§ 28-7-19.2. Standards of corporate behavior.
(a) As used in this section, the following words, unless the context clearly requires otherwise, have the following meanings:
(1) “Control” means the beneficial ownership of fifty percent (50%) or more of the outstanding voting securities of a control transferor; provided, that for the purposes of making percentage calculations, outstanding voting securities includes any voting stock underlying convertible securities.
(2) “Control transferee” means the person or persons who assume control following a transfer of control as defined in subsection (a)(8).
(3) “Control transferor” means the person or persons who exercise control, including the power of hire and fire, before a transfer of control as defined in subsection (a)(8); provided, however, that the person or persons are either:
(i) A corporation to which the provisions of chapters 1.1 and 5.2 of Title 7 apply, a gas or electric company or combined gas and electric company subject to the provisions of chapter 1 of title 39, or an association or trust which pursuant to chapter 1 of title 39 owns beneficially a majority of the common stock of that company; provided, that the corporation employ fifty (50) or more full-time employees, or employees working aggregate hours equal to the sum of hours worked by fifty (50) full-time employees, and has fifty (50) or more shareholders, in the state at some point in the twelve (12) calendar months prior to the transfer of control.
(ii) A foreign corporation established, organized, or chartered under laws other than those of this state; provided, that the corporation employs fifty (50) or more full-time employees, or employees working aggregate hours equal to the sum of hours worked by fifty (50) full-time employees, and has fifty (50) or more shareholders, in the state at some point in the twelve (12) calendar months prior to the transfer of control; and provided further, that the corporation is not an out of state banking association or banking corporation or insurance company authorized to transact business in the state.
(4) “Department” means the department of labor and training.
(5) “Director” means the director of the department of labor and training.
(6) “Employee” means any person employed for hire by an employer in any lawful employment.
(7) “Termination of employment” means the involuntary termination of an employee’s employment consistent with the eligibility standards for unemployment benefits under chapter 44 of this title.
(8) “Transfer of control” means a transaction or series of transactions as a result of which any person is or becomes the “beneficial owner,” directly or indirectly, of securities of a control transferor representing fifty percent (50%) or more of the control transferor’s then outstanding voting securities; provided, that a change in control will not be deemed to have occurred solely because of the acquisition of securities as a control transferor, or any related reporting requirements under chapter 11 of title 7, by an employee benefit plan maintained by the control transferor for its employees.
(9) “Weekly compensation” means an employee’s base compensation in effect on the last payroll period ending prior to the transfer of control for eligible employees pursuant to subsection (b) of this section or the time of termination of employment for eligible employees pursuant to subsection (c) of this section.
(10) “Year of service” means each full year during which the employee has been employed by the control transferor as defined in subsection (a)(3) of this section.
(b) Any employee of a control transferor whose employment is terminated within twenty-four (24) calendar months after the transfer of control of his or her employer is entitled to a one-time lump sum payment from the control transferee equal to the product of twice his or her weekly compensation multiplied by each completed year of service. This severance pay to eligible employees shall be in addition to any final wage payment to the employee and shall be made within one regular pay period after the employee’s last day of work.
(c) Any employee of a control transferor whose employment is terminated within the shorter of the following periods prior to a control transfer: (i) Twelve (12) calendar months, or (ii) The period of time between which the control transferee obtained a five percent (5%) interest in the voting securities of the control transferor and consummated a control transfer by obtaining a fifty percent (50%) or greater interest pursuant to subsection (a)(8) of this section, is entitled to a one-time lump sum payment from the control transferee equal to the product of twice his or her weekly compensation multiplied by each completed year of service. This severance pay to eligible employees shall be in addition to any final wage payment to the employee and shall be made within four (4) regular pay periods after the transfer of control.
(d) There shall be no liability for the one-time payment to an otherwise eligible employee if:
(1) The employee is covered by an express contract providing for payment in the event of termination of employment equal to or in excess of that provided by this section;
(2) The employee has been employed by the control transferor for less than three (3) years;
(3) A transfer of control as defined in subsection (a)(8) of this section is the result of the transfer of securities or the beneficial interest in it, directly or indirectly, by sale, gift, bequest, or otherwise, in one transaction or a series of transactions, between:
(i) An individual and that individual’s spouse;
(ii) An individual and that individual’s sibling or the sibling’s spouse;
(iii) An individual and that individual’s lineal descendants or their spouses;
(iv) An individual or a fiduciary who holds the securities or the beneficial interest therein for the benefit of any of the foregoing persons; or
(4) The control transferee obtained control through enforcement of rights under pledge or other security interest created in good faith and not for the purpose of circumventing the purposes of this chapter or as a result of an assignment for the benefit of creditors, receivership, bankruptcy, enforcement by judicial process, or other similar proceeding, including a transferee obtaining its interest from the person enforcing those rights or in connection with that proceeding.
(e) Upon assuming control, the control transferee shall be responsible for providing written notice to each employee of the control transferor and the collective bargaining representative or representatives, if any, of the rights of employees under this section within thirty (30) days of completion of a transfer of control. The control transferee shall also provide written notice to the department that a control has occurred. The department shall assess a fine in an amount up to one thousand dollars ($1,000) for failure to provide the notification.
(f) In the event any eligible employee is denied a lump sum payment as a result of a violation of this section, the employee shall have available all private civil and other remedies at law or equity. The department of labor and training may take any and all appropriate actions to enforce the provisions of this section.
(g) For the purposes of determining eligibility under subsections (b) and (c) of this section, all determinations shall be as of the date of control transfer occurs unless specifically stated otherwise.
(h) The director may promulgate any regulations that may be required for the implementation of this section.
History of Section.
P.L. 1990, ch. 138, § 2.