Starting in July, New Jersey Will Mandate Severance Pay for Mass Layoffs

In late January, New Jersey Governor Murphy amended the Millville Dallas Airmotive Plant Job Loss Notification Act (“NJ WARN Act”), in several significant ways, one of them mandating that certain employers provide severance pay for mass layoffs. The amendments were inspired by recent closures of several large companies in the state over the last two years, such as Toys R Us, where thousands of workers were laid off as a result. The changes go into effect on July 19, 2020.

Given the significant amendments to the NJ WARN Act and its differences from the federal WARN Act, New Jersey employers should consult with counsel experienced in employment law in advance of any layoffs, changes, or restructuring in order to ensure that they are in compliance with the law.

Key Changes

The legislation makes a number of important changes, the most noteworthy being the following:

• In the instance of a mass layoff that results in an employment loss during a 30-day period, or a termination or transfer in an employment loss at an establishment during any 30-day period that affects 50 or more employees, businesses with 100 or more employees (all employees, including those who work part-time) must pay workers one week of severance pay for every year worked (with no maximum cap)
• Employers must provide workers with at least 90 days’ notice when these changes (i.e. the closures, terminations, restructuring. etc.) are imminent, as well as the Commissioner of Labor and Workforce Development and any collective bargaining units. If companies fail to comply with this requirement, they will have to add another four weeks onto an employee’s severance payout
• Any agreements that would waive employee rights to severance are prohibited unless approval from a court or the New Jersey Department of Labor and Workforce Development is first obtained

The changes are also noteworthy in that employers with more than one establishment in the state will have to aggregate all terminations to determine whether the requirement is triggered.

Calculating Severance

Severance, defined as compensation due to an employee, must be included in the employee’s final wages and calculated based on the greater of their average regular rate of compensation over the last three years of employment or their regular final rate of pay. If the employee is already entitled to severance pursuant to an agreement, he or she is entitled to whichever calculation is greater (i.e. that which the NJ WARN Act provides for, or the agreement).

Contact the Very Best in New Jersey Employment Law Attorneys

The employment law attorneys of McOmber McOmber & Luber provide experienced, knowledgeable representation to employers and employees when it comes to all employment law matters, both in the state of New Jersey and at the federal level. To learn more about our services and find out if there are or have been legal violations in light of these latest changes, call our Red Bank office at 732-842-6500, our Marlton office at 856-985-9800, our Newark office at 973-878-9040, or contact us at 888-396-0736 or online for a free consultation. We represent clients throughout New Jersey.