Legacy of Chicago sit-in: empowering laid-off workers

Six-day factory occupation ends after employees gain $1.75 million severance package.

For some 200 workers who staged a six-day sit-in at their shuttered Chicago plant in outrage over their abrupt layoffs, the protest paid off.

Their stand – which ended Wednesday after netting each fired employee about $7,000 in severance benefits – may also serve as an example for other Americans who face losing their jobs in an economy that seems to be shrinking by the minute.

The takeaway: Know your rights – and go to the mat for them.

"We're at a real malleable moment" in the economy, says Sean Safford, an assistant professor at the University of Chicago Booth School of Business. "This case is so interesting, it's going to be a small piece of how we think of moving forward."

Legal protections for laid-off workers are uneven, depending on the kind of work, whether a worker is hourly or salaried, the size of the employer, and other variables. Moreover, when companies close abruptly and enter bankruptcy, workers seeking back pay are in a long line of creditors – and often they're not at the front of the line.

In the case of some 240 laid-off workers at a manufacturing plant on Chicago's North Side, federal law required a 60-day notice that the facility was closing. Their employer, Republic Windows & Doors, gave three days, citing an emergency in which it had exhausted its line of credit and was unable to obtain more financing to stay open.

This particular law, the 1988 US Worker Adjustment and Retraining Notification (WARN) Act, is intended to give workers a safety cushion to allow them time for a job hunt and an opportunity to take advantage of federally funded job programs. It applies to companies with more than 100 full-time employees that are closing a plant or doing a mass layoff.

With that legal leg to stand on, the workers – members of the United Electrical, Radio and Machine Workers of America (UE) – negotiated a deal with Republic and Bank of America.

Worth $1.75 million, it comes in the form of a loan from Bank of America and JP Morgan Chase & Co. to the window and door manufacturer. Bank of America had been criticized for not extending additional credit to the struggling firm, though the bank itself has received $25 billion from the government as part of the $700 billion US bailout of financial institutions.

The workers got "exactly what they are guaranteed under the law, which was the core demand from the beginning," says Carl Rosen, president of the UE's western region and lead union negotiator. What caught the country's imagination, he says, is that "because of the way corporate regulations are in regard to bankrupt companies, everyone gets off scot-free and everyone else gets nothing. The workers are saying, 'We're changing the rules, and we're not going to be left with nothing.' "

Besides owed benefits, the protesting workers won a public-relations battle and drew a new line in the sand of labor-management relations, say some labor experts. In the past, workers would have filed a class-action suit to get severance, accrued vacation pay, and healthcare benefits. But the sit-in put the issue front and center and made it – and potentially other actions like it – a cause célèbre for people worried about job losses.

"Of course it's going to increase pressure on companies," Dr. Safford says of the sit-in. "What I'm impressed with is this union and these workers. They were thinking way ahead of the game. This is about political pressure being put on companies."

It's no secret why the workers' situation struck a chord with the public, says Cynthia Estlund, a professor of labor and employment law at New York University School of Law.

"Right now you're seeing workers who have been taking it on the chin. Wages have not kept pace with productivity increases, and [workers] have not been able to get their share of the goodies, nor have they been able to get the sort of protections [they would] if unionized," she says. "On the other hand, no magic bullet can protect everyone in times like these."

President-elect Obama said Sunday the glass plant workers are "absolutely right" in asking for their benefits. "What's happening to them is reflective of what's happening across this economy," he said during a press conference.

Some labor experts and policymakers argue that the WARN Act needs to be strengthened to further protect workers in a down economy.

Though considered a breakthrough job-security measure in its day, "it was criticized for not being as tough [on employers] as it should have been," says James Brudney, a professor at Ohio State University's Moritz College of Law, who was chief labor counsel for the Senate labor panel when it drafted WARN during the Reagan administration. Sen. Sherrod Brown (D) of Ohio is expected to introduce a bill next year to improve WARN enforcement and require more of companies preparing for layoffs.

But a stronger WARN Act would not necessarily help, say business advocates. Often, lost wages become the responsibility of banks, which force a company's hand when they withdraw its line of credit, causing factories to close unexpectedly.

"If the company does not have the money to pay for payroll or for salaries going forward, it doesn't have much choice other than to let everybody go," says Thomas Petrides, a Los Angeles-based partner in the labor and employment group of K&L Gates, an international law firm. This fall's credit crisis is the primary driver of current layoffs, he says.

"A lot of the [job] reductions that have taken place in the last several months are problems related to credit," says Mr. Petrides, who represents the management side of labor disputes. "Now, other companies that have been able to avoid credit problems are going to be impacted by what happens to those companies."

•Material from Associated Press was used in this report.