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A Temporary Reprieve for New Jersey Employers: Delay and Changes to the Amended New Jersey WARN Act

7/21/20

By: Stephanie Greenfield

Six months ago, prior to the COVID-19 pandemic in the United States, New Jersey became the first state in the nation to pass a law obligating employers to provide severance to employees affected by a mass layoff.  On January 21, 2020, New Jersey Governor Phil Murphy amended the existing New Jersey Worker Adjustment and Retraining Notification Act (NJ WARN Act). The new amendments, originally scheduled to go into effect on July 19, 2020, require that employers provide severance to each laid-off employee in the amount of one weeks’ pay for each year of employment. Previously under the NJ WARN Act, employers were only obligated to provide severance in connection with a covered mass layoff only if they failed to comply with the required 60-day notice. The new law will ultimately make it drastically more expensive for companies to conduct a large- scale reduction in force in New Jersey.

The significant changes to the NJ WARN Act include:

• Expanded Notice Requirement: An employer that has 100 or more employees must provide at least 90 days’ notice before the first employee is discharged as part of a mass layoff, termination of operations, or transfer of operations. The existing NJ WARN Act requires only 60 days’ notice.
• Mandatory Severance Requirement: In addition to notice, employers must provide discharged employees with “severance pay equal to one week of pay for each full year of employment.” Under the existing NJ WARN Act, an employer is only required to pay severance as a penalty if it fails to provide the required notice.
• Lower Threshold for Mass Layoffs: The threshold for a “mass layoff” was lowered to 50 employees (even if they did not amount to 33% of the workforce). 
• Expanded Counting and Coverage of Part-Time Employees: Employers must include part-time employees in both the 100-employee (for a covered employer) and 50-employee (for a termination of operations or a mass layoff) thresholds. Further, part-time employees are entitled to 90 days’ notice and severance just like full-time employees.
• Expanded Statewide Definition of “Establishment”: The definition of “establishment” was expanded to include a group of all of the employer’s locations in New Jersey.

When the law was passed, the state and nation had no way of knowing that, in a matter of weeks they would be facing a national health crisis. Given the massive labor disturbance and resulting economic impact caused by COVID-19, New Jersey amended the NJ WARN Act once again, effective April 14, 2020. The NJ WARN Act now exempts from coverage any mass layoffs resulting from a natural disaster or national emergency (such as COVID-19), and delays the effective date of the amendments that were originally scheduled to take effect on July 19. These exclusions are retroactive to March 9, 2020, and, thereby, exclude any otherwise covered mass layoff from that date forward. This change permitted New Jersey employers to breathe easier, especially those implementing furloughs and layoffs due to the pandemic.

If you have questions or would like more information, please contact Stephanie Greenfield at sgreenfield@fmglaw.com.