PRINTER'S NO. 1410
No. 1251 Session of 1979
INTRODUCED BY COHEN, RICHARDSON, IRVIS, CHESS, KUKOVICH,
MANDERINO, BROWN, DeWEESE, HARPER, HALVERSON, SCHMITT,
MICHLOVIC, REED, DeMEDIO, SHUPNIK, TRELLO, GRAY, McMONAGLE,
McCALL, COCHRAN, O'DONNELL, DUMAS, DOMBROWSKI, WACHOB,
PUCCIARELLI, SHADDING, F. TAYLOR, STEIGHNER, KNIGHT,
MILANOVICH, CALTAGIRONE, RHODES, PISTELLA, PIEVSKY,
D. R. WRIGHT, YAHNER, EARLEY, CAPPABIANCA, ROCKS, PERZEL,
DURHAM, M. R. CLARK, ZWIKL, BURNS, FEE, OLIVER, SCHWEDER,
RODGERS, GALLAGHER, MULLEN, COLE, GOODMAN, WHITE,
J. J. JOHNSON, BARBER, WARGO, MUSTO, NOVAK, DAWIDA, AUSTIN,
B. F. O'BRIEN, B. D. CLARK, GATSKI, LIVENGOOD, GAMBLE, SWEET,
KOLTER AND STUBAN, MAY 8, 1979
REFERRED TO COMMITTEE ON LABOR RELATIONS, MAY 8, 1979
AN ACT
1 Establishing a program for employee protection and community
2 stabilization and providing penalties.
3 TABLE OF CONTENTS
4 Section 1. Short title.
5 Section 2. Findings and declaration of policy.
6 Section 3. Definitions.
7 Section 4. Bureau of Employee Protection and Community
8 Stabilization.
9 Section 5. Notice of intention to close, relocate or reduce
10 operations.
11 Section 6. Employers obligation to employees.
12 Section 7. Employer obligation to community and
13 Commonwealth.
1 Section 8. Financial assistance.
2 Section 9. Employee Protection and Community Stabilization
3 Fund.
4 Section 10. Enforcement and sanctions.
5 Section 11. Effective date.
6 The General Assembly of the Commonwealth of Pennsylvania hereby
7 enacts as follows:
8 Section 1. Short title.
9 This act shall be known and may be cited as the "Employee
10 Protection and Community Stabilization Act."
11 Section 2. Findings and declaration of policy.
12 (a) It is hereby determined and declared as a matter of
13 legislative finding that:
14 (1) There currently exists in certain areas of the
15 Commonwealth a critical condition of unemployment and that
16 such condition may well exist from time to time in other
17 areas of the Commonwealth.
18 (2) Economic insecurity due to unemployment is a serious
19 menace to the health, safety and general welfare of those
20 unemployed, the people of the affected areas and the people
21 of the entire Commonwealth.
22 (3) There currently exists a significant rate of
23 migration of industrial, commercial and business enterprises
24 from the Commonwealth to other parts of the country and to
25 other countries, and that this migration aggravates the
26 condition of unemployment and destabilizes the economic base
27 of communities in certain areas of the Commonwealth.
28 (4) Arbitrary closings, relocations and reductions in
29 operations of industrial, commercial and business enterprises
30 result in serious social and economic harm to employees,
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1 local communities, and the Commonwealth which usual programs
2 of unemployment compensation and financial assistance can
3 never fully repair.
4 (5) The social and economic harms caused by the closing,
5 relocation or reduction in operations of industrial,
6 commercial and business enterprises are aggravated by the
7 lack of adequate advance notice of the decisions to close,
8 relocate or reduce operations and that such lack of notice
9 prevents employees and communities from seeking alternatives
10 to, or otherwise preparing for, the closing or relocation.
11 (6) Industrial, commercial and business enterprises
12 which voluntarily chose to close, relocate or reduce their
13 operations should take into account the adverse social and
14 economic effects of its decisions on its employees and
15 community and should contribute to the effort of remedying
16 those effects created by its decisions.
17 (7) Financial assistance to communities affected by the
18 closing or relocation of industrial, commercial or business
19 enterprises is needed to reduce the economic and social
20 impact of the dislocation of employment and to develop new
21 employment opportunities.
