After looking into last week’s mass layoff at a manufacturing plant in Scarborough, the Maine Department of Labor has determined that because Whitcraft Group owned the facility for less than three years, the company is not required to follow state labor law regarding severance pay.

“We’ve concluded our investigation and determined that based on that section of the statute and our rules the Department will not hold the company liable for severance,” read a statement the department released Wednesday. “However, employees do have a right to pursue a private suit challenging a company’s assertion that it is not liable.”

The statute regarding severance pay because of a closing, substantial shutdown or relocation of a facility that has employed 100 or more workers at any time in the previous 12 months normally calls for 90-day advance notice to affected workers and a week’s severance pay for every year of service.

Much of Whitcraft’s workforce had been on a full or rotational furlough since the middle of March. On April 29, local managers called employees to inform them they would be laid off the following day, which also would be the final day of their health and dental insurance coverage. They were also told no severance would be forthcoming.

On Tuesday, however, Whitcraft CEO Doug Folsom said that insurance coverage for all laid-off employees would continue through this week, and that they would also receive one week of severance pay. He said the company was not required to do so under Maine law, but that “it’s the right thing to do.”

Jim Kelley, who worked as a second-shift leader, would have celebrated his 14th anniversary at the plant this August. He said many of his colleagues had been there for more than 20 years.

“That’s why it was a success,” Kelley said. “These people built this. They were good at what they did.”

Connecticut-based Whitcraft purchased the facility and its operations on May 2, 2019, from LAI International, which grew out of a Maryland company initially called Laser Applications Inc. LAI had been the plant owner since 2007, when it acquired Rich Technology International.

Originally formed as the Rich Tool & Die Company in 1961 in South Windham, precision manufacturing operations moved to Scarborough in 1992 and the name was changed to Rich Technology International.

Over the years, the company designed and produced precision components used in turbines for power plants and in commercial aircraft engines. General Electric and Pratt & Whitney were among the biggest customers.

“Things were really good for a long time there,” Kelley said. “Then LAI started changing things.”

Kelley said a generous 401(k) retirement plan that matched half of employee contributions was halted, reinstated, then taken away once again under LAI, which also cut pay differential for second- and third-shift workers and put caps on vacation time before selling the business to Whitcraft.

“We all kind of had faith that Whitcraft was going to turn it around,” Kelley said. “But the light at the end of the tunnel seemed to be just another train with a different name coming at us.”

Forty of the 125 Whitcraft employees are staying on to help close down the plant before the end of July.

The director of Maine’s Bureau of Labor Standards, Mike Roland, said the state’s decision was based on a subsection of the rules regarding severance pay that says a company has no liability if “the employee has been employed by the employer for less than 3 years.”

“Our determination,” Roland wrote in response to a request for clarification, is “that it applies in this case.”

Roland said the bureau is still considering how to approach another mitigating factor, listed in another subsection of the rules. Namely, if a shutdown is due to a physical calamity – defined as fire, flood or other natural disaster – the company is not liable for severance. Whether the COVID-19 pandemic fits that description remains to be seen.

“I expect we will have a decision soon,” he said.

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