Advocacy News – July 31, 2024
Legislation was introduced in the Michigan House this week to force Michigan employers to give severance pay to workers who lose their jobs in mass layoffs, defined as a reduction of 20 or more employees at a covered establishment. Eligible employees would be eligible for pay at the rate of one week’s pay for each year that the employee was employed.
What we’re saying: The Michigan Chamber has been engaged with the bill sponsor, Rep. Aiyash (D-Dearborn), on this issue behind the scenes for months, working to help him understand the key reasons we are opposed to his proposed legislation:
- Governmental interference in the workplace. A businesses’ decision to lay off employees and/or close or relocate a facility aren’t taken lightly, but it’s sometimes necessary — and almost always done for economic reasons.
- Conflicts with federal law. The legislation arguably would be preempted by ERISA and federal bankruptcy laws. We would fully expect there to be legal challenges to this legislation if it becomes law.
- Federal protections exist. The federal WARN Act already provides worker protections related to layoffs and closures.
- Protections exist under collective bargaining agreements (CBAs). Similar obligations already exist under most CBAs and include severance for down-time (e.g., upgrades to a plant), relocation and plant closures. The bill would require companies to revisit those benefits.
- Other benefits may already be available. The legislation would require payments to employees in all situation – even when the company currently offers Supplemental Unemployment Benefits (SUB) pay to employees based on seniority in layoff situations.
- Most extreme proposal to date. New Jersey is the only state with a “guaranteed severance” law — but the Michigan bill takes the requirements further. The New Jersey law applies to businesses 100 or more workers and in situations where a large layoff or a plant closing or transfer would put at least 50 people out of a job. The Michigan bill does not include a minimum employer size and applies to layoffs of 20 or more employees where there is an aggregate a total of $2 million or more in compensation.
Go deeper: Read the legislative proposal and please let Wendy Block know if you have questions or would like to provide feedback on this legislation.