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State ends effort to deny benefits to laid-off Penney workers

By POLLY ROSS HUGHES 

AUSTIN -- After taking extraordinary steps to deny unemployment benefits to employees when a Houston J.C. Penney store closed, the Texas Workforce Commission is calling it quits. Commissioners unanimously voted this week to drop the state's appeal in a court fight pitting the commission against employees who lost jobs at Northwest Mall two years ago when Penney permanently shut its doors. "I feel really good that we did challenge this one egregious ruling they made," said Austin labor attorney Rick Levy, who won the case in state district court for four of the former Penney employees. The ruling is limited to those involved in this case. It does not help the 53 others who applied for unemployment after the store closed if they were rejected on similar grounds. "Unfortunately, hundreds of cases are decided each year, and very few get taken to court," Levy said. "It's an employer-dominated agency, and workers still don't get a fair shake." Commissioners Diane Rath, who represents the public, and Ron Lehman, who represents employers, vote as a bloc against the labor representative, T.P. O'Mahoney, Levy said. Rath and Lehman overturned lower administrative findings at the agency when they sided with J.C. Penney's position that the workers had "voluntarily quit." At issue was an employee questionnaire asking those about to be laid off if they had an interest in being considered for jobs at other J.C. Penney stores. They were warned they would lose their severance pay if they accepted a job at a Penney's store. A separate memo from store manager Manny Salinas notified workers that their "scheduled last day of employment" would coincide with the day the store closed. It also noted that there were no positions open at other stores. Rath and Lehman ruled the employees quit their jobs by refusing the opportunity to apply for a "transfer." That made them ineligible for unemployment compensation. "It is nothing short of astonishing that the majority concluded that the claimant quit without good cause connected with the work," O'Mahoney wrote in his lone dissent. "How could the claimant quit a job, when the job no longer existed at the time of her separation?" he continued. "What opportunity does the majority believe existed? Even if the claimant had agreed to try for a transfer, she was not guaranteed another job." State District Judge James F. Clawson Jr. ruled in Houston last May in favor of the employees, concluding they were laid off and entitled to unemployment checks. "In the context of a store closing," Levy had argued, "does providing a survey form with no job-specific job offer, no guarantee of employment, and no explanation as to the effect of the answers on the form convert a company initiated mass layoff into a voluntary resignation by an individual employee?" J.C. Penney dropped its appeal, but the commission continued on its own. The commission dropped its appeal after the Houston Chronicle asked Rath and Lehman why they were pursuing a case even the employer had agreed to drop. Commissioners and J.C. Penney officials said their attorneys advised them not to discuss the matter until litigation has formally ended. The Penney store closing resulted in 85 layoffs and 53 workers filing unemployment claims, according to the commission. However, it is impossible to know how many of the former workers were ultimately denied benefits by the commissioners because they checked the wrong box on the questionnaire. Commission attorney Michael Burns refused to supply documents that would show how often the commissioners voted to deny benefits. He argued that federal law protecting the privacy of the company is an exception to the Texas Public Information Act. The Texas Attorney General's office will review that decision. Had the commission prevailed, Levy said it would have made it legal for companies to place all sorts of barriers in the path of laid-off workers, resulting in even more denials of claims during massive layoffs. "The implications were huge," he said. "Particularly with the economic situation as it is, potentially thousands of workers were facing loss of additional benefits through this additional hoop set up by the Workforce Commission." Already, Texas employers are far more likely to challenge unemployment claims and state officials are far more likely to side with employers than is true nationally, according to an Urban Institute study. In 2001, for instance, 36 percent of all claims were contested, compared with less than 20 percent nationally. Benefits are denied in 70 percent of Texas cases where employers claim employees quit voluntarily and in 40 percent of cases where employers claim misconduct, Urban Institute economist Wayne Vroman said.

