Paul McHale's Blog: February 2009

EMILY C. DOOLEY TIMES-DISPATCH STAFF WRITERPublished: February 6, 2009
When Qimonda North America laid off 500 workers and cut off their pay, health insurance and other benefits this week, the company may have violated a federal labor law.
Some former employees of the Henrico County memory-chip manufacturing plant have contacted elected officials and attorneys about the issue, and a local delegate is investigating the case.
But the company says it was in financial distress, which it believes provides an exemption to the law.
The Worker Adjustment and Retraining Notification Act requires employers to provide 60 days' notice of a layoff or 60 days' pay in lieu of notice.
Qimonda laid off the 500 employees over the course of two days. In most cases, workers were given an hour to collect their belongings and turn in their security badges.
An additional 500 were given dates within the next 30 days; the remaining will leave in waves through April.
Continued pay or benefits were not an option, employees say they were told.
"It was one of the grossest things I've ever witnessed in my entire work life," said Eric Askew, 43, a manufacturing technician who was among the first 200 people hired in 1997 to work in the memory-chip plant in eastern Henrico. "I do believe they are in violation with the WARN act."
The law, dating to 1989, is intended to provide workers protection in the case of mass layoff or closure.
There are a few instances that trigger the WARN act, including cuts that involve 500 or more employees at a single site, said John Philo, legal director of the Sugar Law Center in Detroit, which specializes in the law.
But the law also comes with exemptions. Natural disaster is one; so is the loss of a customer that is so significant the business cannot continue.
Another exemption, and one Qimonda believes applies, involves financial distress.
That clause relates to companies trying to get investors or a loan. If issuing a notice of a layoff would scare off potential investors or lenders, the notice time can be shortened, said Ann C. Hodges, a law professor at the University of Richmond who specializes in employment law.
"It's only if it's not foreseeable or they were trying to get capital," Hodges said.
Qimonda North America's parent company, Qimonda AG, filed for insolvency protection in Germany last month, which is akin to claiming bankruptcy. Since then, the company has not provided operating cash to the Sandston plant or been able to buy any memory-chip wafers the facility produces.
Qimonda North America spokesman Glen Haley said the company does not feel WARN applies based on the financial condition of the company.
"We obviously would not have made this decision if there were legal issues with it," Haley said. "We are not in a financial position to be able to pay them for 60 days."
Several employees said they have made calls to an attorney specializing in class actions and are awaiting a response.
A local elected official questions whether the employees were treated fairly. "The WARN act could be an issue, and that is something I'm in the process of investigating," Del. Christopher K. Peace, R-Hanover, said yesterday. "The question will be whether . . . notice was timely."
Hodges and Philo said they believe employees have a claim, but they will have to pursue legal action against the company on their own.
The WARN act has no federal enforcement mechanism.
"I would expect they could and should get a judgment here and try to recover [wages and benefits]," Philo said.
Two bills introduced in the U.S. Senate and House of Representatives in 2007 to beef up WARN provisions and enforcement died without action. Sen. Sherrod Brown, D-Ohio, and then-senators Barack Obama and Hillary Rodham Clinton signed on to the bill, which added a provision allowing state officials to bring suit against companies on behalf of workers.
A media aide in Brown's office said the senator was considering reintroducing the bill.
Peace said it is too late to submit legislation to the Virginia General Assembly this year, but he said he has contacted the attorney general's office and the governor's office about the Qimonda situation.
Contact Emily C. Dooley at (804) 649-6016 or edooley@timesdispatch.com
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Reader Reactions
Posted by ( been there ) on February 07, 2009 at 6:00 pm
Try this one on witnessed this three time now first @ Lucent( Viasystems)Erni now Quimonda get out of this industry folks / evrything moves to ASIA / GERMANY / MEXICO
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Posted by ( DavidvsGoliath ) on February 07, 2009 at 9:52 am
Just for the persons not fully understanding: we are not seeking a handout or a stimulus bailout. We are asking for the gov’t to protect as they have laid down the law—with the WARN Act. That is what we as citizens of the US pay our taxes for. If the gov’t would step in, we would not be using lawyers. We are not stupid, we have been looking for jobs, many of our co-workers have left. Unfortunately we work in a very specialized industry that is not always seen as transferable (although after working in this industry nothing could compare to the stress, multi-tasking and knowledge), we have very marketable skills and like everyone else looking for jobs, just want another chance to use them, but not lose our entire savings and homes waiting for that chance.
