Recent Amendments to the New Jersey WARN Act Expands Employers’ Notice and Severance Pay Obligations
On January 21, 2020, New Jersey Governor Phil Murphy signed into law Senate Bill 3170, significantly expanding employers’ obligations under the Millville Dallas Airmotive Plant Job Loss Notification Act (“NJ WARN Act”). The bill, which was first introduced in November 2018 and passed by the state legislature on January 13, 2020, goes into effect on July 19, 2020 (180 days after enactment).
The current NJ WARN Act, modeled after the federal WARN Act, mandates that employers with 100 or more full-time employees provide, under certain circumstances, notice to affected employees of mass layoffs, plant shutdowns and transfers of operations. Failure to provide such notice can result in liability to affected employees for back wages, as well as civil fines. Under current law, covered employers must give notice to affected full-time employees and are required to pay severance only if they fail to provide the required notice. The recent amendments, however, significantly expand employers’ notice and severance pay obligations under the Act.
The new law revises the Act’s definition of “mass layoff.” Previously, a mass layoff triggered NJ WARN Act requirements where either 500 or more full-time employees, or 50 or more full-time employees representing one-third or more of the full-time employees at an establishment, were affected. The recent amendments have eliminated the requirement that the layoff affect full-time employees. Now, a “mass layoff” is defined as a reduction in force, during any 30-day period, resulting in the termination of at least 50 employees at or reporting to an establishment, regardless of full-time or part-time classification.
The amendments also expand the definition of “establishment” to mean a single location or a group of locations in New Jersey. Meaning that the obligations under the Act could be triggered if a mass layoff affects 50 or more employees at various employer locations throughout the state.
Currently, the NJ WARN Act requires covered employers to give 60 days’ advance notice to employees of a plant closure, transfer, or mass layoff. Under the new law, employers who employ 100 or more employees, regardless of full-time or part-time status, are required to provide affected employees 90 days’ advance notice.
Previously, the NJ WARN Act mandated severance pay as a penalty when a covered employer failed to give the required notice. Under the new law, severance pay is automatic. Now, covered employers must pay affected employees one week’s pay for each full year of employment. Further, covered employers who fail to give the full 90-day notice will be required to pay an additional fours weeks of severance. Employees may not waive their right to severance under the NJ WARN Act without state or court approval.
The new law places substantial burdens on companies with at least 100 employees that seek to reduce their workforce for financial or other business reasons. Employers must continue to employ affected employees during the 90-day notice period—30 days longer than before. Companies must also ensure that they maintain adequate funding to cover the new severance liabilities under the Act. In light of these significant changes, employers that anticipate an event covered by the law should consult with counsel to fully understand their obligations.
Please do not hesitate to contact any of our attorneys if you have any questions regarding this new law.