Consequently, any mass terminations on or after April 10, 2023, depending on the effective date of the termination, will be subject to the amendments to the NJ WARN Act. New Jersey employers considering a large-scale layoff should consult with legal counsel regarding the effect these amendments may have on such plans.
A bill currently awaiting New Jersey Governor Philip D. Murphy’s signature ends the delay of the implementation of the amendments to the Millville Dallas Airmotive Plant Job Loss Notification Act (NJ WARN Act)— New Jersey’s version of the federal Worker Adjustment and Retraining Notification Act. The revisions to the NJ WARN Act impose significant obligations on New Jersey employers, including changes to the meaning of “covered employer” and “mass layoff” and by imposing an automatic severance-pay requirement.
On January 21, 2020, prior to the onset of the COVID-19 pandemic, Governor Murphy signed Senate Bill 3170, which amended the NJ WARN Act. The amendments were originally scheduled to go into effect in July 2020. However, on March 9, 2020, Governor Murphy issued Executive Order 103 (EO) declaring a public-health emergency because of the COVID-19 pandemic. On April 14, 2020, Governor Murphy signed New Jersey Senate Bill 2353, which provided that the amendments to the NJ WARN Act would go into effect 90 days after EO 103 was terminated. To date, EO 103 remains in effect.
The New Jersey Legislature has now passed a bill separating the NJ WARN Act amendments from EO 103. On December 15, 2022, the Assembly passed A4768, and the Senate passed the companion bill S3162 on December 19, 2022. If Governor Murphy signs the bill, the amendments to the NJ WARN Act would go into effect ninety days later.
Substantive changes to the NJ WARN Act
Covered Employers and Notice Requirements
The NJ WARN Act currently applies to employers with 100 or more full-time employees and requires 60 days written notice to employees affected by mass layoffs, transfer of operations or plant closings. “Mass layoff” is defined as a reduction in force which is not the result of a transfer or termination of operations and which results in the termination of employment at an establishment during any 30-day period of 500 or more full-time employees, or for 50 or more of the full-time employees representing one-third or more of the full-time employees at the establishment. “Establishment” is defined as a single place of employment which has been operated by an employer for a period longer than three years, which can include a single location or a group of contiguous locations.
Pursuant to the amendments, the NJ WARN Act will apply now to employers with at least 100 employees, with no distinction between full-time and part-time employees. Employers will be required to provide a 90-day notice period in the event of a “mass layoff,” which the amendments define as the termination of at least 50 or more employees at or reporting to any establishments located anywhere within the state. The amendments expand the definition of “establishment” by eliminating the “contiguous” requirement. Thus, employers with various locations within the state must consider all locations and all employees when evaluating whether terminations could be considered a “mass layoff.”
Severance Pay Requirement
Under the amendments, the right to severance pay will be automatic for all affected and properly noticed employees in the amount of one week’s pay for every year of employment. Prior to the amendments, the severance-pay requirement was only imposed as a penalty for employers who failed to provide proper notice. Under the amendments, employers who fail to comply with the 90-day notice requirement will be compelled to pay four weeks of severance pay in addition to the required one week per year of employment. This amendment, however, is not applicable to union employees already entitled to severance pay pursuant to a collective bargaining agreement.
The amendments prohibit employees from waiving their right to severance under NJ WARN Act without approval by the New Jersey Department of Labor and Workforce Development or a court.
As amended, the definition of “termination of operations” excludes “fire, flood, natural disaster, national emergency” and other similar events from triggering the severance-pay obligations.
What this means for New Jersey employers
New Jersey employers with over 100 employees—full-time and part-time—considering a reduction in force of 50 or more employees must now engage in a more thorough analysis of how that reduction affects their overall workforce. Those 100 or more employees can be located anywhere within the state, not simply at any particular location as was previously the case. This means that an employer with 500 employees reducing 10% of its workforce or an employer with 5,000 eliminating 1% of its workforce statewide is now subject to the NJ WARN Act’s 90-day notice and severance-pay requirements. New Jersey employers must now give three times as much notice as before, and also factor into that reduction the amount of severance pay they must provide the terminated employees. These considerations further complicate the already arduous analysis employers must engage in—such as examining the potential discriminatory effects of a reduction in force—beyond simply the day-to-day operational impacts of a reduction, as well as the fiscal reasons underlying the need for the reduction in the first place.
Suffice to say, New Jersey’s already-stringent employment laws have become more demanding. Without a thorough legal analysis, New Jersey employers considering a reduction in force may find themselves walking into a minefield. As they used to say in ancient Rome, “dico cavete.”