Severance Pay Now Mandatory for Some New Jersey Terminations

Labor & Employment @lert

Date: January 28, 2020

Key Notes:

  • Senate bill toughens New Jersey’s WARN Act
  • Mandates that employers provide severance pay in the event the WARN Act is triggered

Generally, the federal Worker Adjustment and Retraining Notification Act (“WARN”) requires certain employers to provide advance notice before conducting a covered plant-closure or mass layoff.  Some states place additional requirements, over and above those mandated by federal law, on employers engaging in such a covered action in a particular state. This type of legislation is commonly referred to as Mini-WARN laws.

On January 21, 2020, New Jersey’s Governor signed Senate Bill 3170, amending existing state law and creating the nation’s toughest Mini-WARN law. This alert summarizes some of the New Jersey law’s key changes.

The New Jersey Law Applies to More Employers

Both federal and New Jersey law only applies to employers with 100 or more employees. However, under federal law, certain employees do not count toward the 100-employee threshold for coverage. Notably, part-time employees who, on average, work less than 20 hours per work-week, do not count toward the 100-employee threshold for federal coverage. Part-time employees will now count toward the 100-employee threshold under New Jersey’s new law.

The New Jersey Law Increases the Circumstances When Employers Must Comply with Mini-WARN Requirements

Under federal law, WARN requirements may be triggered when a covered plant closure or mass layoff results in the termination of at least 50 employees at a single-work site.  However, part-time employees do not count toward the 50-employee threshold for covered action under federal law.  Part-time employees will count toward the 50-employee threshold for covered action under New Jersey’s new law.  Also, the New Jersey law does not calculate the 50 employee-threshold based on the number of employees effected at a particular work site. Instead, so long as 50 employees are terminated in the State of New Jersey, the new law may be triggered.

Additionally, for the purposes of a covered mass layoff under federal law, 33 percent of covered employees at a work-site must be affected. The New Jersey law does not have a percentage requirement.

The New Jersey Law Lengthens the Required Notice Period to 90 Days

Federal law requires covered employers to provide 60-days’ notice before engaging in covered action. New Jersey law requires 90-days’ notice.

The New Jersey Law Requires that Employers Provide Severance Pay

Federal law does not require employers to pay employees when providing sufficient notice before engaging in covered action. New Jersey will be the first state in the nation to require covered employers to provide employees with severance pay, whether they provide enough advance WARN notice or not. Specifically, when an employer provides 90-days’ notice, the New Jersey law requires one week of severance pay for each year of employment.  However, when an employer fails to provide sufficient notice, they are required to pay employees 4 weeks’ pay on-top of other required severance pay.

The new state law goes into effect later this year on July 19, 2020. Employees cannot waive New Jersey Mini-WARN rights without approval from the Commissioner of Labor and Workforce Development or a court.

Employers with existing operations in New Jersey, along with those considering restructuring, the sale or a business or the acquisition of a business within this jurisdiction should consider how to best comply with this new law.

FOR MORE INFORMATION

For more information, concerning WARN or Mini-WARN compliance, please contact:

Jason Carruthers
404.541.2955
Jason.Carruthers@ThompsonHine.com

Tim McDonald
404.407.3623
Tim.McDonald@ThompsonHine.com

M. Scott Young
513.352.6617
Scott.Young@ThompsonHine.com

or any a member of Thompson Hine’s Labor & Employment group.

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