NJ Amends WARN Act to Count Part-Time Workers and Pay Severance in Mass Layoffs

January 28, 2020Alerts

A recently signed amendment to the New Jersey WARN Act – the state’s version of the federal Worker Adjustment and Retraining Notification Act – will require employers to notify full- and part-time employees of a mass layoff 90 days in advance and also provide severance to them. Notably, part-time workers will be included in the 100-employee threshold that defines a “covered employer” under the Act, and a “mass layoff” will mean the termination of 50 full- or part-time employees reporting to any one or group of establishments.

Employers who face the possibility of any major layoffs in one or more establishment in New Jersey should be prepared to comply with the forthcoming changes in the NJ WARN Act.

Signed by Gov. Phil Murphy on Jan. 21, the amendment is set to take effect on July 19, 2020.

Key Changes

Updated Notice Requirements
Prior to the amendment, the NJ WARN Act required covered employers (those with 100 or more full-time employees) to provide 60 days’ written notice to employees impacted by a mass layoff, transfer of operations or plant closing. The term “mass layoff” referred to a reduction in force which was not the result of a transfer or termination of operations and which resulted in the termination of employment at an establishment during any 30-day period for 500 or more full-time employees, or 50 or more of the full-time employees representing one-third or more of the full-time employees at an establishment.

Under the amendment, employers are required to provide a 90-day notice period in the event of a “mass layoff,” which is defined in the amendment to mean the termination of at least 50 full- or part-time employees at or reporting to any establishment or group of establishments within the state, rather than just a single establishment. It also eliminates the aforementioned one-third requirement. A 90-day look back period will determine whether the statutory threshold of 50 employees is met. Similarly, the law increases from 60 to 90 days the period in which a notice needs to be provided to the Commissioner of the Department of Labor and the chief elected official of the municipality where the establishments are located. 

Severance Pay Compliance
Perhaps the most daunting change for employers is that the law will require severance for all terminated employees, even if the statutory notice is provided. Previously, severance was only required as a penalty if the employer failed to give the proper notice. When the new law takes effect, the triggering of the NJ WARN Act makes all terminated employees entitled to one week of severance for every year of employment. If the statutory notice of 90 days is not provided, then the employer must pay an additional four weeks of severance on top of the one week per year of service. The rate of pay for the severance is the higher of (1) the employee’s average regular rate of compensation during the last three years of employment; (2) the employee’s final regular rate of compensation; or (3) the amount provided by any other agreement, plan or policy, including a collective bargaining agreement. 

Employers will face added complexities if the NJ WARN Act is triggered. For example, an employer hoping to obtain a release of claims in exchange for a severance payment will have to pay the employee more than what they are otherwise entitled to, which includes the mandatory severance provided under the amended NJ WARN Act. It is best that employers start this process as early as possible so that they can properly evaluate all of these new issues.

For any questions about this alert, please contact Jonathan Ash at 609.895.7079, or at [email protected] or any member of the firm’s national Labor & Employment Group.