Laid-Off Workers Lose Severance

By Amy Joyce
Washington Post Staff Writer
Friday, July 26, 2002; Page E01

After her husband was laid off from WorldCom on June 28, Sandra Harms figured they, and their three children, could survive awhile on his $12,000 severance pay until he found another job.

But all bets were off after WorldCom filed for Chapter 11 bankruptcy Sunday. That stopped any severance checks from going out, and under bankruptcy law, a former employee may never see more than $4,650.

In addition to helping take down the stock market early this week, WorldCom's bankruptcy filing put many recently fired employees' lives on hold. About 5,000 former WorldCom employees' severance packages will be affected by the company's bankruptcy filing, a spokeswoman said.

Employees who were told they would receive a specific payment, including some insurance coverage, found out they will receive nothing for now. Plans were put on hold, children were taken out of preschool, and the newly unemployed are now rushing to find jobs -- any jobs.

"To add insult to injury, not only did we lose our 401(k), but I thought with the [severance] package, I'd have time to find a job," said Lee Simmons of Centreville, who worked as a senior program manager at the Ashburn campus.

The amount of each severance package was determined by length of service and salary range, said a WorldCom spokeswoman, from six weeks to six months of pay. Employees also would get extended benefits.

The company petitioned the court to allow it to pay some severance and benefits, the spokeswoman said.

According to court documents, the company has been authorized, "but not required," to pay the severance benefits, up to the $4,650 cap, to each employee who was terminated. The WorldCom spokeswoman could not say whether or when those payments might be made.

That's little solace to people like Harms and her husband, who didn't want to be interviewed. The couple pulled their two younger children, 4 years old and 16 months old, out of their Centreville preschool Wednesday because it costs $700 a month. Harms's 4-year-old daughter wasn't happy.

"She keeps saying, 'I need to go back to school tomorrow because we baked cookies and we get to eat them tomorrow,' " said Harms, who lives in Warrenton.

The couple has cut spending for things such as cable and has tapped into about $6,000 of savings for necessities. Harms works three days a week at a hair salon in Centreville while her husband watches the children. When she is not at work, he is at job fairs, networking and studying for a new computer software certification to add to his r駸um・

Kristen Stahl of Leesburg was in Maui on a WorldCom-funded trip with her husband, who works in sales, on June 28 when she found out she had lost her job with the company. She worked in project management earning about $40,000 a year.

She spent the last two days of their vacation, a reward for her husband's high-earning sales team, talking to other friends who were laid off and trying to figure out how much severance she would receive.

A package was sent to Stahl on July 15 outlining her severance payments. She was to receive about $6,500. When the package arrived, she immediately signed the papers and mailed them back. She was told she would receive the money two weeks later.

"I'm not counting on seeing anything for a while," Stahl said.

She and her husband, who is still employed at WorldCom and did not want to be identified, have begun to cut costs, and they've slowed their hunt for a bigger house. "Having my husband there has been helpful," she said. "He does well enough that we're okay for now."

But, she said, she was counting on the severance to help stretch her job search time. Now, she feels pressured to find something much faster. "I was hoping I could have that money so I could expand my job search a bit, so I wasn't in a pinch and could just find something that appealed to me," she said. "I don't want to get stuck with another WorldCom."

A WorldCom spokesman said the company set severance amounts before the layoffs and the bankruptcy filing. The payments were to be made in installments every other week.

Simmons said he is one of the lucky ones. He earned a hefty salary before losing his job, and had a decent amount of money in savings to help support his wife and 13-year-old son. But he has liquidated some of his stock portfolio, which he had set aside for retirement and his son's college education.

He signed an agreement that said he would receive $16,638 in severance. If he wants to receive more than the $4,650, he will have to hire his own attorney and wait in line behind other creditors such as banks, vendors and suppliers.

That process "may be too expensive and time consuming. I need to focus on getting another job as soon as possible," he said.

"I was keeping those securities for retirement. You don't want to go into your nest egg," Simmons said. "That's kind of ruined now, not only because of the stock market, but because of this."