The sudden closure of Sumitomo Rubber’s Tonawanda plant on Thursday is bringing questions about its compliance with the state and federal WARN Acts. The law requires companies who are laying off a large amount of employees or ceasing operations to publicly file a notice with the Department of Labor.
The federal WARN act requires a 60 day notice, while New York’s is 90. Sumitomo Rubber’s notice was filed the same day it decided to close, and according to a fax to Erie County Executive Mark Poloncarz, after a press release was already sent out by the company.
“I believe they violated the WARN Act," said Poloncarz. "They can still close, but there will be repercussions associated with that."
Another repercussion at play is the massive Erie County Industrial Agency incentives and other benefits provided in recent years.
"When it comes to the IDA [Industrial Development Agency] benefits that were provided, we entered into an agreement with a recapture agreement. If they shut down they do not meet the standard with the number of jobs that they said they were going to create or have as a result of the tax benefit that was provided to them," he said. "Then they got to pay it back.”
Poloncarz said ultimately it’s up to state and federal authorities to enforce penalties on WARN Act issues.
A representative from Sumitomo Rubber USA, who spoke to WBFO on the condition of anonymity, argued the company is in compliance with the WARN Act. He said the company will be paying its over 1,000 United Steelworkers employees a 60-day lump sum paycheck two scheduled paydays from now - which satisfies the WARN Act. Employees are also slated to receive their regular paycheck this Wednesday, a scheduled payday.
The representative added the offer has been put out to USW Local 135L to negotiate other payouts and benefits to employees.
