World News

Group of former Toys R Us employees win $2m severance

Published on: July 1st, 2019

The payout is a fraction of the $56m in fees awarded to Kirkland & Ellis, the law firm representing Toys R Us. 

As reported by NorthJersey.com, Judge Keith L. Phillips of the Eastern District of Virginia has approved a settlement of $2m for 33,000 employees who were laid off after Toys R Us filed for bankruptcy last year. The settlement was the result of a class action claim filed by the workers last year.

The group was led by Ann Marie Reinhart Smith, a 30-year Toys R Us employee who filed the claim on behalf of all employees laid off without severance. “After being so loyal to the company, to be let go without our promised severance is disrespectful,” she said in a statement. “We’re grateful we achieved this class-action settlement. It’s an important milestone for working families like mine who are so vulnerable to Wall Street’s greed.”

Anne Marie has called the settlement bittersweet. She said that, despite recognising the importance of honouring severance, the case highlights what she described as holes in the bankruptcy process that prevents employees from being paid in full.

Jack Raisner, a partner in the law firm Outten & Golden LLP that represented the workers, echoed a similar sentiment. “After nearly a year, employees laid off by Toys R Us are finally getting something to show for their steadfast service,” he said in a statement. “It’s a shame they aren’t getting more, but this settlement sends a message that employees deserve a place in the front of the line of creditors when businesses fail, and that is important to people who work in retail and their families.”

The $2m settlement contrasts sharply to the $56m in fees awarded to Kirkland & Ellis, the law firm representing Toys R Us, but is still considered a win for employees. That’s because pensions and severance payments are labelled as unsecured debt when a company files Chapter 11, making them low a priority and less likely to be paid.

“That [the payout] will pay my phone bill,” said Michelle Perez, a resident of Vancouver, Washington, who worked as a supervisor at a Toys R Us store in Portland, Oregon, for four years until 30th June, 2018. “We feel employees should be taken care of first, a lot of employees had been there 30 years,” added Michelle, now a leader with United for Respect, a non-profit group that works to improve wages and conditions for retail and other lower-wage workers. “It shows how little employees are valued. Many of us still don’t have jobs.”

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