Warning! Sweeping Amendments to New Jersey WARN Act Require Mandatory Severance Pay and Increased Advanced Notice to Employees Affected by Mass Layoffs
By Benjamin S. Teris
On January 21, 2020, New Jersey Governor Phil Murphy signed sweeping amendments (“Amendments”) to the Millville Dallas Airmotive Plant Job Loss Notification Act (NJ-WARN Act) into law. The NJ-WARN Act generally imposes requirements on employers with respect to mass layoffs and terminations or transfers of operations (covered actions). Already more onerous than its federal counterpart, the Worker Adjustment Retraining and Notification Act of 1988 (federal WARN Act), the Amendments radically expand the NJ-WARN Act to require, among other things: mandatory severance pay to employees terminated as the result of a covered action, a 90-day advanced notice period, and inclusion of part-time employees in triggering requirement calculations. The Amendments take effect July 19, 2020.
Federal WARN Act
The federal WARN Act:
- Covers employers with 100 or more full-time employees or 100 or more full- and part-time employees who work a combined minimum total of 4,000 hours per week.
- Requires covered employers to provide 60 days of advance written notice to employees or their union representative before a:
- “Plant closing,” which is defined as “the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees[;]” or a
- “Mass layoff,” which is defined as “a reduction in force which . . is not the result of a plant closing; and results in an employment loss at a single site of employment during any 30-day period for (i) at least 33 percent of the employees (excluding . . . part-time . . .); and at least 50 employees (excluding . . . part-time . . .); or (ii) at least 500 employees (excluding . . . part-time . . .) . . . .”
Current NJ-WARN Act Requirements
The NJ-WARN Act presently covers employers who have been in operation in New Jersey for longer than three years and employ 100 or more full-time employees. While similar to the federal WARN Act (e.g., notice prior to a covered action), the NJ-WARN Act has always imposed more requirements than its federal counterpart. Key differences include:
- “Transfer of operations” as a covered action. Currently defined as “the permanent or temporary transfer of a single establishment, or one or more facilities or operating units within a single establishment, to another location, inside or outside of [New Jersey].” The NJ-WARN Act also covers the same actions as the federal WARN Act—mass layoffs and plant closings (called “termination of operations” under the NJ-WARN Act).
- Notice. Employers must give advanced written notice of a covered action to both the employees and their union representative.
- Severance penalty. Employers who fail to give proper notice of covered actions currently must pay severance to terminated full-time employees in the amount of one week’s pay for each full year of employment.
- Response team services. Employers are required to allow a Department of Labor and Workforce Development response team on-site to provide information and counseling to employees who are impacted by covered actions.
NJ-WARN Act Amendments – Effective July 19, 2020
The Amendments significantly expand the NJ-WARN Act:
- Increased notice period. The advance notice required to be given to employees before a covered action is increased from 60 to 90 days—30 more than the federal WARN Act.
- Part-time employees. Part-time employees will be included in the calculation for the 100 employees necessary to be deemed a “covered employer” and the number of terminated employees necessary to trigger the Act’s requirements.
- Removal of the “single establishment” and 33 percent triggering requirements. Previously, the Act’s mass layoff requirements were only triggered if the layoff resulted in the termination of employment at a single establishment of: at least 33 percent of full-time employees and at least 50 full-time employees; or at least 500 employees.
Under the Amendments, the Act’s requirements will be triggered when there are layoffs within a 30-day period that result in the termination of employment of 50 or more employees at any of the employer’s locations in the state, regardless of percentage of the employer’s workforce they represent.
- Mandatory severance pay. This is the big one and unique to New Jersey. The Amendments convert the severance penalty into mandatory severance pay—i.e., employers must provide affected employees with one week’s pay for each full year of employment. There is no cap on the number of years of service that can be included in the calculation (e.g., an employee with 30 years of service must be paid 30 weeks of severance). Employees cannot waive their right to severance absent approval by a court or the Department of Labor and Workforce Development.
- Increased severance penalty. Employers who fail to provide the required notice to affected employees must pay an additional four weeks of severance pay to those employees on top of the mandatory severance pay required by the Amendments.
- Expansion of the definition of employer. The Amendments redefine “employer” to include “any individual, partnership, association, corporation, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee, and includes any person who, directly or indirectly, owns and operates the nominal employer, or owns a corporate subsidiary that, directly or indirectly, owns and operates the nominal employer or makes the decision responsible for the employment action that gives rise to a mass layoff subject to notification.”
Considerations for Employers
The Amendments make the NJ-WARN Act the most expansive layoff law in the nation. In sum, starting July 19, 2020, New Jersey employers who have been in operation in the state for three or more years and have 100 or more employees (full- and/or part-time) must provide 90 days of advanced written notice before:
- The termination or transfer of operations “which results, during any continuous period of not more than 30 days, in the termination of employment of 50 or more employees[;]” or
- A mass layoff “which results in the termination of employment at an establishment during any 30-day period for 50 or more of the employees at or reporting to the establishment.”
Moreover, employers must provide each employee terminated as part of one of the covered actions with one week’s severance pay for each year of employment.
New Jersey employers who are deliberating restructuring their workforce should review the new requirements of the NJ-WARN Act. Timing of layoffs may impact the rules that must be followed. Consultation with legal counsel should be considered.