22 (8) In some cases employee-community ownership of
23 enterprises provide means of preserving jobs and stabilizing
24 the economy of communities affected by closings and
25 relocations, and that such enterprises should be encouraged,
26 but that numerous obstacles exist which make it difficult to
27 create or operate such enterprises.
28 (b) Therefore, it is hereby declared to be the policy of the
29 Commonwealth of Pennsylvania for the promulgation of the health,
30 safety, right to gainful employment, business opportunities and
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1 general welfare of its citizens through the enactment of the
2 provisions of this act.
3 Section 3. Definitions.
4 The following words and phrases when used in this act, shall
5 have the meanings given them in this section, unless the context
6 clearly indicates otherwise:
7 "Authority." The Pennsylvania Industrial Development
8 Authority created under the act of May 17, 1956 (1955 P.L.1609,
9 No.537), known as the "Pennsylvania Industrial Development
10 Authority Act."
11 "Average weekly wage." The amount obtained by dividing an
12 employee's total remuneration received from an employer during
13 the 52 week-period prior by the number of weeks during that
14 period the employee worked for that employer.
15 "Bureau." The Bureau of Employee Protection and Community
16 Stabilization created by section 4.
17 "Closing." The permanent shutting down of operations at any
18 establishment for any reason other than because the employer has
19 filed for bankruptcy in accordance with Federal bankruptcy laws.
20 "Community development corporation." A nonprofit corporation
21 incorporated in the Commonwealth and eligible for grants under
22 the Housing and Community Development Act of 1974.
23 "Community stabilization target area" or "target area." Any
24 contiguous geographic area designated by the bureau which is
25 economically depressed as a result of closings or relocations of
26 enterprises within that area. Such areas may encompass an entire
27 municipality except that for municipalities with a population
28 greater than 50,000, a target area shall be a smaller area
29 within the municipality in which the enterprise has closed.
30 "Development project." Any industrial, commercial, business
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1 or other economic development activity undertaken in a target
2 area for the purpose of:
3 (1) reducing the impact of closings or relocations of
4 enterprises;
5 (2) creating employment opportunities; or
6 (3) reducing conditions of blight or economic
7 depression.
8 "Director." The director of the Bureau of Employee
9 Protection and Community Stabilization.
10 "Employee-community organization." Any organization of
11 employees or residents of a community affected by closings or
12 relocations of enterprises which has incorporated under the laws
13 of the Commonwealth and has as a purpose the operation of an
14 enterprise as an employee-community owned enterprise.
15 "Employee Protection and Community Stabilization Fund" or
16 "Fund." The fund created by section 9.
17 "Employer." Any person or corporation who employs at least
18 50 individuals and operates an industrial, commercial or
19 business enterprise in the Commonwealth, but does not include
20 the Commonwealth or its political subdivisions.
21 "Establishment." Any factory, plant, office, facility or
22 other working place of an employer, but does not include a
23 construction site or other work place as exempted by the
24 director that was never intended as other than a temporary work
25 place.
26 "Industrial development agency." Any incorporated nonprofit
27 organization, foundation or agency which has as its purpose the
28 promotion, encouragement and development of industrial,
29 commercial or business enterprises in a target area.
30 "Necessary or justifiable on economic grounds." The criteria
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1 of economic necessity established by the bureau pursuant to
2 section 4. A closing or relocation shall not be deemed to be
3 "necessary or justifiable on economic grounds" unless the
4 establishment has suffered absolute economic losses in at least
5 two of the three years preceeding such closing or relocation or
6 has filed for bankruptcy under Federal bankruptcy laws.
7 "Reduction in operations." A permanent shutting down of a
8 portion of the operations at any establishment so as to reduce
9 the number of employees employed at that establishment by more
10 than 35% over any two-year period.
11 "Relocation." The transfer of all or part of an employer's
12 operation from one establishment to another existing or proposed
13 establishment owned or operated by the employer or parent
14 corporation or subsidiaries thereof located beyond a reasonable
15 commuting distance from the first establishment.
16 "Total annual wages of all employees." The sum of the
17 average weekly wage of all employees multiplied by 52.
