About 2,500 workers will get additional severance pay from New England Motor Freight, a New Jersey-based carrier that declared bankruptcy in February, according to an attorney representing terminated employees.
The new package, totaling $15.7 million, was approved by a bankruptcy judge overseeing New England Motor Freight’s case, according to Charles Ercole, a labor attorney at Klehr Harrison Harvey Branzburg LLP of Philadelphia.
The Elizabeth, N.J.-based company’s initial offer of severance for the laid-off employees included up to two weeks of pay and eight weeks of medical coverage, totaling about $13 million companywide, Ercole told Transport Topics on March 13.
Ercole said his firm objected to the proposed severance because employees were owed additional wages and accrued vacation time.
Ercole and others also sued New England Motor Freight for failure to post adequate notice under federal law. Ercole said the trucking company did not comply with the U.S. Worker Adjustment and Retraining Notification (WARN) Act, which requires employers with more than 100 employees to give 60 days of notice before a closure or mass layoff.
New England Motor Freight, a less-than-truckload carrier, filed Chapter 11 bankruptcy in a federal court Feb. 11 and began ending operations Feb. 15.
Under the new severance agreement, workers will be covered with health benefits from Feb. 15 to April 13, Ercole said. Workers will get a minimum of 14.5 days of severance pay, but that could go as high as five weeks, depending on the employee’s unused vacation days, he said.
The new agreement gives workers a 20.8% increase in severance benefits, Ercole said. And with the increase, workers will drop their suit against the carrier for the alleged WARN Act violation. Severance checks already have started to go out, Ercole said.
Other carriers have inquired about hiring NEMF drivers. The company employed about 1,600 full-time drivers, according to Ercole. The U.S. trucking industry has a shortage of about 50,000 drivers, according to the American Transportation Research Institute.
NEMF had been in business since 1918 and was headed by Myron Shevell, a local trucking operator who bought the business from Farmland Dairies in 1977. News of New England Motor Freight’s bankruptcy filing roiled the trucking industry, but analysts said the problems seemed unique to the company. NEMF did business with many large retailers and that, according to industry observers, may have contributed to its demise.
“New England Motor Freight was burdened by several large underperforming contracts, including Amazon.com,” Evan Armstrong, president of Armstrong & Associates, a logistics industry research firm based in Milwaukee, told TT in February.
Vincent Colistra, NEMF’s chief restructuring officer, issued a news release in February, saying the company suffered two years of losses and faced challenges hiring drivers. Colistra did not immediately return a message from TT about the settlement.
Shevell Group ranked No. 70 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
New England Motor Freight ranked No. 18 on the less-than-truckload sector list with revenue of $400.5 million in 2017.