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Mandatory Severance Pay for Mass Layoffs Looms in New Jersey

The New Jersey Senate has passed a bill that would amend the New Jersey Millville Dallas Airmotive Plant Loss Job Notification Act, more commonly referred to as the “NJ WARN Act,” to require severance payments and increase notification requirements for employees impacted by certain mass layoffs, transfers or terminations of operations.

Currently under the NJ WARN Act, employers with 100 or more full-time employees must provide 60 days’ notice to affected full-time employees in the event of a mass layoff or transfer or termination of operations. 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. Under the current law, employers are only required to make severance payments to affected employees if they fail to provide such employees with the required amount of notice of termination or layoff.

The pending bill, if enacted, would:

  • revise the definition of a “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, at or reporting to an “establishment” (as defined in the bill);

  • require employers with 100 or more employees (regardless of full-time or part-time status) to provide at least 90 days’ notice to impacted employees before a mass layoff, transfer of operations to another location, or shutdown of an establishment;

  • require employers to pay severance of one week’s wages for every year of an impacted employee’s service in the event of a mass layoff or shutdown/transfer resulting in the termination of 50 or more employees in an establishment during any 30-day period, regardless of whether or not appropriate notice is provided to affected employees;

  • require employers who fail to satisfy the 90-day notice requirement to pay an additional four weeks of severance to affected employees; and

  • expand the definition of “establishment” to include either a single location or a group of all of an employer’s locations in New Jersey (currently, the NJ WARN Act defines an establishment as a single location or a group of contiguous locations which form an office or industrial park, or separate buildings across the street from each other).

Covered employees subject to a collective bargaining agreement or other severance plan or policy would be eligible for the statutory severance described above or any severance pay provided pursuant to the CBA or severance plan/policy, whichever is greater. Employees would not be permitted to waive the statutory right to severance except with the approval of a court or the Commissioner of Labor and Workforce Development.

In another notable change, the bill would broadly define an 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.” Accordingly, the law, if enacted, would impose liability on individuals acting in the interest of an employer, including individuals who own the employing entity or are responsible for the decision to effectuate the layoff.

The bill passed the state Senate with a vote of 27-13 on December 16, 2019 and a nearly identical bill awaits a state Assembly floor vote. We will continue to monitor and report on further developments regarding this bill.

© 2020 Proskauer Rose LLP.

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About this Author

Evandro Gigante, Labor Attorney, Proskauer Rose Law FIrm
Senior Counsel

Evandro Gigante is a Senior Counsel in the Labor & Employment Law Department. He represents and counsels clients through a variety of labor and employment matters, including allegations of race, gender, national origin, disability and religious discrimination, sexual harassment, wrongful discharge, defamation, and breach of contract. Evandro also counsels employers in connection with reductions in force and wage-and-hour issues, and advises clients on restrictive covenant issues, including, for example, confidentiality, non-compete, and non-solicit agreements. 

212.969.3132
Laura M. Fant, Labor & Employment Attorney, Proskauer Law Firm
Associate

Laura M. Fant is an Associate in the Labor & Employment Department, resident in the New York office. She is a member of the Accessibility and Accommodations Practice Group, and frequently counsels on matters involving the Americans with Disabilities Act (ADA) and state public accommodation law, as well as disability accommodation in the workplace. She has experience conducting accessibility audits and providing ADA and accessibility training for clients in a variety of sectors, including retail, sports, and not-for-profit. Her practice also focuses on wage and hour and class and collective action litigation, and she is a frequent contributor to the Proskauer on Class and Collective Actions blog.

212-969-3631
Arielle Kobetz, Proskauer Law Firm, Labor and Employment Attorney
Associate

Arielle Kobetz is an associate in the Labor & Employment Law Department. She assists employers in a wide range of areas, including discrimination, wage and hour, and traditional labor.

Prior to joining Proskauer, Arielle served as a law clerk at the New York City Human Resources Administration, Employment Law Unit, where she worked on a variety of employment discrimination and internal employee disciplinary issues. 

212-969-3304