Massachusetts Lawyer Blog

Last night during a budget meeting of the Weymouth town council, we discussed the Massachusetts Governor's recent 9C cuts and how we would handle the lost revenues during this fiscal year. While layoffs were discussed, we opted (although not unanimously) to avoid layoffs this fiscal year because we would only have about one fiscal quarter (after the notice period ran) to make the full $1,000,000 in cuts.

Despite my strong reluctance to use a one time nonrecurring revenue source to make-up the difference (we had funds available from the sale of a town owned property), I thought it better to spread the cuts over a full fiscal year should any become necessary as we move forward. Had we opted to act now, we were looking at laying off 120-140 employees next week.

In those cities and towns without an adequate reserve or a new revenue source, they may be forced into making tough choices on layoffs soon. For employees who are displaced due to job loss, there is some help in the stimulus package in the form of a 65% employer paid subsidy of COBRA premiums for nine months. The Employee Benefits Legal Blog has a good post, Employer Paid COBRA Subsidies in the Economic Stimulus Bill: Initial Action Plan and alert that applies to the employer side of this, but provides a good overview for employees, too.

Eligible employees who suffered an involuntary job loss or had a qualifying event (between September 1, 2008 to December 31, 2009) or qualified beneficiaries, should make sure they understand how this COBRA provision affects them and their insurance coverage options.  Covered employers, on the other hand, have the new challenges of dealing with this program and its requirements. While employers are eligible for a payroll tax credit for the COBRA premiums paid under the Act, this Act is a major change to COBRA law and administration and thus must be taken into consideration before making any reductions in the workforce.