Automatic Severance and Additional Notice: The Expanding Obligations For Employers Under New Jersey’s New WARN ACT

Effective July 19, 2020, pursuant to new legislation signed by New Jersey Governor Phil Murphy on January 21, 2020, New Jersey employers with at least 100 employees over a 3 year period, will have new and expanded obligations to provide their employees with advance notice and severance pay under revisions to the State’s Millville Dallas Airmotive Plant Job Loss Notification Act (NJ WARN). As a result of these revisions, New Jersey will have the most burdensome and expensive reduction-in-force (RIF) legislation in the country.

Pursuant to the new law, NJ WARN may be triggered by any termination of 50 or more employees, aggregating terminations across multiple locations that report to the same jobsite, regardless of where in the state the terminations occur. This change eliminates the prior focus on the number of employees impacted by a layoff at a single place of employment, like most Federal and State WARN legislation. An employee transferred out-of-state, or to a location more than 50 miles from its original employment site, will also be deemed a “termination of employment” under the new law.

Expansion of the Definition of “Employer”

The new definition of “employer” has also been expanded 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.”

Employee Coverage

The new law eliminates the practice of excluding “part-time” employees from an employer’s 50-person headcount, i.e., those with less than 6 months of service or who work less than 20 hours per week. It also removes the requirement that 33% of the workforce must be affected for the term “mass layoff” to be applicable.

Mandatory Severance, Increased Notice Period & Restrictions on Employee Waivers

NJ WARN will increase the notice period employers must provide impacted employees, from 60 days to 90 days. The new law, when triggered, imposes a severance obligation on employers in the amount of one week’s pay, per year, for each year of service worked by a terminated employee. If the employer fails to provide 90 days’ notice, the law obligates the employer to pay an additional four weeks of severance to each employee. Another substantial change under the new law is that any employer seeking to obtain NJ WARN rights waivers from its employees, must now obtain approval from the Commissioner of Labor and Workforce Development or a court of competent jurisdiction.

Comparison Between Employer’s Obligations Under NJ WARN And The Federal WARN Act

To emphasize the dramatic impact that the new law will have on an employer’s RIF budgeting and planning, below is a chart that compares the NJ WARN’s applicability, severance obligations and notice requirements to the Federal WARN Act.

	NJ WARN (as of July 19, 2020)	Federal WARN
Employer	An individual or private business entity operated by an employer for a period longer than three years and employs 100 or more employees, regard, but excluding managerial, temporary and part-time employees (who worked less than 20 hours per week for the predecessor employer for at least 90 days immediately before the change).	Any business enterprise with 100 or more employees, excluding part-time; or 100 or more employees, including part-time, who work a combined total of at least 4,000 regular hours per week.
Notice Requirement	90 days	60 days
Plant Closing	Transfer of operations or termination 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 …	Permanent shutdown of a single site of employment, if the shutdown results in an employment loss during any 30-day period for 50 or more employees.
Mass Layoffs	A reduction-in-force which is not the result of a transfer or termination of operations and 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.	A reduction-in-force which results in an employment loss of at least 33% of the workforce at a single site of employment during any 30-day period, provided at least 50 employees are affected.  If the reduction impacts 500 employees, the 33% requirement is not applicable.
Severance Payments	There is a severance obligation in the amount of 1 week’s pay, per employee, per year, for each year of service worked by a terminated employee.	N/A
Notice Provided To	1. Each terminated employee; 2. The designated representatives of any collective bargaining units; 3. The chief elected official of the municipality; and 4. The Commissioner of Labor and Workforce Development.	1. The impacted employees or their bargaining representative; 2. The chief elected official of the unit of the local government; and 3. The State dislocated worker unit.

 

Bottom Line

Any employer contemplating a future RIF should budget for NJ WARN’s new severance pay obligation, and plan for the new 90-day notice period to avoid the law’s additional 4-week severance pay penalty. Employers considering layoffs should take this opportunity to ensure that their Human Resources Department is aware that the calculation of the 50 terminated employees under the revised law now includes certain transferred employees, most part-time employees, and potentially impacted employees at multiple job sites.

For more information regarding this and other developments impacting an employer’s ability to facilitate a RIF, please contact John Vreeland, Esq., Partner in the firm’s Wage and Hour and Labor Law Practice Groups, or Paul Mazer, Esq., or 973-533-0777.