HAZARD — Two months after the shut down and elimination of several positions at a Frasure Creek mine in Perry County, the former employees claim they have not received severance and are now considering a lawsuit.
Over 100 employees were laid off via a letter claiming the company had lost a large account and was shutting down operations at this mine. According to former employees, the company claimed in this letter that the circumstances were sudden and unforeseen, meaning they did not have to give the employees 60 days of notice or severance. The employees of Frasure Creek, however, say this was not the case.
In a meeting held at Hazard City Hall on Thursday, May 24, many employees came together to discuss this closure and a possible lawsuit to work toward getting their severance pay. The meeting was hosted by McKinley Morgan, an attorney with Morgan, Madden, Brashear, Collins, and Yeast in Hazard. Morgan will be working with Roy Collins, a lawyer with his firm, and Cheryl Lewis, of a firm in Hyden, on any legal action that may be taken in this case.
Morgan said that he believed that Frasure Creek and their parent company, Essar Minerals, worked to create the guise of an emergency layoff to keep from having to pay so many severances.
“My best guess is that they knew what was coming,” said Morgan. “They didn’t do this with a human resources manager. Somebody sitting there that night didn’t just dream it up. Lawyers concocted this scheme.”
According to several former employees in attendance, the company informed them that there was a partial malfunction at a power plant that made up 25 percent of the total coal production of the mine. They began slowing down production, but said that this was a temporary state. The employees then found out from news sources that the power plant was shutting down. Over two months later, the company informed them that this plant was shutting down suddenly and without warning, and that was the reason for the layoffs at the mine.
“The letters that they have sent you all, they have tried under the federal law to meet an exception where they don’t have to give you notice and money,” said Morgan.
Morgan added that he believes that the company knew of this lost client even before the employees found out, giving them plenty of time to give notice and work up severance packages.
“The WARN Act is a federal act that says if an employer shuts down, they first of all have to give you a notice letter that says they are going to shut down,” said Morgan. “Then they have got to construct a severance package for you.”
WARN stands for Worker Adjustment and Retraining Notification. This act was put in place to protect employees from being laid off without any notice or ability to pay bills while they are job searching or working on getting unemployment. The act insures that employees who have at least 60 days of notice or pay, with more for employees that have been with a company for many years.
The Herald attempted several times to contact officials with Frasure Creek and Essar Minerals about the layoffs and possible WARN Act violations, but no comments were given, and several more calls seeking comment were not returned.
Morgan said that he wants to give the company the opportunity to do the right thing, although he does not expect them to.
“In my best opinion, if they were going to voluntarily give that to you then you would have that in the bank. You would not be here,” said Morgan. “We are going to send them that letter and give them the opportunity to sit down and talk to us and make things right with you before we file a lawsuit.”
Morgan, Lewis and Collins decided that the best way to approach fact finding for this case would be to have a subcommittee of former employees that would be willing to sit down and give all of the details leading up to the layoffs.
“I would like about five people that will tell me when the first layoffs were, how long till the second one and what they told you,” said Morgan.
Another concern for many of the employees, they noted, is a long-standing rumor that Frasure Creek would file for bankruptcy. They feared that if they did they would not be able to get any severance from them. Morgan said that this shouldn’t be a problem. Grants and loans are available for companies that file bankruptcy and need to pay employees. Also, Essaar Minerals is not considering bankruptcy and could be held responsible.
Due to the complexity of the case, the lawyer fees with be 40 percent of the overall awarded money, but if no money is awarded than the employees will not be out any funds. Morgan said that with all of the time and money it will take to even prepare a case like this, he has to truly believe they deserve this severance to take of this case.