New Jersey Mandates Severance Pay and Expands Notice Requirements in Mass Layoffs
On January 21, 2020, New Jersey became the first state in the country to require severance pay for mass layoffs when Governor Murphy signed S3170, landmark legislation nicknamed the “Toys R Us” bill after the toy retailer whose closure last year resulted in the termination of 2,000 New Jersey employees. The bill amends the Millville Dallas Airmotive Plant Job Loss Notification Act, commonly known as the New Jersey mini-WARN Act (the “Act”), which requires covered employers to provide notice to employees in advance of a mass layoff or certain transfers or terminations of operations.

Starting July 19, 2020 , significant changes to the Act go into effect, including:

  • Applies to all employers with 100 employees, regardless of hours of work: The Act previously applied only to employers with 100 or more full-time employees and did not count those with less than 6 months of service. Now, all employees are counted.

  • Obligations are triggered at lower thresholds: As amended, the Act applies to any reduction in workforce resulting in the termination of employment during any 30-day period for 50 or more full or part-time employees at any of the company’s locations in the state that have been in operation for at least three years. Previously, the Act considered only full-time employees and applied to layoffs of 500 or more full-time employees or to 50 or more full-time employees representing at least one-third of the employees at a single site or group of related facilities.

  • Amount of notice is increased: Employers must provide 90 days of notice (up from 60) to impacted employees.

  • Severance pay is guaranteed: Employers must pay severance in the amount of 1 week for each year of employment to affected employees. Significantly, severance is required regardless of whether the required notice is timely made. If the employee receives less than 90 days of notification before termination of employment, he or she is entitled to an additional 4 weeks of severance pay. Importantly, the required severance is regarded as compensation due to an employee for back pay, and is earned in full upon the termination of the employment relationship. This means that the severance must be paid at the same time as the final paycheck, and also that the severance cannot be used as consideration to negotiate a general release of claims from the terminated employee. Employers who wish to obtain a release of claims must offer some additional consideration.
  • Limitations are imposed on successor employers: The Act as amended requires notice to employees 15 days before a change of control and limits the ability of successor employers to terminate or reduce the compensation of those employees. 
Given these significant changes, it is even more important than ever to consult with legal counsel if you are contemplating a business action that may result in termination of 50 employees or more. Please contact the NFC attorney with whom you typically work or CLICK HERE should you need any assistance in managing a plant closing, transfer or mass layoff.
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