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Posted by ( chem2000 ) on February 07, 2009 at 12:28 am
5 years? What are you talking about?Even until 2 years ago, nobody was losing money. Even in memory sector, Qimonda started to lose money about 1.5 year ago. Samsung reported their 1st losing quarter a few weeks ago. Intel so far never lost money last 5 years. Same is true for QCOM, Microchip, TXN, TSMC etc.. Remember NVidia and Sandisk, and how they were doing even up to a couple of quarters ago? How about Seagage and Western Digital? Even little more than a year ago, some NAND memory companies were making tons of money (with Ipod booms) - look at HYNIX and Micron.Please provide us with your specific 5 years comment, that you were able to envision the “entire” semiconductor industry…
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Posted by ( Jr ) on February 07, 2009 at 12:22 am
Just in case anyone didn’t understand the reason for bankruptcy after shutting down would be? Is to save from paying multimillion dollars of vendor bills and other bills that haven’t been paid to U.S companies in the last 6 months.
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Posted by ( Jr ) on February 07, 2009 at 12:16 am
lrn2ply, you are one of the reasons Qimonda is shutting down. That was just a stupid comment. Some chips made money, some lost, but the richmond plant made at least 1 million above cost per week to run! Now from experience, the next step will be to bring someone in to purchase the tools and whatever else that can be sold in 30 days. 2nd step: ship that money to Qimonda AG to keep the funds safe from Qimonda NA that will be filing bankruptcy after the transfer of funds from the sale. Smart HUH? The US government should be involved. Oh and I would like to make a chout out to my dad that is keeping an eye on this.
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Posted by ( Lrn2ply ) on February 06, 2009 at 10:38 pm
For anyone who has been working in the semiconductor industry for more than 5 years you should have seen this coming. Did you ever look at the quarterly reports or any of the industry news? Did you really think a company could continue hemorrhaging hundreds of millions of dollars ever quarter? Now you look to lawyers and government for help? Give me a break.
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Posted by ( Qimonda Ex ) on February 06, 2009 at 2:54 pm
It appears Qimonda AG dumped all the debt on Qimonda NA to make themselves appear better, QNA will have to file charter 11 to get out of this. This means we lost our jobs so they can collect the bounty on the tools in there, by selling them off, so they have monies for Dresden BWL and then dump their debt on Qi NA, next they’ll be announcing their 2008 yearly results and with QNA out of the way they’ll get Saxony’s money and look profitable, what a lovely company this has turned out to be. I heard all directors and Section managers are all still in there, talking bull..sxxt all day with nothing to do, with engineering too, Techs I expect, as they need to idle the machines in there, but those other free loaders, why are they there? Its not as if any product needs to be engineered or managed, now is it?
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Posted by ( wattiwason ) on February 06, 2009 at 2:44 pm
We have gotten the old shaft. One of my questions is why they didn’t close the Asian plants and give the Richmond plant the money.The ceo needs to be looked at because why would he not sell Richmond to another co. when he had the deal in his hand. If we had a good law firm to help us out we need to start suing from the top on down I hope all the upper management enjoy their packages that they will get. They have ruined whole family’s lives. May they burn in——
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Posted by ( chem2000 ) on February 06, 2009 at 2:36 pm
Understand that Qimonda has nothing..What about class action on Infineon, who still owns the majority? In fact, they already prep’ed for hundreds of millions of dollars for Qimonda insolvency according to one of the old article…
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Posted by ( Shafted ) on February 06, 2009 at 11:59 am
Don’t think for one minute Qimonda AG, NA and the Richomd site didn’t know what was going on. Qimonda AG paid Qimonda NA for what we produced. When AG filed inslovency they knew it is was the way to hang Richmond out to dry. They were trying to skirt around the Warn Act. Richmond was so broke and not paying Vendors but claimed the forced days off would raise 3.1 million dollars and there was enough in payroll for 3 months. They could have given notice. Upper Management at Richmond knew it but blew smoke up our butt. They had 300MM employees taking 2 forced unpaid days per month for cost savings which started in January. Fu said Germany was commited to our success. Con’t to talk about the buried wordline etc. On Thursday,January 29th an unoffical meeting was held. We were told GE Capital was coming in to check tools we had sold and we may do more business with them. Not true the only reason they were there was to audit tools they had purchased.Qimonda NA was not looking for help. We were told the story of cutting to 6K wafer starts from 9k and a possible head count cut when this happen. I know they had me working on one areas staffing reduction until Monday, Febuary 2nd. Never was it mentioned the plant would shutdown. I knew the writing was on the wall when thy stopped wafer started and pushed remaining product through the line. HR and Upper management trying to hide the fact they were at the plant by parking where they thought we couldn’t see. They waited to do this once the line was idle and before a new pay period started. On Feb 3rd had the nerve to say no notice for most of you here, it is your last day but be proud of your work over the past 12 years. I am proud of my work but NA, Richmond and AG upper management can’t say the same. They lied and were underhanded. This should be investigated!!!!
