Opinion: NC’s “employment at will” status can leave workers stranded at closing time

 In April 2019

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Opinion

What does an employer owe rank-and-file workers in the event of a sale or downsizing? That’s a question that has long interested me after writing many stories on mergers and acquisitions, few providing details on how workers will fare.

There’s a simple answer in North Carolina: Nothing, except in the event of a mass layoff covered by the federal Worker Adjustment and Retraining Notification Act or if a collective bargaining agreement is in place.

I’m not talking about deals in which struggling companies are forced to sell and dismiss staff. I’m referring to high-performing businesses with large market shares protected by franchise territories, friendly legislation, solid brands or even monopoly status.

North Carolina’s “employment at will” status has helped it earn a reputation as an employer-friendly state and helps our growth outpace the nation. There’s the law, however, and then there’s the right thing to do. I asked an N.C. employment lawyer if thriving businesses have any obligations to staff members during a sale.

“If businesspeople have checked to make sure the WARN Act doesn’t apply, and if there are no labor contracts in place, the lawyer is likely to shrug and say, ‘You can do what you want. North Carolina is not going to stop you,’” says Katie Abernethy, an employment law specialist at The Noble Law Firm in Chapel Hill.

My ears perked up on this after publishing an M&A story on our website last month. The next day, I heard from several hourly workers who had lost their jobs as the lucrative transaction closed. Several dozen people, some with tenure topping 25 years, were dismissed without severance or company-paid insurance. Most live in eastern North Carolina towns with stable or declining economies.

At the same time, Duke Energy Corp. offered up to a year’s severance for 1,900 employees taking early retirement buyouts. Journalists taking similar payouts at the Charlotte and Raleigh newspapers — owned by a money-losing media company — received up to six months severance.

Efforts to get the company’s side of the story proved fruitless. (For more details) Privately owned companies don’t have to talk to the press. Some businesses can’t afford generous employee send-offs.

But have you noticed how many politicians in 2020 are offering ideas that seem radical to mainstream business thinking? Examples include requiring workers on corporate boards; onerous taxes on the very wealthy; “Medicare for all;” and breaking up giant banks and tech companies.

To a degree, that reflects 2020 election pandering. Still, there’s a simmering anger among many workers that the deck is stacked against them amid a wealth gap similar to the 1920s. Warren Buffett told CNBC changes are needed, though “we shouldn’t screw up the market system.” Ray Dalio, who runs the world’s largest hedge fund, Bridgewater Associates, last year said, “Capitalism basically is not working for the majority of people. That’s just the reality.”

Some hardworking Down East folks would agree.

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