Gannett's punitive severance policies make NYT

Dateline: Mon 27 Jul 2009

 

"Last December, when the Gannett newspaper chain laid off thousands of workers, Jenny Poon was not one of them. Now she wishes she had been.

Ms. Poon, an art director at The Arizona Republic, lost her job this month in the latest wave of layoffs, as the Gannett Company, like other corporations, shed jobs to keep up with falling revenue. But rather than pay severance, as it did in previous rounds, Gannett is paying what is called supplemental unemployment benefits, which allows the company to shift part of the cost onto the states.

The company says that for most employees the result will be about the same — that in fact, many will get a little more, and a few could get much more. But employees are discovering that some of them, like Ms. Poon, stand to get a lot less than they would have under the old severance packages, and some will get nothing.

Ms. Poon, 26, has a graphic design business that generates a little income, which will lower her state unemployment benefits and may be enough to wipe them out entirely. She is awaiting the state’s ruling to learn which. And if she is not eligible for payments from the state, she will receive nothing from Gannett.

Other former Republic employees who had part-time second jobs say those jobs now mean missing out on thousands of dollars from the company.

“I don’t blame them for cutting and trying to save money because things are bad, but there ought to be a decent severance,” Ms. Poon said. “This way it punishes people for trying to find work.”

Gannett, a largely nonunion company, is under no obligation to make severance or any other payments to most of the people it lays off, and it is not alone in looking for ways to spend less on employees as it weathers the downturn; many newspaper companies, including The New York Times Company, have cut wages and benefits.

As for supplemental unemployment programs like Gannett’s, “they exist but they’re pretty rare,” said Andrew Stettner, deputy director of the National Employment Law Project. Several major publishers, including the Tribune Company, the McClatchy Company and the Times Company, said they have never used one and pay standard severance instead.

Robin Pence, a Gannett spokeswoman, said the 1,400 people laid off this month should not think of the program as severance. “The purpose of this is to supplement your unemployment while you’re getting a job,” she said. “It’s a transitional pay, not severance.”

That distinction is lost on employees who say that the practical effect of being paid — or not — is the same, no matter how the program is labeled.

In this month’s layoffs, as in previous rounds, affected employees can keep receiving the equivalent of their salaries for a number of weeks equal to their years of service; for instance, a 10-year employee would continue to be paid for 10 weeks.

But in this round, the company told workers to file for state unemployment, which in Arizona and some other states means filing again every week. If they qualify for state payments, they can apply for supplemental benefits to Total Management Solutions, a company hired by Gannett to run the program, and receive the difference between their former salaries and their state unemployment checks.

The company said it did not know how much it would save, compared with paying severance, or how many employees would be adversely affected. It said most employees would get a little more than they would have from severance, because unemployment benefits are exempt from Social Security and Medicare taxes. The move raised the minimum benefit from two weeks’ pay to three. And laid-off employees with more than 26 years’ service — Gannett said it did not know how many there were — could get significantly more than they would have from severance, because the maximum benefit was raised from 26 weeks to 36.

Gannett operates hundreds of newspapers in many states, but the benefit restrictions are a particular concern in Arizona, whose unemployment benefits are among the nation’s lowest, capped at $265 a week. The Arizona Department of Economic Security says that unemployment beneficiaries become ineligible if they bring in more in a week than their maximum weekly unemployment check. And for former Gannett workers, any interruption in unemployment eligibility means no further payments from the company.

“If you take part-time work or freelance work, even for a week, you get nothing from Gannett,” said Dave Lumia, 52, who was an assistant sports editor at The Republic. “It certainly doesn’t encourage me to go out and look for work.”

Mr. Lumia, who worked at the paper for 13 years, said his wife lost her job in December, and they are weighing whether they can afford to help their daughter pay for college this fall.

Jennifer Johnson, who was laid off from her job as an editor on The Republic’s Page 1 team, quickly found a new post, working for the Arizona Democratic Party. But that means she will not receive nine of the 10 weeks’ pay she would have gotten, she said.

Labor lawyers say that in a small number of states — including New York, where Gannett has several newspapers — there is another way that people could receive much less than they would have under the company’s former severance plans. In those states, people who lose their jobs can receive full severance payments and full state unemployment benefits simultaneously. But Gannett’s new program makes that impossible."

 

Comments

BigPoppa [Member] said:

Having been downsized 3 times in the past 8 years I can tell you that some companies do it the right way realizing how it will affect the downsized employee, while others focus solely on the bottom line regardless of the affect it will have on someone's life.

The first time was 9/11/01. The company had already gone through a couple of rounds of layoffs. I was towards the top of the payroll ranks and when I get to the office in the morning, my keycard has been deactivated. Like those targeted in the first two rounds, my unemployment application was denied as the company made up information to avoid paying. All I received going out was the remainder of unused vacation, about 2 weeks. Turned out to be a blessing as those employees that were left were paid with rubber checks and 401k contributions were no longer being made.

Second time was much better. We find out in August that the entire IT department will be outsourced starting Jan 1. Everyone on the current staff would be retained, but I was a contractor, so I had no guarantee of my contract extending and no severance. However, I had 4 months to find a job. Not the greatest economy then, but it was better than the dry spell now and for the few months after 9/11.

Third time (a charm!) we knew it was coming a couple of months in advance. Those of us affected were able to get an early start on the job hunt while we were still employed. When the axe finally came we received a very generous severance (for a failing company on the verge of closing) and unused vacation. It was more than enough to bridge the gap between positions.

I like to work for very small companies (or tiny departments), so I take on the risk that things may not always work out. Gannett, for their size, should be ashamed for manipulating the system to try to pay as little as possible, especially in this current job climate. A little compassion goes a long way in times like these.

2009-07-28 09:47:52

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