Melville House Books

In the newest installment in her Melville House Live Book Project, Kari Lydersen investigates the behind-the-scenes role of the Illinois attorney general in the negotiations over the future of the Republic Doors & Windows workers …

Illinois Attorney General Lisa Madigan

Chicago, January 27, 2009 — Illinois Attorney General Lisa Madigan had been hearing news of the impending closure of Republic Windows all week. As the factory occupation started, she dispatched assistant attorney general John Rosenblatt, a labor expert, to find out whether the office could help the workers. Rosenblatt spent time at the factory over the weekend and reported back to the Attorney General about the apparent seriousness of the issue.

Such situations would normally be dealt with by the state Department of Labor, and the WARN Act violations would be federal matters. But Madigan views her office as having an advocacy mission, and thought she might be able to get involved.

So the next week assistant attorney general Paul Gaynor joined the contentious negotiations being carried out in a conference room at Bank of America’s downtown headquarters, involving Pat Holden from Bank of America, factory owner Richard Gillman, Congressman Luis Gutierrez and several other politicians, a representative of the city treasurer’s office and a host of lawyers. With 12 years of bankruptcy law experience himself, Gaynor was intimately familiar with the process which he knew would soon be ensuing. (During the negotiations, Republic Windows had still not declared bankruptcy. The bankruptcy filing was one of the bank’s conditions for extending the loan.)

The Attorney General issued a subpoena to Bank of America allowing them to obtain confidential information about the bank’s dealings with Republic.

As the negotiations progressed, according to sources in the Attorney General’s office, it became apparent there was another critical issue that has even now not been publicized: Not only had the company not given the workers the advance notice or severance pay required by the WARN Act, but it had also allegedly not paid the workers for one week of their labor – an example of a growing trend known as “wage theft.”

An employer accepting labor and services when they know they cannot pay is a serious legal matter — kind of like writing a bad check when you know you don’t have sufficient funds in the bank, which can be criminal check fraud.

A criminal investigation probably could have been opened into this charge, though the issue became irrelevant since the workers were ultimately paid for that week along with the severance pay. But as Interfaith Worker Justice executive director Kim Bobo will discuss in tomorrow’s post, thousands of workers across the country have wages stolen from them in similar ways, and many never get recourse or even know where to turn for help.

In the early negotiations, according to several people present, Gillman not only did not offer to cough up the unpaid week’s wages, but he also requested Bank of America kick in funds to cover his $90,000 car lease and some of his own wages. He eventually backed off these demands and agreed to contribute $117,000 of his own money to pay workers.

Meanwhile through the early negotiations one party had been notably absent – JPMorgan Chase, which has 40 percent equity in the company. In retrospect it is curious why Gillman, and then the union and the public, honed in on Bank of America while making little mention of Chase. Chase officials were likely plenty happy to leave it that way, and tried to lay low. But calls from Gutierrez and the attorney general’s office reportedly summoned them to the table, eventually resulting in that bank’s $400,000 contribution.

As shareholders and lenders, respectively, Chase and Bank of America really had no legal obligation to produce funds for the workers. Paul Gaynor figures, “It was the public pressure that did it, combined with the weight of the Attorney General’s office.”

But it remains to be seen how other workers will fare in similar situations which will doubtless arise. As Gaynor said, “We have serious concerns that other companies may violate the WARN Act, and workers may be left out in the cold.”

• Click here for all posts in the series