18 Section 4. Bureau of Employee Protection and Community
19 Stabilization.
20 (a) There is hereby created a bureau within the Department
21 of Commerce to be known as the Bureau of Employee Protection and
22 Community Stabilization. The bureau shall be under the direction
23 of a director appointed by the Secretary of Commerce. The
24 secretary shall provide to such bureau all staff, office space,
25 supplies and other requirements necessary for the fulfillment of
26 its duties.
27 (b) The bureau shall have the following powers and duties:
28 (1) To make and adopt such rules and regulations as may
29 be necessary for the administration of this act. Such rules
30 shall be promulgated pursuant to the act of July 31, 1968
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1 (P.L.769, No.240), known as the "Commonwealth Documents Law."
2 (2) To conduct investigations and examinations, to hear
3 testimony and take proof under oath or affirmation and to
4 make and publish findings on any matter material for its
5 information or necessary to effectuate the purposes of this
6 act.
7 (3) To administer oaths and to issue subpoenas requiring
8 the attendance of witnesses and the production of books and
9 papers pertinent to any hearing before the bureau.
10 (4) To apply to any court having territorial
11 jurisdiction of the offense to have punished for contempt any
12 witness who refuse to obey a subpoena, or who refuses to be
13 sworn or affirmed to testify, or who is guilty of any other
14 contempt.
15 (5) To make determination and designation of community
16 stabilization target areas.
17 (6) To make recommendations to the Pennsylvania
18 Industrial Development Authority concerning whether the
19 awarding of financial assistance to an enterprise threatened
20 with closing or relocation will effectuate the purposes of
21 this act.
22 (7) To publish annual reports to the Governor regarding
23 the migration of industry from the Commonwealth and resulting
24 loss in employment, including full listings of closings,
25 relocations and reductions in operations, the number of
26 employees affected, the estimated losses of State and local
27 tax revenue, attempts at finding alternatives to closings,
28 relocations and reductions in operations, the success or
29 failure of financial assistance under this act in alleviating
30 the effects of closings and relocations and any
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1 recommendations for legislation.
2 (8) To do such other acts as may be necessary or
3 appropriate to carry out and effectuate the purposes of this
4 act.
5 Section 5. Notice of intention to close, relocate or reduce
6 operations.
7 (a) (1) Whenever an employer makes a decision to close,
8 relocate or reduce all or part of the operations of an
9 establishment of that employer, and such closing, relocation
10 or reduction in operations will result in the loss of
11 employment of 15% of employees at that establishment, the
12 employer shall notify in writing the bureau, the employees of
13 the affected establishment, any employee organization which
14 represents the employees of the affected establishment, and
15 the community in which the affected establishment is located
16 of such intention to close, relocate or reduce its operations
17 not less than one year prior to the date of such closing,
18 relocation or reduction in operations.
19 (2) Whenever the bureau for good cause determines that
20 circumstances beyond the control of the employer makes one
21 year's advance notice impossible, the bureau may approve
22 notification less than one year prior to the closing or
23 relocation. The bureau shall develop written criteria for
24 such determinations.
25 (b) The written notice required by subsection (a) shall
26 include the following:
27 (1) The nature of the establishment affected by the
28 closing, relocation or reduction of operations.
29 (2) The reasons for the proposed closing, relocation or
30 reduction in operations.
19790H1251B1410 - 8 -
1 (3) An economic impact statement which shall include
2 information concerning the:
3 (i) Employer's payroll.
4 (ii) Number of employees to be affected by the
5 proposed action.
6 (iii) Wages and other remuneration paid to those
7 employees.
8 (iv) Amount of State and local tax revenue that will
9 be lost as a result of the proposed action.
10 (v) Potential financial effect on other businesses
11 in the affected community.
12 (4) Any plans the employer has developed to relieve the
13 adverse effects of the proposed action on the affected
14 employees and community.
15 (5) The economic circumstances of the employer and
16 affected establishment including present profitability or
17 marginality and future investment, employment and production
18 plans for that establishment and similar establishments owned
19 or controlled by the employer.
20 (6) Potential alternatives to the proposed action.
21 (c) Within 90 days of receipt of the notice of intention to
22 close, relocate or reduce operations, the bureau shall conduct a
23 thorough investigation and make findings regarding all the
24 following:
25 (1) The economic necessity or justification for the
26 proposed action.
27 (2) The potential economic and social loss to the
28 affected employees and community.
29 (3) Potential alternatives to the proposed action.
