New Jersey Employers: Plan ahead for long-delayed state WARN law overhaul – layoff/firing

On January 21, 2020, months before the emergence of the COVID-19 pandemic in the United States, New Jersey Governor Phil Murphy signed into law New Jersey Senate Bill 3170, ushering in significant changes to the Millville Dallas Air Power Plant Job Loss Notification Act (NJ WARN Act), the state of New Jersey’s legal equivalent of the federal WARN Act. Originally scheduled to take effect in July 2020, the pandemic has triggered a series of postponements. Pursuant to New Jersey Senate Bill 2353, signed into law on April 14, 2020, the amendments will take effect 90 days after the termination of Executive Order No. 103, which declared a state of emergency resulting from the COVID pandemic -19 and remains in effect. effect. That being said, while the changes remain pending at this time, New Jersey employers should be aware of the significant changes to NJ WARN law and the dramatically different landscape they will face once the changes go into effect. By lengthening the required notice period, broadening the scope of coverage, and imposing severance pay even when adequate notice is given, the amendments make New Jersey’s mini-WARN law one of the broadest and most expensive to implement. The amendments widen the gap between the federal WARN law and the NJ WARN law, making compliance with both laws more difficult.

New Jersey Law Amendments

We summarize below the main changes made to the NJ WARN law:

Expanded scope of covered employers

Currently, the NJ WARN law applies to employers with 100 or more full-time employees. As amended, the coverage threshold of 100 employees applies whether the employees are employed full-time or part-time.

Expanded scope of the notice of “mass dismissal”

Current NJ WARN law defines “mass layoff” only with respect to job losses within a 30-day period affecting a threshold number of full-time employees who work in an “establishment.” As amended, a mass termination notice occurs if an employer terminates, within 30 days, 50 or more employees, regardless of their full-time or part-time status and whether they work or simply report to an establishment.

Aggregation of construction sites across New Jersey

Further expanding the scope of a mass termination, amendments to the NJ WARN Act change the definition of an “establishment.” Current NJ WARN law defines an “establishment” as a single location or a group of contiguous locations. The amended NJ WARN law defines “establishment” to include multiple locations in New Jersey, regardless of distance. Therefore, when counting job losses to determine if a mass layoff has occurred, New Jersey employers must consider what is happening at all job sites in the state.

Notice period increased

The amendments increase the notice period from 60 days (the length of time required under federal WARN law) to 90 days. With this change, New Jersey will join New York and Maine as the only other states that mandate a 90-day notice period for covered events under a mini-WARN law.

Mandatory severance pay even with proper notice

Currently, NJ WARN law requires employers to pay severance pay only to full-time employees affected by a notice triggering event and only in the event that 60 days notice is not given. In its amended form, the NJ WARN law makes the right to severance pay automatic even when affected employees receive the full 90 days notice to which they are entitled. Employees affected by a Notice Triggering Event under the amended NJ WARN Act are entitled to one week of severance pay for each year of service completed, regardless of full-time or part-time status. However, employees represented by a union entitled to severance pay under a collective bargaining agreement are not entitled to receive additional severance pay under the NJ WARN Act, as amended. By making the right to severance pay automatic, New Jersey will be the only state requiring severance pay in addition to sufficient notice under a mini-WARN law. Like New Jersey’s current NJ WARN law, Hawaii and Maine require severance pay under their mini-WARN laws only if a covered employer fails to give sufficient notice. Federal WARN law has no severance pay obligations.

Additional severance pay when notice is not given

As amended, the NJ WARN law penalizes employers who fail to give 90 days notice of a triggering event by requiring payment of an additional four weeks of severance pay. Indeed, an employee who has completed one year of service with a covered employer and who is entitled to notice under the amended law will be owed five weeks’ severance pay by the employer. The amendments do not clarify whether an employee with less than one year of service is entitled to four weeks of severance pay in this circumstance, since he is not entitled to mandatory severance pay under the NJ WARN law, as amended.

Exceptions to the new severance pay obligation

New Jersey Senate Bill 2353 not only tied the effective date of the NJ WARN Act to the lifting of Executive Order No. 103, but it also made additional changes to the law with retroactive effect. as of March 9, 2020. Most notably, Senate Bill 2353 amended the definition. of “mass termination” under NJ WARN law as amended to exclude “national emergencies” and certain other events from triggering severance pay obligations. These changes made it clear that the mass layoffs resulting from the COVID-19 pandemic, as a national emergency, did not trigger the new layoff requirements.

Bar on private versions

Under the amended NJ WARN law, affected employees are entitled to severance pay without any release requirements. In fact, the amendments provide that a release from claims under the NJ WARN Act is only enforceable if the New Jersey Department of Labor and Workforce Development or a court approves the release. As a result, New Jersey employers accustomed to paying severance only in exchange for a release agreement will need to alter their practice to comply with the changes.

New obligations in the event of a change of control

Currently, NJ WARN law only requires notice of mass termination, termination of business, or transfer of business. As amended, a whole new set of obligations apply in the event of a “change of control”, defined as “any material change in the ownership of an employer” or “any filing for bankruptcy protection”. . In the event of a change of control, both the previous employer and the successor employer will be subject to a new set of obligations under New Jersey law once the changes to NJ WARN law come into effect.

Potential for individual accountability of decision makers

Amendments to NJ WARN law expand the definition of a covered “employer” to include persons acting “in the interest of an employer” and persons making the decisions that give rise to mass termination notice. Indeed, the amended NJ WARN law makes owners, officers and business leaders involved in the decision-making process of a reduction in force vulnerable to individual liability for violations of the NJ WARN law. .

What this means for employers

The impending changes to the NJ WARN law underscore the need for New Jersey employers to plan well in advance to implement any business changes that trigger a notice under the law, as amended. For example, the combined effect of the expanded definitions of “mass layoff” and “establishment” will result in many further reductions in the strength of New Jersey employees subject to the strict requirements of NJ WARN law. In addition, employers should consider the new mandatory severance spending when planning for the budgetary and operational effects of a business change resulting in job losses. Non-compliance with NJ WARN law can be costly for employers, not only because of new severance requirements, but also because NJ WARN law gives employees the right to sue in court. , including potential class action lawsuits and the potential negative publicity that accompanies litigation. To complicate matters, New Jersey employers must ensure compliance with both NJ WARN and Federal WARN law in the event that a corporate change triggers a notice under both laws. Among the many distinctions between federal and state statutory regimes are the amount of notice required, the events triggering the notice, exceptions to the notice requirement, and penalties for violations. New Jersey employers should review their severance policies and practices, as well as all labor agreements, collective agreements, and ERISA plans dealing with terminations, before the changes take effect to ensure compliance with the NJ WARN law. New Jersey employers contemplating a downsizing, plant closure or transfer, M&A transaction, or bankruptcy filing may wish to speak with legal counsel for guidance on navigating their obligations under NJ WARN law and the management of employee relations issues that accompany any major business change.

For more information

If you have any questions about this Alertplease contact Michael R. Futterman, Patrice E. LeTourneau, Kathryn R. Brown, one of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the firm’s attorney with which you are in regular contact.

Disclaimer: This alert has been prepared and posted for informational purposes only and is not offered and should not be construed as legal advice. For more information, please see the full disclaimer.

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