Reducing your New Jersey workforce just became more expensive.
On January 21, 2020, Governor Phil Murphy signed into law Senate Bill 3170. This bill radically expands employers' advance notice and severance pay obligations under the Millville Dallas Airmotive Plant Job Loss Notification Act (NJ WARN), making the New Jersey statute the most burdensome and costly reduction-in-force law in the country.
Starting July 19, 2020, the following changes to NJ WARN will be in force:
- NJ WARN is now triggered by a termination of 50 employees, regardless of tenure or hours of work, aggregating all terminations across the state and regardless of where within the state the terminations occur. The bill eliminates the law's prior focus on the number of terminations at a single place of employment, unlike nearly every other WARN and mini-WARN Act in the nation.1 It eliminates the requirement of not counting "part time" employees (those with less than six months of service or working less than 20 hours per week). And it eliminates the rule that a mass layoff is triggered only if at least 33% of the workforce is affected. Unchanged is the rule that terminations are counted only if they occur either within a single 30-day period, or within a 90-day period if it cannot be proved the terminations are for separate and distinct causes. Also unchanged is the provision that the layoff of seasonal employees is not a "termination of employment" under the law. NOTE that under NJ WARN, transferring employees out of state, no matter how close to the original employment site, or transferring employees beyond 50 miles from their original site of employment, is a "termination of employment" if the employees do not accept the transfer, and also potentially so even if the employees accept the transfer.
- The notice period is now 90 days, not 60. New Jersey joins New York, Maine and the Virgin Islands in requiring 90 days' WARN notice. Unlike New York, however, the New Jersey statute does not limit damages to a 60-day remedy.
- Severance pay is now automatic. Previously, NJ WARN mandated severance pay only if the employer failed to give 60 days' WARN notice. No longer. Now, if NJ WARN is triggered, an employer must pay all terminated employees severance pay of one week for each year of employment, in addition to providing 90 days' WARN notice. If full WARN notice is not given, the severance obligation is increased by four weeks of pay.
- NJ WARN now applies to employers with at least 100 employees regardless of tenure or hours of work. NJ WARN previously applied only to employers with at least 100 "full-time" employees, excluding those with less than six months of service or working less than 20 hours per week. Now all employees are counted. Moreover, the statute no longer expressly limits the severance pay obligation to even those larger employers. The bill did not change the rule that a place of employment is only covered if the employer has operated it for longer than three years.
- Employees may not waive their right to severance under NJ WARN without state or court approval. This is similar to the requirement imposed by many courts on settlements of claims under the Fair Labor Standards Act, and suggests that settlements of contested NJ WARN claims may require state or court approval.
- Employers should consider the impact of the NJ WARN severance pay obligation on programs that require a release of claims as a condition of severance pay. Generally, an employer must offer more than the employee is legally entitled to receive, to have consideration supporting a release of claims. Where NJ WARN is triggered and an employer wants to obtain a release of claims, the employer will need to offer more than the NJ WARN statutory requirement.
In light of these radical changes, employers should consider reaching out to counsel well in advance of any anticipated changes to their New Jersey workforce to understand their obligations under this newly amended law.
1 Vermont's mini-WARN also aggregates all facilities within the state. Wisconsin's mini-WARN aggregates all facilities within a single municipality.