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Posted by ( xQi ) on February 06, 2009 at 10:08 am
Clearly there is a shell game going on here, but make now mistake - the parent company is in Germany, the money comes from Germany. They decided that QR3 employees were expendable and with the help of elements of QNA mgmt they executed their plan. They are trying to skirt the law and deny >1000 individuals their rights under the WARN act.
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Posted by ( ExQi ) on February 06, 2009 at 9:29 am
What I think it very interesing is that as of 2 weeks ago a high level director during a communication meeting stated that QNA had up to 3 months of salary to pay everyone. The WARN act requires only 2 months. If this statement was true the least the company could have done was continue to pay the affected employees for 60 days to compy with the WARN act.
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Posted by ( shameonqimonda ) on February 06, 2009 at 9:04 am
I find this comment very interesting:
“We obviously would not have made this decision if there were legal issues with it,“ Haley said.
It seems to be consistent with the way everything is handled at Qimonda. It is always about what they don’t have to do versus what is the right thing to do. You would think that Haley would have said something more along the lines of “we tried to do everything we could for the employees just as we did for the 200mm employess, but we were not able to” The reason they don’t say that, is because there was no attempt made to do that. There is a lot being said in this one sentence. You would think that fear of legal implications would come after doing what is right for the people and city that have supported this company for more than ten years. This one comment also seems to imply that there was an ability to comply with WARN, but a choice was made not to. I hope elected officials make the choice to support these employees.
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Posted by ( DavidvsGoliath ) on February 06, 2009 at 8:31 am
I have never felt as cheated and treated as poorly in my life. This is a very basic case of a large corporation not caring about it’s employees and the citizens of the state where the firm resides. As the article and other comments state, we were basically shoved out the door with nothing. The HR department provided little assistance and the director will not even respond to request and questions. We were handed a small folder with little information on the way out the door. I contacted the employment commission and was told that the UEmployment office is trying to help, but that Qimonda is being very unresponsive in giving names and information. Not only is this company still solvent, it is keeping managers employed who have absolutely no function to perform during a “shut down” situation. If this is truly a bankrupt situation, why are the managers still employed and why is the company paying millions to lease outdated 200mm equipment and some persons have indefinite termination dates. I certainly believe there is a lot of dirt under those rocks if someone starts turning them over. The article stated that we needed a customer, well we had one, but they took 3000 wafer starts from us, that does not sound like a customer, it is the parent company keeping it’s own pockets lined. Within the last 60 days, Germany decided to take nearly 1/2 of our production to use in their own plant and has since ramped the starts even higher. We need help and are reaching out to anyone that is willing to dig hard and deep into this organization and it’s management. I am struggling and to be thrown out within hours of termination with no assistance is just Wrong!
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Posted by ( xQi ) on February 06, 2009 at 7:28 am
I think this situation requires some real legal scrutiny. It is important to note that Qimonda North America has not filed for bankrupcy, and somehow has enough money to keep upper mgmt employed. The parent company has hundreds of millions of dollars in assets. I would think local officials would be upset with a German co. forcing >1000 individuals to file for unemployment with no notification. At least Circuit City had the decency to abide by WARN and provide 60 days notice to employees even though they were bankrupt and undergoing liquidation. These affected Qimonda employees were given no notice, and had their insurance terminated as they were let go. It is shameful, if the WARN act doesn’t protect these people, then who does it protect?
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