When Republican Gov. Paul LePage and Democratic Attorney General Janet Mills are on the same side of a high-profile issue, the issue must be especially clear-cut.
As it turns out, when it comes to the timing of severance payments for laid-off workers from Verso Paper Corp.’s closing Bucksport mill, it is: The Memphis, Tennessee-based paper producer owes severance pay to the workers it’s laying off sooner rather than later.
Although the company says Maine law isn’t clear on the issue, there’s actually no ambiguity in the law nor in the labor contract Verso has negotiated with its unions about the timing of severance payments.
The Maine Department of Labor has determined, based on state law, that Verso owes its workers one week of severance pay for every year of service by Jan. 8 — that’s within one pay period following the workers’ last official day of work. Verso must make those payments in early January, not only as a gesture of basic decency to the 500 workers losing their Bucksport mill jobs, but as a matter of law.
If Maine law and Verso’s labor contract are so clear on the timing of severance payments, why does Verso plan to make the severance payments it owes closer to April 1?
The company says it’s simply following the terms of the contract it has negotiated with the labor unions representing the Bucksport mill workers. Indeed, the contract only guarantees severance pay for “employees permanently laid off for three months or more,” and it provides for those payments to be made “three months following the date of layoff.”
That’s a provision in the Verso contract that’s decades old. It’s a provision the unions agreed to with an eye toward bringing as many laid-off workers as possible back to work at a still-operating mill, said Emery Deabay, president of United Steelworkers Local 1188 and a 40-year mill employee.
“We were always thinking about one machine or a piece of equipment,” Deabay said. “If something happened, and they started the machine back up, we were thinking more about people coming back to work than getting severance.”
In fact, that severance provision predates the current state law on severance pay, which requires that payments be made within one pay period of the last day of work when an establishment with 100 or more employees shuts down or relocates. In this situation, the state law clearly takes precedence — contrary to Verso’s assertions.
Verso spokesman Bill Cohen said the state law doesn’t apply in this case, citing a provision that says the contract’s terms apply if those terms specify a more generous severance payout. “We believe there’s an exemption,” he said.
Both state law and the contract provide for a week of severance pay for every year of service, but the state law actually provides for a more generous payout.
The state law calculates the one week of pay for each year of service by taking the worker’s gross pay over the past year and dividing it by the number of weeks worked. That gross pay would include overtime, shift differentials and other add-ons.
Verso’s contract, on the other hand, calculates a week of pay by taking the base hourly rate and multiplying it by 40 hours — no overtime, no shift differentials, no add-ons.
Plus, the contract has this clause: “It is understood that should the State or Federal law provide a greater severance allowance those affected employees would receive the higher amount.”
Verso must follow the state law, which provides a more generous payout and is clear about the timing: The workers are owed their required severance payments by early January. There’s no question about it.