UPDATED MAY 4, 2020
Background:
On January 21, 2020, Governor Murphy signed Senate Bill 3170 into law, amending the New Jersey Millville Dallas Airmotive Plant Loss Job Notification Act (more commonly known as the “NJ WARN Act”). The law is scheduled to go in effect July 19, 2020,* and requires employers to provide severance payments to employees impacted by mass layoffs, transfers, or termination of operations impacting 50 or more employees.
Notably, the law revised the following key definitions:
- “Establishment” to mean a single location or group of locations in the state of New Jersey operated by an employer (eliminating the focus on a single site of employment by expanding the analysis to all facilities in the state).
- “Mass layoff” to now mean a reduction in force, during any 30-day period, resulting in the termination of at least 50 employees at or reporting to an establishment (eliminates consideration for work tenure and classification as full-time or part-time).
- “Termination of operations” refers to the permanent or temporary shutdown of a single establishment or one or more facilities or operating units within a single establishment during any continuous period of not more than 30 days which results in the termination of employment of 50 or more employees (eliminates the rule that a mass layoff is triggered only if at least 33% of the workforce is affected).
The law also extends the NJ WARN Act’s advance written notice requirements to 90 days and increases potential penalties for failure to provide timely notice.
*Update: On April 14, 2020, Governor Phil Murphy signed into law modifications to the New Jersey WARN Act that delays the implementation of the January 2020 amendments originally set to take effect July 2020, in response to the COVID-19 pandemic. Please visit our blog post for more information.
Who is subject to the law?
Any employer that has been operating in New Jersey for longer than three years and employs 100 or more employees. Beginning July 2020, employers must count all employees, regardless of tenure or the amount of hours worked, in determining whether the employer meets the threshold number of 100 employees. Employers should be aware of this change, as the NJ WARN Act (originally enacted in 2007) was previously limited to employers with 100 or more full-time employees.
In addition, the law expanded the definition of “establishment” to include all employer locations within the state of New Jersey when considering the count of impacted employees to determine whether the NJ WARN Act applies.
Who is covered by the law?
An individual who has been employed by an employer for at least 90 days immediately before the event triggering a NJ WARN notice. The law eliminates the distinction between full-time and part-time employees, and severance must be issued to employees upon termination, regardless of how many hours worked or their length of service.
What is the expanded NJ WARN notice requirement?
The amendment requires an employer that has 100 or more employees to provide at least 90 days’ (change from 60 days) notice before the first employee is discharged as part of a mass layoff, termination of operations, or transfer of operations.
What are the employer’s mandatory severance obligations?
If an NJ WARN notice is triggered, an employer must pay terminated employees severance of one week for each year of employment, with no maximum. In calculating the amount of severance pay, the rate of pay must be the greater of the employee’s average regular rate of compensation over the past three years of employment, or the employee’s regular final rate of pay. Under the law, severance paid pursuant to the NJ WARN Act will be considered compensation due to an employee for back pay and losses associated with the termination of the employment relationship and will be earned in full upon the termination of employment.
The law also requires an increase to four weeks of severance to be paid if the employer does not comply with the expanded 90 day notice requirement.
Can an employee waive their right to severance?
Under the law, the employer’s ability to obtain a waiver from an employee is eliminated unless it is approved by the Commissioner or a court.
Employer Considerations:
- Consider terminations impacting all classifications of employees, instead of just full-time employees, to determine whether the NJ WARN Act is triggered;
- Consider the total number of impacted employees in New Jersey;
- Understand that the state of New Jersey will not recognize any employee’s waiver or release of their rights to severance payments required by the NJ WARN ACT (unless explicitly approved by the Commissioner or a court).
Employers should consult with legal counsel prior to any anticipated changes to their New Jersey workforces.
Additional Resources:
NJ Department of Labor and Workforce Development
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