State seeks another $800k from BrandPartners

The New Hampshire Department of Labor staff is proposing that BrandPartners Inc. pay its workers $800,000, or about $10,000 each, for alleged violation of the state’s Worker Adjustment and Retraining Notification, or WARN, Act.The penalty would be in addition to a proposed fine of $500,000 proposed in March for violating the law.The Rochester-based company, which designed bank interiors, shut its doors on April 16, forcing some 40 workers to scramble for other employment. But the department also counts workers either laid off or on furlough a month before the shutdown — a total, it says, that reaches 80, five more than the threshold of 75 workers under the state WARN Act.Under the law, which went into effect Jan. 1, a company must give workers 60 days notice before a mass layoff. The company can’t be charged under the federal WARN act, which has a 100-worker threshold.According to a letter released by the Labor Department on Monday and dated Aug. 10, the company is liable for the average rate of compensation for 60 days (to correspond with the required 60-day notice), or some $800,683. This would be the first time the state has tried to enforce the WARN act, and it is doubtful the company will actually pay the total in fines and restitution. Indeed, it is questionable whether it will pay anything at all.First, the state could substantially reduce the penalty after a public hearing. Second, the state may not be able to collect against a company with few assets.BrandPartners claims that it has none after TD Bank called in its loan after the company defaulted on a secondary 18 percent interest loan with Kuwaiti lenders — a move that led to the shutdown. The bank seized whatever assets it could find and auctioned them off.BrandPartners, however, did not declare bankruptcy, and its stock is still traded publicly on the Pink Sheets, though for less than an eighth of a penny. And its corporate structure is apparently intact.The state WARN act enables the state to place a lien against the company, but could not hold executives or board members personally liable. That provision was stripped out of the bill as a compromise to get it passed.However, the state could go after executives on other labor law violations. On July 8, the department – after a hearing — backed its staff determination that the company owed $139,00.16 for unpaid benefits, expenses and deductions taken from worker that were not paid to intended parties, such as medical insurance and 401K.BrandPartners, through its attorney, has claimed that the shutdown was TD Bank’s fault because it shut down the company’s line of credit and debited the company bank accounts, including the payroll account, on April 2. Therefore, he argued, the bank should pay the workers.Meanwhile, the agency has considerably lowered the civil penalty owed to the state on labor law violations considerably. The DOL had charged the company with 253 labor violations, including paying employees on a biweekly basis without state authorization, paying workers four days late in April, failing to make payment of benefits owed, failing to pay employee expenses and failing to forward deductions from wages to appropriate parties. At $100 per violation, the original fine amounted to $25,300. But the department ruled that some violations were due to “extenuating circumstances,” and the penalties to the state were consolidated into a single $700 fine.Appeals of that penalty would go to the Department’s Penalty Appeal board. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW