New Jersey Law to Require Severance Payment in Mass Layoffs

Recent changes to the New Jersey WARN Act now guarantees severance pay for New Jersey workers terminated pursuant to certain kinds of layoffs. Governor Murphy recently signed into law several amendments to The Millville Dallas Airmotive Plant Job Loss Notification Act, commonly referred to as the New Jersey WARN Act (“NJ WARN Act”), Scheduled to come into effect July 21, 2020.  The new amendments, in addition to severance pay, greatly expand the coverage of the Act, now applying to more employers and protecting more employees.

IMG_1040-300x169The NJ WARN Act requires certain employers to provide sufficient notice to terminated employees prior to particular events, such as plant closings, operational transfers or terminations, and mass layoffs. The recent changes to the Warn Act, increases the amount of New Jersey employers subject to the notification requirement. The WARN Act now applies to all employers in the state that have operated within the state for a period of more than three years. Prior to the amendments, the Act only applied to those employers who had operated at a single location, or locations in close proximity to each other, for a period of over three years. Additionally, the amendments now provide for personal liability to those individuals acting in a supervisory role and who play a part in the decision to terminate covered employees. Accordingly, many more New Jersey employers must provide employees notice prior to terminations under the WARN Act.

The amendments also provide addition coverage to New Jersey employees. Prior to these amendments, the WARN Act previously distinguished between full-time and part-time employees, affording protections to only those employees who worked on a full-time basis. The amendments have removed distinction and now provides protections to all employees, regardless of the number of hours they work each week. Furthermore, the tenure requirement in order for employees to be afforded protections under the WARN Act has been removed. Previously, employees were not considered full-time employees under the WARN Act unless they had worked for the employer for at least six (6) of the last (12) months at the time of their termination. The WARN Act now treats all employees equally, in this respect, regardless of the length of their employment.

The WARN Act now also requires employers to provide a longer notice period to employees that are to be terminated pursuant to a mass layoff.  Under the WARN Act, a mass layoff includes all layoff of multiple employees that are not the result of a transfer or termination of the employer’s operations. Where an employer with more than 100 employees terminates 50 or more employees, within a 30-day period, because of a mass layoff, the employer must now provide those employees with 90 of notice of the termination. This 90-day requirement is a marked increase from the WARN Act’s previous 60-day notice requirement. Transfers or terminations of operations that result in termination of 50 or more employees, on the other hand, still only requires an employer to provide 30 days of advance notice to employees.

The most significant change to the NJ WARN Act largely centers around severance pay. Prior to the amendments, the WARN Act only required employers to pay affected employees severance pay when the employer failed to adhere to the WARN Act notice requirements. Now, terminated employees protected under the WARN Act are guaranteed severance pay equal to one week of severance pay for each full year of employment with the employer.

The WARN Act still, however, provides penalties when an employer violates the WARN Act’s notice requirements. Now, when an employer fails to provide proper notice to affected employees, the employer must provide those employees with additional severance pay, in addition to the severance pay already guaranteed under the WARN Act. Each employee that was not provided sufficient notice is entitled to four (4) weeks additional of severance pay, irrespective of the length of time the employee has been employed with the employer.

The WARN Act specifically designates this additional severance pay as owed compensation, earned at the time of the employee’s termination.  Accordingly, this additional four weeks of severance pay may also be protected under the New Jersey Wage Payment Act. Furthermore, an employee may be entitled to this severance pay even if the employee is entitled to severance pay under a collective bargaining agreement, or any other agreement. However, the employee is entitled to only whichever amount of severance pay is greater.

Notably, an employee’s entitlement to severance pay under the WARN Act cannot be waived unless the waiver is approved by the Commissioner of Labor and Workforce Development or a court of competent jurisdiction. As a result, liability waivers contained within an employer’s severance agreement may not be effective to the extent that they bar claims related to  the NJ WARN Act.

Our New Jersey employment lawyers will continue to monitor future changes to the New Jersey WARN Act. If you believe you provided improper notice in a plant closing, transfer or termination of operations, or mass layoff, contact our New Jersey employment lawyers to discuss the facts of your situation.