workers money to help after a layoff. It could change the calculation that companies make when deciding to cut workers in the first place, by putting a price on it. Right now, it’s “virtually costless” to fire employees, Appelbaum said. Private-equity firms in particular tend to turn to layoffs quickly after taking over a company. “Squeezing labor is the fastest way to increase cash flow to be able to make payments on the debt,” Appelbaum explained. This measure could “cause companies to think twice about whether laying off workers is their go-to solution for every problem that they face.”

(click here to continue reading Hedge-Fund Ownership Cost Sears Workers Their Jobs. Now They’re Fighting Back. | The Nation.)

I don’t know what the chances are of this bill passing, but I whole-heartedly support it. Hedge funds bleeding a company dry of its assets then laying off employees is a frequent occurrence, it isn’t right.

Even better would be a national bill with these same general parameters. Maybe Elizabeth Warren could propose it? 

Two is a Magic Number

Written by Seth Anderson

April 23rd, 2019 at 10:03 am

Posted in Business,government

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