Jan 23, 2020

New Jersey Passes Legislation Requiring Increased Notice and Severance Pay

New Law for Severance Pay

On January 21, 2020, New Jersey Governor Phil Murphy signed a bill making New Jersey the first state in the nation to require employers to provide severance to employees who lose their job in a mass reduction in force.  Senate Bill No. 3170 was first introduced in November 2018 and passed by the state legislature on January 13, 2020.

The new law significantly expands employers’ notice and severance pay obligations in the event of a covered mass layoff or plant closing. Currently, the New Jersey Millville Dallas Airmotive Plant Loss Job Notification Act (“NJ WARN Act”), which is modeled after the federal WARN Act, requires employers with 100 or more full-time employees to provide 60 days’ advance written notice to affected full-time employees in the event of a covered mass layoff, transfer, or plant closing.  A mass layoff is defined as a reduction in force, during a 30-day period, that results in the termination of 500 or more full-time employees or the termination of 50 or more full-time employees representing at least one-third of an employer’s total workforce.  Additionally, under the current NJ WARN Act, employers are only required to make severance payments to affected employees if the employer fails to provide the required 60 days’ notice to affected employees.

The new law revises the definition of “mass layoff” to mean a reduction in force, during a 30-day period, that results in the termination of 50 or more employees, regardless of full-time or part-time classification.  The law also requires New Jersey employers with 100 or more employees (regardless of full-time or part-time status) to provide severance equal to one week of pay for each full year of employment to employees who lose their job in a layoff, transfer or plant closing that results in the termination of employment of 50 or more employees.

The law also requires employers to provide not less than 90 days’ notice to each employee whose employment is to be terminated as part of a covered mass layoff, transfer, or plant closing, to the Commissioner of Labor and Workforce Development, and to any collective bargaining units of employees.  Employers who fail to provide the required 90-day notice are required to pay an additional four weeks of severance to affected employees.  The law also eliminates an employer’s ability to obtain a waiver of the employee’s right to severance unless it is approved by the Commissioner of New Jersey Labor and Workforce Development or a court.

Finally, the new law expands the definition of “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.”  This expanded definition imposes liability on individuals acting in the interest of an employer, including owners and management personnel who are responsible for the decision to effectuate a mass layoff.

The bill takes effect six months after enactment on July 19, 2020.

If you have any questions about this client alert, please contact your SGR Labor and Employment counsel.


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