Laid-off WorldCom Inc. employees demanded Monday that the bankrupt telecommunications giant cough up tens of millions of dollars in severance and health benefits that were promised but not paid.
With legal help funded by the AFL-CIO, more than 40 ex-WorldCom workers from around the country asked the U.S. Bankruptcy Court in Manhattan to require the severance payments to at least 4,000 employees and possibly thousands more.
John Sweeney, the AFL-CIO’s president, sent letters to the heads of AOL Time Warner Inc. and Metropolitan Life Insurance Co., two of WorldCom’s biggest creditors, asking them not to stand in the way of the severance request.
“These WorldCom workers believed in their company and worked hard for their company — and in return they were robbed of their 401(k)s, their jobs and health care,” Sweeney said.
With WorldCom in Chapter 11 bankruptcy proceedings — in the biggest such case in U.S. history — the court must approve virtually every dollar the company spends and hear objections from creditors.
In the four months before filing for bankruptcy on July 21, WorldCom laid off or said it would fire 12,800 people.
When bankruptcy proceedings began, the court allowed WorldCom to pay $22 million in severance to about 4,000 workers who had been let go. Each worker’s check was capped at $4,650 even though many employees had been promised much better packages.
WorldCom itself asked the court last week to let it pay $36 million more in severance it had promised — and to cancel lucrative severance packages it had given to 19 executives. The company said those actions would improve the morale of its remaining employees.
The motion is scheduled to be heard Oct. 1.
The AFL-CIO — which did not represent the WorldCom workers when they were with the company, praised the company’s motion but said several thousand additional workers, people laid off later in WorldCom’s collapse, also are owed severance payments they haven’t seen.
The exact number of additional workers and the total value of such payments is unclear, said Lowell Peterson, an attorney for the former employees.
The union wants WorldCom to pay the severance in lump sums, as the company traditionally has done, rather than in installments, and make health coverage available retroactively.
That issue is especially important for Ben Barile, 42, of Poughkeepsie, N.Y., a 14-year WorldCom veteran who lost his job developing billing systems. Barile is HIV positive, and his medicine costs $2,000 a month. He has been shelling out nearly $400 a month to keep his old coverage while he tries to find new work.
“I’ve seen things, frankly, that make me want to cry,” said Kate Lee, 44, who oversees a small fund created by Worldcom workers to help former colleagues in dire straits. Lee says she is still owed $40,000 in severance after being cut as senior manager of internal communications.
Daniel Golden, an attorney for the committee of WorldCom creditors, did not immediately return a call seeking comment. Neither did representatives of WorldCom, MetLife and AOL Time Warner.