employer dodges published severance package by "passing" employers through new owner

employer dodges published severance package by "passing" employers through new owner

What is the name of your state? Ohio

I've been an engineer for company "A" over 17 years. In December 2001, "A" sold operations at our plant and a sister plant in Oklahoma plus exclusive right to manufacture "A's" products in North America for 5 years to a Canadian company "B" to reduce costs. Part of the cost savings was realized by transferring 80% of our production out of the USA (non-union), leading to workforce reductions.

Management staff not picked up by "B" were terminated by "A" with severance in accordance to a published plan, while those 45 and older with 10 years service were offered an early retirement incentive. "A's" published severance plan at the time of the sale precluded severance payment to management employees offered employment by the new owner and to the retirees, many of whom were offered positions with "B".

In July 2002, "A" re-negotiated the terms of the 5 year contract with "B", demanding lower (hundreds of millions) costs which could only be provided by closing our location and moving remaining operations out of the USA. As part of the agreement, "A" repurchased the factory and real estate from "B" and agreed to bear the costs of closing. "B" is providing their severance
package to affected management employees (including retirees who would not have been eligible under "A's" plan), but it is not as generous as what would have been paid under "A's" plan in place at the time of the original sale. (4 weeks less severance, 3 months less COBRA benefits)

It is my contention that "A" dodged payment of its published severance plan to non-pension eligible employees by passing them through "B" on their way out the door. Is there anything that can be done?

In my opinion, it is quite unlikely that all this complicated back-and-forth selling and renegotating of purchase contracts occurred in order to avoid paying departing employees more generous severance. There appear to be much larger financial issues of greater concern here to A and B.

In any event, in order to determine if your contention is true, you'd have to take the an awful lot of materials to an attorney to prove it: copies of both companies' severance policies and handbooks and probably copies of all the purchase contracts too. Additionally, the severance policy would have to include language that it is binding under these circumstances. Most severance and other employer policies typically include language that basically says the employer may change, amend or eliminate the policy completely as they wish.

Assuming you could even get your hands on these documents, the cost of pursuing this will far outweigh four addt'l weeks of severance and the cost of 3 months of group health continuation.