30 (4) The accuracy of the economic impact statement
19790H1251B1410 - 9 -
1 submitted by the employer under subsection (b).
2 (5) Whether the awarding of financial assistance under
3 this act will obviate the necessity for the proposed action
4 and allow the enterprise to continue operation on an improved
5 financial basis.
6 (d) The employer shall provide to the bureau any additional
7 information requested by the bureau and material to or necessary
8 to its investigation.
9 Section 6. Employers obligation to employees.
10 (a) Whenever an employer closes, relocates or reduces all or
11 part of the operations of an establishment of that employer and
12 such closing, relocation or reduction in operations results in
13 the loss of employment of 15% of employees at that
14 establishment, the employer shall do all the following:
15 (1) Make a lump sum payment at the time of separation to
16 each employee who loses his or her job as a result of the
17 closing, relocation or reduction in operations. The payment
18 shall be equal to the average weekly wage of the employee
19 times the number of years the employee has been employed by
20 the employer.
21 (2) Offer suitable reemployment to each employee who
22 loses his or her job as a result of the closing, relocation
23 or reduction in operations at another establishment owned or
24 operated by the employer. Whenever an employee accepts an
25 offer of reemployment, the employer shall pay to that
26 employee reasonable relocation expenses incurred by the
27 employee in moving his or her family and possessions to the
28 location of the new employment. Acceptance by the employee,
29 at his or her option, of reemployment shall be in lieu of
30 severance benefits provided by paragraph (1).
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1 (3) Continue coverage of any health insurance benefits
2 for each employee who loses his or her job as a result of the
3 closing, relocation or reduction in operations for a period
4 of six months after such loss of employment or until the
5 employee finds other full-time employment, whichever comes
6 first.
7 (b) No employee who accepts a lump sum payment in accordance
8 with paragraph (1) shall be denied benefits under the act of
9 December 5, 1936 (2nd Sp.Sess., 1937 P.L.2897, No.1), known as
10 the "Unemployment Compensation Law," because of his or her
11 acceptance of such payment.
12 (c) Severance benefits required by this section shall be
13 considered "fringe benefits or wage supplements" for the
14 purposes of the act of July 14, 1961 (P.L.637, No.329), known as
15 the "Wage Payment and Collection Law."
16 (d) Provisions of collective bargaining agreements which
17 require the payment of severance benefits to affected employees
18 in the event of termination of employment in which the severance
19 benefits are greater in amount than those required by this
20 section shall supersede the requirements of this section.
21 Vacation pay, accrued wages, and other types of payments made
22 for any reason other than as compensation for discharge or lay-
23 off shall not be considered severance benefits and shall not be
24 considered to satisfy the requirements of this section.
25 Section 7. Employer obligation to community and Commonwealth.
26 (a) Whenever an employer closes, relocates or reduces all or
27 part of the operations of an establishment of that employer, and
28 such closing, relocation or reduction in operations results in
29 the loss of employment of 15% of the employees of that
30 establishment the employer shall pay into the Employee
19790H1251B1410 - 11 -
1 Protection and Community Stabilization Fund an amount equal to
2 15% of the total annual wages of all employees who lose their
3 employment as a result of the closing, relocation or reduction
4 in operations.
5 (b) The bureau shall establish rules and regulations
6 governing the manner of payments made into the fund as required
7 by subsection (a).
8 Section 8. Financial assistance.
9 Whenever it has been determined by the Pennsylvania
10 Industrial Development Authority upon application of an
11 industrial development agency, community development
12 corporation, or industrial, commercial or business enterprise
13 eligible for financial assistance under this section that the
14 awarding of financial assistance in the manner hereinafter
15 provided will accomplish the public purposes of this act, the
16 authority may contract with such industrial development agency,
17 community development corporation or enterprise to provide such
18 assistance subject, however, to the following conditions:
19 (1) The authority may contract to provide loans or
20 interest subsidies to, and to guarantee or endorse the bonds,
21 notes, contracts or other obligations of, or otherwise assist
22 financially any enterprise which has filed a notice of
23 intention to close, relocate or reduce its operations with
24 the bureau pursuant to section 5 if prior to the approval of
25 any financial assistance under this subsection, the bureau
26 shall have determined in its investigation pursuant to
27 section 5(c) that:
28 (i) Such closing, relocation or reduction in
29 operations is necessary or justifiable on economic
30 grounds.
