Political leaders in Maine this week went public with a call for Verso Paper to adhere to Maine’s Severance Pay requirements – apparently after hearing some scuttlebutt that the company preferred to delay these payments. For those not well-versed in this area of the law, Maine statute requires severance pay to be paid at the end of the pay period during which the layoff occurred. The reasons for this should be clear: the theory behind severance pay is to help the worker bridge the gap between the lost job and his/her next opportunity. In a way, it’s something like an advance on unemployment. Around the holidays, this takes on an even greater significance. Hopefully the company in this case will comply with the law.
It’s important to note some forgotten history: Maine’s Severance Pay law almost didn’t survive an early legal challenge. In the early 1980’s a company called Fort Halifax Packing Co. closed a poultry plant in Winslow, putting over 100 people out of work. The State sued the company under a then-new provision of Maine law requiring companies like this to pay severance. The company challenged the law, arguing it was pre-empted by both Employee Retirement Income Security Act (ERISA) and the National Labor Relations Act (NLRA). The case made it all the way to the United States Supreme Court, which eventually upheld the Maine statute.
This was a vital decision, as the company argued, in essence, that ERISA prevented states from regulating employee benefits at all. Maine was fortunate that the Court recognized a narrower view of ERISA pre-emption, and therefore allowed Maine’s law to stand. Today, the employees at Verso stand to benefit, at least in small part, from that decision. A good reminder that worker benefits are frequently won only after hard-fought and protracted battles – in the streets, at the negotiating table, and in the Courts – and that the consequences of those victories aren’t always felt until years later.
About the author: Ben Grant is an attorney at the workers’ rights law firm, McTeague Higbee. He can be reached at email@example.com or at 207-725-5581