Copyright 2002 Houston Chronicle Austin Bureau

60 former Enron workers opt out Proposed severance plan still expected to get judge's OK

By ERIC BERGER

About 60 former Enron employees have opted out of a proposed severance agreement, setting up a potential roadblock to final approval of the $28.8 million deal, according to sources involved in the bankruptcy. Although this is more opt-outs than anticipated, the sources say they still expect the deal will be approved by Judge Arthur Gonzalez, the New York judge over Enron's bankruptcy. Enron and its creditors can nix the agreement if enough former employees choose not to accept a plan that caps total severance pay at $13,500. Many of the former employees have opted out of the agreement because they have claims under Enron's old severance plan in excess of $50,000. Creditors postponed a meeting scheduled for today to estimate the claims of those opting out of the settlement because they need more time to study the greater than expected number of claims. That hearing is now scheduled for Monday, the same day lawyers for the creditors and former employees are expected to seek final approval for the deal. The settlement is the result of four months of negotiations among the committee, the AFL-CIO and Enron and its creditors. The committee of former employees in the bankruptcy has urged the 4,200 eligible workers to accept the deal as a "real and immediate payment." Enron already has paid each worker who was laid off when the company filed for bankruptcy Dec. 2 about $5,600. If the agreement is approved by Gonzalez, each of the former workers will receive the amount of money they're due under terms of Enron's severance plan, up to the cap. The money would be paid almost immediately By opting out of the agreement, former employees are likely choosing to fight an extended legal battle. Even if they prevail, their claims may not be paid until after Enron completes a plan of reorganization and emerges from bankruptcy, which could take several years. The decision Enron and its creditors now face is whether the cost of battling those employees who opted out is greater than the cost of scrapping the entire settlement and battling all the former employees, who are not entitled to any further severance under bankruptcy law, legal experts say. Part of that calculation, almost certainly, is that the company and its efforts to reorganize would be dealt a major public relations blow if it is perceived to have backed out of a deal with the former employees, widely viewed as victims in the company's bankruptcy. If Enron and its creditors support the deal after estimating the opt-out claims, approval by Gonzalez is all but given.

No label on this hall

Non-union construction workers used to cut costs on new Teamsters building

By L.M. SIXEL

Teamsters Union 988 is holding the grand opening this weekend for its new union hall, which is expected to feature Teamsters President James P. Hoffa. But it has become a sour moment for other labor leaders because the Teamsters didn't use union construction workers. They were told by the Teamsters that union contractors cost too much. "No one is happy about it," said Paul Dunnam, organizer of the International Brotherhood of Electrical Workers Local 716. The electricians, along with other unions, complained to the Houston Gulf Coast Building and Construction Trades Council but to no avail. The council has no leverage over an individual union like the Teamsters because each local is run by its members. "There are serious solidarity issues here," said Richard Shaw, secretary-treasurer of the Harris County AFL-CIO. Unions are supposed to support each other, said Shaw. He recalled how other unions backed the Teamsters during its last strike against United Parcel Service. Dennis Bankhead, secretary-treasurer of Teamsters Local 988, said he wouldn't comment on the new building, adding it was unlikely any other Teamsters official would have anything to say. This dispute comes at a time when union construction workers are in demand because there is so much work available for skilled tradesmen. The International Brotherhood of Teamsters is a member union of the international AFL-CIO and an affiliated member of its Building and Construction Trades Department. While Teamsters Local 988 is one of the biggest locals in Houston with more than 2,000 members, it has had a rocky relationship with other labor groups. It withdrew from the local AFL-CIO about a year ago. Another local, Teamsters Local 968, a construction union, has never been locally affiliated. But, Teamsters Local 919, which represents the brewery workers at Anheuser Busch, has long had ties to the Harris County AFL-CIO. Local 988 put its union hall on Interstate 10 up for sale and over the past few months it has been building a 16,246-square-foot building at 4303 E. North Sam Houston Parkway. Other union leaders are still puzzled why the local opted to build non-union. Robert "Sarge" Robinson, business manager of Plumbers Local Union 68 in Houston, said he remodeled his union's three-building complex in Houston during 1998 and 1999 and did it with union labor wherever possible. "We paid a little extra but the quality was better," said Robinson, whose union covers plumbers in Beaumont, College Station, Victoria and Galveston. "Unions have to support one another." While Robinson said he wouldn't have done what the Teamsters did, he said it's their decision. E. Dale Wortham, president of the Harris Country AFL-CIO, said he wasn't involved in the discussions about the construction but has been hearing complaints from other unions. He speculated that perhaps because Local 988 was paying a mortgage on two properties, it felt it needed to be specially careful how it spent its members' dues. But, Wortham added, "I just can't believe the cost issue outweighed the right thing to do."