19790H1251B1410 - 12 -
1 (ii) Such action will result in substantial
2 employment loss.
3 (iii) Assistance under this subsection will obviate
4 the necessity for the proposed action and allow the
5 enterprise to continue to operate on an improved
6 financial basis.
7 (2) The authority may contract to provide loans or
8 interest subsidies to, and to guarantee or endorse the bonds,
9 notes, contracts or other obligations of, or otherwise assist
10 financially any development project of an industrial
11 development agency or industrial, commercial or business
12 enterprise located in a target area subject, however, to the
13 following conditions:
14 (i) Where the development project is sponsored by an
15 industrial, commercial or business enterprise, the
16 authority, prior to approval of any financial assistance
17 under this subsection, shall have determined that the
18 applicant has, or will have if assistance is provided,
19 the capacity to expand its operations and offer
20 additional employment opportunities to persons residing
21 in a target area.
22 (ii) Where the development project is sponsored by
23 an industrial development agency, the authority, prior to
24 approval of any financial assistance under this
25 subsection, shall have determined that the project will:
26 (A) Be located in a target area.
27 (B) Offer substantial employment opportunities
28 to persons residing in a target area.
29 (iii) The authority shall not provide loans for any
30 development project under this subsection in excess of
19790H1251B1410 - 13 -
1 50% of the cost of such project. However, assistance in
2 the form of interest subsidies or guarantees of bonds,
3 notes, contracts or obligations may be provided for the
4 total cost of the project.
5 (iv) Financial assistance under this subsection
6 shall not be limited by section 306 of the act of May 17,
7 1956 (1955 P.L.1609, No.537), known as the "Pennsylvania
8 Industrial Development Authority Act."
9 (3) The authority may provide grants to, or contracts to
10 provide loans or interest subsidies to, or to guarantee or
11 endorse the bonds, notes, contracts or other obligations of,
12 or otherwise assist financially any community development
13 corporation for development projects within a target area
14 subject, however, to the following conditions:
15 (i) Prior to the approval of any financial
16 assistance under this subsection, the authority shall
17 have determined that the community development project
18 will:
19 (A) aid in reducing the adverse effects of
20 industrial closings or relocations on the affected
21 community;
22 (B) reduce conditions of blight or economic
23 depression in a target area; or
24 (C) create or aid in creating employment in a
25 target area.
26 (ii) The authority may guarantee up to 50% of equity
27 investments made by a community development corporation
28 in a development project which meets the requirements of
29 this subsection.
30 (4) The authority may provide technical and financial
19790H1251B1410 - 14 -
1 assistance to any organization of employees affected by a
2 closing or relocation, to any labor organization which
3 represents such employees, or to any community based
4 organization located within a target area for the purpose of
5 assisting such employee-community organization or
6 organizations to study the feasibility of, or to effect the
7 purchase and continuation of operations of, an enterprise
8 that would otherwise close or relocate subject, however, to
9 the following conditions:
10 (i) The authority may provide grants and technical
11 assistance to any employee-community organization for the
12 purpose of studying the economic feasibility of
13 purchasing and operating as an employee-community owned
14 operation an enterprise which has closed or has given
15 notice of intention to close or relocate.
16 (ii) The authority may contract to provide loans or
17 interest subsidies to, and to guarantee or endorse the
18 bonds, notes, contracts or other obligations of any
19 employee-community organization for technical assistance
20 and transfer, startup and operating costs for an
21 employee-community owned enterprise, provided that the
22 economic feasibility study conducted by that organization
23 provides reasonable grounds to expect that the proposed
24 transfer of ownership and continuation of operations will
25 be successful.
26 (iii) The authority may for the purpose of providing
27 necessary capital for the successful operation of an
28 employee-community owned enterprise purchase stock or
29 investment shares in that enterprise provided that:
30 (A) The authority shall not purchase more than
19790H1251B1410 - 15 -
1 33% of the stock of that enterprise.
2 (B) Any shares purchased by the authority be of
3 a nonvoting type, or if it is of a voting type that
4 the authority give its proxy to the board of
5 directors of the enterprise concerning all regular
6 decisions of the enterprise.
