Employees-turned-agents sue to claim severance p. 17

By: George Garneau

Denied separation pay when their jobs were abolished,
former circulation employees claim in a suit that
their choices were a ‘sham’ to save Newsday money sp.

WHEN NEWSDAY CUT 200 circulation jobs in 1992, it offered employees the choice of applying for an enhanced severance package, a new circulation job, or a home distribution agency.
Those who opted for the latter two, however, were barred from collecting severance packages.
Now, five former employees are claiming in a $3-million lawsuit that they were illegally denied severance they were entitled to simply because they opted to become agents, while employees who went into other businesses got the benefits.
The “voluntary” choice they were offered, the suit by New York attorney Louis Pechman says, was nothing more than “a subterfuge” to deny the circulation managers their rightful benefits, which are protected under federal retirement law.
The complaint says the “sham” was designed to save Newsday the costs of separation pay and benefits to some 60 circulation home delivery managers who took agencies.
Newsday denies the defendants were entitled to severance benefits, and denies almost every allegation in their 14-page complaint.
The case was filed in federal court in Happague, N.Y., last year and is in the discovery process. The five plaintiffs have applied for class action status to represent the more than 60 former circulation employees who accepted agency contracts after Newsday abolished their jobs and reorganized home delivery, shifting from an employee-based system to an agency system. No decision has been made on the class action application.
In these days of staff cuts and increased contracting in newspaper distribution, the case illuminates the difficulties in structuring equitable job buyouts and contractual distribution arrangements ? even when employers spend millions of dollars to buy out workers’ jobs.
Newsday, based in Melville, N.Y., in the Long Island suburbs of New York City, is owned by Times Mirror Co., known as one of the industry’s more beneficent employers, but one to whom hard times have forced dramatic cutbacks.
Newsday estimated the elimination of about 300 jobs overall would save up to $17 million a year. It offered voluntary buyouts in an effort to cut the home delivery staff to 65, from nearly 300.
Circulation managers could apply for enhanced-severance buyouts, the 65 jobs in the reorganized department, or a home delivery agency. Or they could do nothing and collect regular severance.
Of the 110 home delivery agents who first signed on, 60 were former circulation employees, the suit contends. It says the five plaintiffs spent a total of 67 years at the paper.
Newsday funded the job cuts through a severance plan and a voluntary separation plan. The regular severance plan paid four weeks of pay, plus two weeks’ pay per year of service, to a maximum of 50 weeks. The voluntary separation plan paid eight weeks of salary, plus 2.5 weeks’ pay for each year of service, to a maximum of 60 weeks, plus a choice of health options and other benefits.
Newsday argues that the former employees who took agencies were “voluntarily leaving . . . to pursue a new business opportunity.”
Workers who took the severance could do whatever they wanted, including working for the paper as an independent contractor, but they could not be home delivery agents. According to the suit, Newsday awarded home-delivery service agencies for free, and the former employees received the same terms as nonemployees.
The suit claims Newsday did not renew the agency contracts of plaintiffs Elliot Smith and Albert Riddick and continues to deny them benefits they would have gotten had they not sought home delivery agencies.
The other three plaintiffs, Russell Petz, James W. Gemmell and Kevin Dailey, lost their agencies after they filed suit, sources supporting their case said.
In court papers seeking dismissal of the suit, Newsday lawyer David Bennet Ross, of the firm Seyfarth, Shaw, Fairweather & Geraldson in New York, said the suit is barred by the statute of limitations and by releases the plaintiffs signed.

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