Law and Politics

FEGS Pays $2.5 Million To Former Employees

August 18, 2015
By LaborPress Staff

FEGS workers have just scored an important victory.

FEGS workers have just scored an important victory.

New York, NY –  Former employees of the now bankrupt Federation of Employment and Guidance Service (FEGS) have been paid $2.5 million in accrued vacation pay, according the union representing workers. 

Victoria Mitchell, executive director of District Council 1707 AFSCME, called the payments, which are being mailed to employees, a significant victory – but also stated that FEGS still owes workers an additional $2.5 million in severance pay. 

"We will not rest until our members receive every dime that the employer is contractually obligated to pay our members," Mitchell said in a statement.

FEGS had sought and obtained authorization from the court for timely paying accrued vacation, agruing that such a commitment was necessary to hold workers and enable an orderly transition of its social service programs to other agencies, acccording to union counsel Larry Cary of the labor law firm of Cary Kane LLP. Unfortunately for the workers involved, once all of FEGS’s programs were transferred and employees laid off – payments were not forthcoming.   

The payment of severance pay will have to await the final resolution of the bankruptcy proceeding. While FEGS said it was filing for bankruptcy because it had a deficit of about $20 million, the union is reasonably confident that moneys will be available because FEGS’s financial statements, which were filed with the court, show that assets far exceeded liabilities.

Additionally, the National Labor Relations Board is reportedly preparing a complaint against FEGS contending it unlawfully failed to bargain in good faith with the union over the effects of the shutdown. FEGS told the union that it was rushing to shut down all its programs because government funding agencies were demanding it. Government representatives told the NLRB a different story, saying that FEGS announced to them early on that it was immediately declaring bankruptcy and shutting down. This left both City and State agencies scrambling to find suitable agencies to receive these programs on very short notice. The union maintains that this led to a very disorderly transition of programs where many workers lost their jobs because they were not hired by the recipient agencies. If a settlement of the unfair labor practice charge is not reached between the NLRB and FEGS by the end of August, a formal complaint is expected to soon issue.

FEGS was an 80-year old social service agency with state and city contracts annually serving over 100,000 disadvantaged New Yorkers. It had an annual budget in excess of $250 million. It is the largest non-profit social service agency to declare bankruptcy in the United States. The organization is reportedly the subject of several investigations now underway by various law enforcement and government agencies interested in FEGS' financial affairs and why it went under. 

According to Mitchell, dozens of Social Service Employees Local 215 members wrote the U.S. Bankruptcy Court for the Eastern District of New York, alerting the court that they had not received their accrued vacation wages.

August 17, 2015

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