Big verdict for shallow pockets: Passaic workers to pay $2.6 million — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Big verdict for shallow pockets: Passaic workers to pay $2.6 million

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When Michigan-based Masco Corp. closed its Bath Unlimited plant in Passaic and laid off more than 115 employees, 86 of them filed workers’ compensation claims.

Masco smelled a rat, and took an unusual step. The company filed suit against the employees and their law firm under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, claiming the workers’ comp complaints were fraudulent.

The law firm settled its part of the case in a sealed agreement. The factory workers, left without counsel, did not respond to the federal lawsuit.

The New Jersey U.S. District Court therefore issued a $2.6 million default judgment against the workers for attorneys’ fees, costs, compensatory damages and the workers’ compensation awards received by two of the workers.

Richard Huford, director of litigation for Masco, said the company’s approach could be considered another tool in the in-house counsel’s toolbox, but conceded it was a heavy one. “No employer wants to be in a position where they make claims against current or former employees,” he said. “It should only be done after you have done your homework and have arrived at a conviction that the system is being abused.”  

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