New Jersey Significantly Modifies the New Jersey WARN Act to Require Severance Pay for Mass Layoffs
On January 21, 2020, New Jersey Governor Murphy enacted major revisions to the New Jersey WARN Act, making New Jersey the first state in the nation to require severance pay for mass layoffs. WARN Act stands for Worker Adjustment and Retraining Notification Act.
The law, scheduled to go into effect on July 19, 2020, will not only require 90 days’ advance notice of mass layoffs or of a transfer or termination of operations—rather than the current 60 days’ notice—but most significantly, New Jersey will now be the first state in the nation to mandate statutory severance pay for all employees who lose their job in a WARN event such as a “mass layoff.”
In addition, the amendments substantially change the methodology for determining whether a WARN event is triggered by (1) eliminating the “one-third” of the workforce threshold for mass layoffs and (2) requiring aggregation of all terminations at all employer worksites within the state, rather than by treating terminations on a site-by-site basis. Further, the law now applies to all employees, not just full-time workers.
Under the law, New Jersey employers will be required to give affected employees 90 days’ notice and severance pay of one week’s pay for every full year of employment, irrespective of whether the employer complied with the state’s WARN Act notice requirements. Where an employer fails to give the required amount of notice, the required amount of severance pay is increased by an additional four weeks’ pay per affected employee. These severance amounts cannot be conditioned on obtaining a release of claims from the employee, and the amounts apply to both full- and part-time employees.
If an employer fails to satisfy its severance obligations, liability can potentially attach to an individual who makes a decision responsible for the employment action that gives rise to the mass layoff, even if that person was not directly employed by the employer.