7 (C) The authority shall attempt to sell such
8 shares to employees or community members as soon as
9 such becomes economically feasible.
10 (5) Any loan or other financial assistance made by the
11 authority as authorized by this section shall be for such
12 period of time and shall bear interest at such rate as shall
13 be determined by the authority, and such loans shall be
14 evidenced by bond or note of the borrower and secured as may
15 be required by the board of directors. However, the rate of
16 interest charged shall in no case exceed the prevailing rate
17 for loans of similar amounts made under similar terms and
18 conditions to other creditworthy borrowers in the community.
19 (6) Prior to approving financial assistance under this
20 section, the authority shall require all applicants to make
21 all reasonable efforts to use its own financial resources or
22 to or obtain loans or investment capital from other available
23 sources.
24 (7) All applications for assistance under this section
25 shall be made on forms supplied by the authority. The
26 authority may at any time require supplemental information
27 from an applicant in support of its application. The
28 authority shall establish rules and regulations governing the
29 approval and rejection of applications for assistance as will
30 effectuate the purposes of this act.
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1 (8) The authority shall not provide any financial
2 assistance under this act where such assistance will cause
3 the removal of an enterprise from one area of the
4 Commonwealth to another.
5 Section 9. Employee Protection and Community Stabilization
6 Fund.
7 (a) There is hereby created a special fund in the Treasury
8 of the Commonwealth to be known as the "Employee Protection and
9 Community Protection Fund," to which shall be credited all
10 appropriations made by the General Assembly for the purposes of
11 this act, and such other deposits as are provided by this act.
12 The fund shall be administered by the authority.
13 (b) As often as may be necessary, the authority shall
14 requisition from the fund such amounts as may be necessary to
15 provide for the payment of the administration of this act.
16 (c) The authority shall also requisition from time to time
17 from the fund such amounts so allocated and appropriated by the
18 authority for loans, grants or other financial assistance
19 pursuant to this act. All moneys repaid to the authority
20 pursuant to the terms and conditions of the agreements made and
21 entered into by the authority shall be deposited into the fund.
22 (d) All appropriations, deposits and contributions made to
23 the fund shall be immediately credited in full to the fund, and
24 earnings on the moneys held in the fund shall be credited to the
25 fund for the purposes of this act.
26 Section 10. Enforcement and sanctions.
27 (a) Any employee, resident of a community or employee
28 organization or representative affected by the failure of an
29 employer to comply with the requirements of this act may bring a
30 civil action in the Court of Common Pleas of the county in which
19790H1251B1410 - 17 -
1 the affected establishment is located to enforce the provisions
2 of this act. Any administrative procedures or remedies need not
3 be exhausted.
4 (b) If a court of appropriate jurisdiction finds that an
5 employer has intentionally failed to provide written
6 notification of its intention to close, relocate or reduce its
7 operations at least one year prior to such action as provided by
8 section 5, the court may enjoin the employer from carrying out
9 such action until the employer has given proper notice or has
10 otherwise complied with the requirements of this act. If prior
11 to the commencement of a civil action to enforce section 5, as
12 provided by this section, an employer has closed, relocated or
13 reduced its operations in violation of this act, the court may
14 award to each affected employee as damages an amount equal to
15 the average weekly wage of the employee times the number of
16 weeks short of one year in which notice has not been provided by
17 the employer.
18 (c) If the court finds that an employer has intentionally
19 failed to pay to an employee severance benefits in violation of
20 section 6, the court shall award to such employee treble
21 damages.
22 (d) The payment of severance benefits pursuant to section 6
23 may, in addition to other remedies provided by this section, be
24 enforced by the Secretary of Labor and Industry pursuant to the
25 authority and provisions of the act of July 14, 1961 (P.L.637,
26 No.329), known as the "Wage Payment and Collection Law."
27 (e) No employer shall discriminate against any employee in
28 the terms and conditions of employment on account of that
29 employee's reporting of information concerning the possible or
30 actual violation of this act or because that employee has filed
19790H1251B1410 - 18 -
1 any administrative or judicial proceedings to enforce the
2 provisions of this act.
3 (f) Any person who intentionally violates or who directs or
4 consents to the violation of any provision of this act, shall
5 be guilty of a misdemeanor of the third degree.
6 Section 11. Effective date.
7 This act shall take effect in 90 days.
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