Beginning On April 10, 2023, New Jersey Employers Must Comply With Stricter Requirements On Mass-Layoffs And Business Closures

In 2020, New Jersey amended the Millville Dallas Airmotive Plant Job Loss Notification Act (referred to as the NJ WARN Act), which regulates employers implementing mass layoffs and business closures. Governor Phil Murphy placed those amendments on hold due to the Covid-19 pandemic. Three years after their enactment, on January 10, 2023, Governor Murphy passed legislation making those amendments effective on April 10, 2023. Those amendments change the landscape for those employers who are forced to close their doors or reduce their workforce.

Current NJ WARN Act:

The NJ WARN Act currently requires employers with 100 or more full-time employees to provide 60 days’ advance notice prior to a mass layoff or a termination or transfer of operations that results in the termination of employment of 50 or more full-time employees. The NJ WARN Act contains complicated definitions of a “mass-layoff,” which is the termination of employment within a 30-day period, and for which the employer does not make a commitment to reinstate within six months, either of the following: 1) 500 or more full-time employees; or 2) 50 or more full-time employees, which represent 33% or more of the full time employees at the establishment at issue.

Major Changes To The NJ WARN Act

The following changes to the NJ WARN Act become effective on April 10, 2023:

• All employers with 100 or more employees are covered; both part-time and full-time employees are now counted towards this 100-person trigger (the current law only counts full-time employees).
• Employers must give employees 90 days’ notice of the mass layoff or business closure (the current law only provided for 60 days’ notice).
• All laid off employees must receive one week’s severance pay for every year the employee worked for the employer (the current law contains no severance requirement).
• Employers who fail to give the required 90 days’ notice of lay off must also pay impacted employees an additional four weeks’ severance pay.
• A mass layoff is defined in the amendments as a layoff that results in the termination of 50 or more employees at, or reporting to, an establishment within any 30-day period regardless of whether the 50 employees constitute one-third of the establishment’s employees. This new definition reduces the headcount of impacted employees so that more lay-offs will trigger the mass layoff standard.
• The definition of an “establishment” is now expanded to encompass multiple non-contiguous sites and employees at jobsites reporting into the location, even employees outside of New Jersey who report into the establishment.
• Employers must receive approval from the New Jersey Department of Labor and Workforce Development or a court order to obtain a valid waiver of an employee’s NJ WARN rights.

There are three significant takeaways from these amendments. First, more employer layoffs will be subject to the NJ WARN requirements. Second, for the first time in New Jersey, employers will be required to pay severance to laid-off employees. Third, employers must carefully plan out layoffs to comply with the 90 days’ notice requirement (or else they are required to pay impacted employees an additional four weeks of severance).

The amendments also raise an important practical consideration. Employers routinely prepare severance packages for laid-off employees in exchange for a release waiving the employee’s right to sue the employer for unlawful termination or discrimination. Employers must give employees something of value to which they would not otherwise be entitled, to have a valid and enforceable release. If the amendments now statutorily entitle the employee to at least one week of severance pay for each year worked, the employer must give something in addition to this required sum, in exchange for a valid release of claims from the employee. Lay-offs have just become more expensive for New Jersey employers.

Bottom Line

The NJ WARN amendments make layoffs more complex and expensive. If your organization is contemplating a reduction in force, closing, or layoff, please contact John C. Petrella, Esq., Partner in the firm’s Employment Law & Litigation Practice Group, via email here, or Brigette N. Eagan, Esq., Counsel in the firm’s Human Resources, Counseling & Compliance Practice Group, via email here.