Mandatory Severance Pay for Mass Layoffs in New Jersey
DATE: February 19, 2020
FROM: Labor and Employment Law Department
RE: Mandatory Severance Pay for Mass Layoffs in New Jersey
On Tuesday January 21, 2020, New Jersey Governor, Phil Murphy, signed legislation that amends the New Jersey WARN Act (the “Act”) to expand employer notification obligations and require severance payments for employees affected by mass layoffs and transfers or terminations of operations. This new law will take effect on July 19, 2020.
Currently, employers with 100 or more full-time employees must provide 60 days’ advance written notice to employees who will be affected by a mass layoff or transfer or termination of operations. A mass layoff means the termination of 500 or more full-time employees during a 30-day period or 50 or more full-time employees representing at least one-third of an employer’s total workforce at a single facility, a group of facilities in an office or industrial park, or separate facilities located across the street from each other.
The amendment, when effective, would expand notice obligations to all employers with 100 or more employees, including full-time and part-time employees, and increase the minimum notice such employers must provide to affected employees from 60 days to 90 days. The amendment would also revise the definition of mass layoff to mean the termination of 50 or more employees, regardless of full-time or part-time status, at or reporting to a single location or a group of locations, including any facilities located in New Jersey, during a 30-day period.
Further, the amendment would require employers to pay severance payments to affected employees in the amount of one week of pay for each full year of employment, regardless of whether employers satisfied their notice obligations. However, if proper notice is not given employers would be required to pay affected employees an additional four weeks of pay. Such severance pay must be calculated using either the employee’s average regular rate of compensation during the last three years of employment, or the employee’s final regular rate of compensation, whichever is greater. If an affected employee is subject to a collective bargaining agreement (“CBA”) he or she would be entitled to the greater of the statutory severance pay or any severance pay pursuant to the CBA. The amendment also provides that employees cannot waive their rights to this statutory severance pay without approval of a court or the Commissioner of Labor and Workforce Development.
Employers with operations in New Jersey should ensure that they are prepared to comply with these new notice and financial obligations in the event of any of the covered occurrences.
If you have any questions, please do not hesitate to contact David R. Rothfeld,
Lois M. Traub, Alexander Soric, Jennifer Schmalz, Jaclyn Ruocco, Joseph Tangredi, Brian Polivy or Robert L. Sacks.
This memo is provided for informational purposes only.
It is not intended as legal advice and readers should consult counsel to discuss how these matters relate to their individual circumstances