Proposed Changes to the New Jersey Warn Act

 

The Millville Dallas Airmotive Plant Job Loss Notification Act, otherwise referred to as the New Jersey WARN Act (“NJ WARN Act”), requires employers of 100 or more full-time employees to provide advanced notice to terminated employees prior to certain events such as plant closings, operational transfers or terminations, and mass layoffs.  The New Jersey Senate Commerce Committee recently approved a bill that seeks to increase the NJ WARN Act’s prenotification period and require severance pay to affected employees in qualifying terminations.

The current New Jersey Warn Act requires qualifying employers to provide written notice to all affected employees not less than 60 days before the first termination in connection with certain terminations or transfers of operations and mass layoffs.  If the employer fails to provide proper notice, the employer must provide those terminated employees which severance pay equal to one week’s compensation for each full year of the employee’s employment.

The proposed legislation, Bill S-3170, seeks to increase the required notification from a period of 60 days to 90 days.  Additionally, under the proposed changes, an employer is obligated to furnish severance pay to covered employee regardless of whether proper notice as been given.  Where an employer fails to give the required 90-day notice to covered employees, the new law if passed would require eligible employers to pay covered employees an additional 4 weeks of severance pay.

Another significant proposed change to the New Jersey WARN Act is its expansion of what is considered a “mass layoff” for the purposes of the Act.  Currently, the New Jersey WARN Act defines a mass layoff as reduction in force, during a 30-day period, resulting in the termination of 500 or more full-time employees or the termination of 50 or more full-time employees, where the latter represent one third or more of the full-time employees at the affected workplace.  The proposed bill seeks to reconstruct this definition of mass layoff to include reductions in force resulting in the termination of 50 or more employees at or reporting to the affected workplace.  Such as change drastically broadens the scope of the NJ WARN Acts coverage and would include protection for employees subject to wider range of layoffs.

The new bill would also expand the number of employers subject to the New Jersey WARN Act’s notice requirements. As it currently exists, only employers who employee 100 or more full-time employees are covered by the Act.  The new bill omits the “full-time” language expanding coverage to include employers of 100 or more employees, whether they be part- or full-time.  Incorporating part-time employees would greatly increase the number of employers subject to the notice requirements of the Act.  Furthermore, the definition of employer would be broadened to include any person or entity acting directly or indirectly in the interest of the employer, including those owning and operating the nominal employer.

Lastly, the proposed legislation seeks to add an entirely new category of protected employees under the New Jersey Warn Act.  The category covers changes in the control of the employer, referring to material changes in ownership and any filing seeking bankruptcy protection.  The bill would require employers which have undergone a change of control to retain certain employees, not reduce their compensation during a 180 day “transition period” following the change.  An employer must seek approval by the Commissioner of Labor and Workforce in order make reductions to its workforce otherwise in violation of this proposed section of the New Jersey 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 to discuss the facts of your situation.