New Jersey Postpones Law Requiring Severance for Mass Layoffs

New Jersey Postpones Law Requiring Severance for Mass Layoffs

The coronavirus (COVID-19) pandemic has prompted changes to New Jersey’s mass layoff law. As amended, the Worker Adjustment and Retraining Notification (WARN) Act’s definition of mass layoff no longer includes a mass layoff that is necessary because of a natural disaster or national emergency. In addition, the new requirement that employers pay severance to all employees following amass layoff will be delayed until 90 days after New Jersey’s state of emergency has been lifted.

New Jersey’s WARN Act

New Jersey’s WARN Act requires employers with 100 or more employees to provide notice prior to laying off 50 or more employees within a 30-day period. The notice requirements specifically apply to mass layoffs and the transfer of operations/termination of operations.

The WARN Act previously required employers who failed to satisfy the notification requirements to pay severance to impacted employees. Senate Bill No. 3170 (SB 3170), which Gov. Murphy signed into law in January, makes the requirement to provide severance pay apply whether or not the employer provides the required notice. Pursuant to SB 3170:

Severance under this subsection shall be regarded as compensation due to an employee for back pay and losses associated with the termination of the employment relationship, and earned in full upon the termination of the employment relationship, notwithstanding the calculation of the amount of the payment with reference to the employee’s length of service.

Under the amendments, severance is equal to one week of pay for each full year of employment and is in addition to any other severance paid for any reason. SB 3170 also requires an additional severance of four weeks of pay if the employers fail to satisfy the 90-day WARN Act notice requirement. Other amendments set forth in SB 3170 include increasing the minimum number of days that covered employers must give to employees from 60 days to 90 days and counting both full-time and part-time workers when calculating the number of employees impacted by a layoff.

COVID-19 Prompts Changes to WARN Act

SB 3170 was slated to take effect on July 19, 2020. However, Gov. Murphy recently signed additional WARN Act amendments into law that give New Jersey employers a temporary reprieve in light of the COVID-19 pandemic.

Under Senate Bill No. 2353 (SB 2353), the definition of mass layoff is amended to expressly exclude “a mass layoff made necessary because of a fire, flood, natural disaster, national emergency, act of war, civil disorder or industrial sabotage, decertification from participation in the Medicare and Medicaid programs as provided under Titles XVIII and XIX of the federal Social Security Act, or license revocation pursuant to P.L.1971, c.136.” Accordingly, layoffs due to COVID-19 will generally not be subject to the WARN Act’s requirements. The new law also delays the effective date of SB 3170. The effective date is now the 90th day following the termination of Gov. Murphy’s Executive Order 103, which established the current state of emergency.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact Maryam Meseha, Sarah Tornetta, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.