The second session of the 120th Maine Legislature recently adjourned in Augusta, but not without tackling issues in the employment law setting.  Front and center for legislators this session was the question of severance pay.  Two separate, and competing, bills seeking to make significant changes to Maine’s severance pay statute, found at Title 26 M.R.S.A. Section 625-B, were hotly debated on both the House and Senate floors.

A bold proposal to change Maine’s severance pay laws, L.D. 2054, An Act Regarding the Payment of Severance Pay, was killed completely by legislators.  Brought forward by Rep. John Tuttle (D-Sanford), this legislation proposed to alter in several ways the severance pay requirements currently in force against Maine employers.  Among other things, the amended version of the bill provided that a business’s bankruptcy no longer excuses an employer from its obligation to provide severance pay.  The bill also clarified that the amount of severance pay due to an employee must be based on the total number of years the employee worked at the establishment, including those before the current employer assumed ownership.  Finally, the bill sought to award interest (calculated from the date severance pay should have been made), attorney’s fees and costs to any employee who obtains a judgment against an employer for unpaid severance pay.  In its amended form, the bill passed the Democrat-controlled House by a vote of 88-55.  In the Senate, where Democrats barely outnumber Republicans, the measure failed by the smallest of margins, 18-17. 

The second bill considered by lawmakers, L.D. 2001, An Act to Amend the Law Regarding Severance Pay, was presented by Rep. David E. Bowles (R-Sanford).  In its original form, it provided that, upon a determination by the Department of Labor that a “substantial cessation of operations” in a business having more than 100 employees has occurred, any employee that was laid off within one year of the Department’s determination is automatically eligible for severance pay benefits.  After a hearing before the Legislature’s Joint Standing Committee on Labor, however, the bill was stripped of all of its substantive provisions.  What was left was merely a directive to the Department of Labor to adopt major substantive rules by January 15, 2003 implementing the current, much narrower severance pay law, which mandates that benefits be paid only to those individuals who are employed at a business at the time it relocates or closes down completely.  In its amended form, passage in the House and Senate was swift and relatively non-controversial, as was Governor King’s signing of it into law.

Thus, in the end, Maine’s severance pay statutes were left virtually unchanged in the second session.  Whether the rules to be adopted by the Department of Labor in the coming year will change the landscape remains to be seen.  For now, though, the Maine’s severance pay laws remain intact.