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Introduced by   Senator White of Windham District

Referred to Committee on


Subject:  Labor; reduction in force; severance pay required

Statement of purpose:  This bill proposes to require employers to pay one week of severance pay for each year worked when an employer downsizes or closes an employment site.


It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  21 V.S.A. chapter 23 is added to read:



For the purposes of this chapter:

(1)  “Affected employees” means employees who are terminated from their jobs as the result of the employer closing an employment facility or downsizing the workforce.

(2)  “Employer” means any business or enterprise that employs or at any time in the previous 12 months employed:

(A)  Fifty or more employees, excluding part-time employees.

(B)  Fifty or more employees who in the aggregate work at least 2,000 hours per week, exclusive of overtime.

(3)(A)  “Employment loss” means all the following:

(i)  A termination of employment other than for cause, voluntary departure, or retirement.

(ii)  A layoff for more than six months.

(B)  Employment loss shall not be deemed to have occurred if it is the result of relocation or consolidation of part or all of the employer’s business and prior to the employment loss the employer offers one of the following:

(i)  To transfer the employees at the same or greater wage and benefit level to a different employment site within a reasonable commuting distance with no more than a six-month break in employment.

(ii)  To transfer the employees to employment at the same or greater wage and benefit level at any other employment site regardless of distance with no more than a six-month break in employment, to pay reasonable moving expenses, and the offer is made no later than 30 days before the employment loss.

(4)  “Mass layoff” means a reduction in force that is not a plant closing but the result of a permanent cessation of a major discrete portion of the business, including the elimination of a shift; the shutdown or relocation of a division; the permanent discontinuation or transfer of a production process or product line; a major workforce reduction; or a prolonged staging of permanent layoffs that do not qualify as a full plant closing and that reduction of workforce results in an employment loss at a single employment site during any six-month period for at least 20 percent of the employees but not fewer than 25 employees.

(5)  “Part-time employee” means an employee who is employed for an average of fewer than 20 hours a week.

(6)  “Plant closing” means the permanent or temporary shutdown of a single employment site, or one or more facilities or operating units within a single employment site, if, during any six-month period, the shutdown results in termination of at least 90 percent of the employees or an employment loss for 25 or more employees, excluding part-time employees, at that employment site.

(7)  “Week’s pay” means an amount equal to 1/52nd of the gross wages paid to an employee during the preceding 12 months.


An employment loss will not be considered to have occurred if the loss is either of the following:

(1)  The closing of a temporary facility or the result of the completion of a particular project or undertaking, and the affected employees were notified at the time of hiring that the employment was limited to the duration of the facility or project.

(2)  The direct result of any form of natural disaster such as a fire, flood, earthquake, or drought.


(a)  An employer who orders a plant closing or mass layoff shall provide to each affected employee who at the time of the employment loss has been employed by that employer for at least one year severance pay at the rate of one week of pay for each year of employment by that employer in that facility or location.  Severance pay under this section shall be in addition to any final wage payment made or owed to the employee and shall be paid within one regular pay period after the employee’s last full day of employment.  An employer shall not be liable for severance pay in addition to any contract to provide the same benefits as required by this section.

(b)  An affected employee may bring an action in the superior court in which the plant closing or mass layoff occurs for the benefits provided under this section.  The court may award up to three times the amount of severance pay benefits owed and shall award costs and attorney fees if the affected employee prevails.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont