New Jersey WARN Act Amendments Expanding Coverage and Increasing Severance and Notice Requirements Now in Effect
In Short
The Situation: On January 10, 2023, New Jersey Governor Phil Murphy signed A-4768, which started a 90-day countdown to the effective date of amendments (S-3170) to New Jersey's WARN Act, the Millville Dallas Airmotive Plant Job Loss Notification Act ("NJ WARN Act"). The amendments became effective on April 10, 2023.
The Result: The amendments have heightened employer requirements during layoffs, including mandatory severance and longer notice periods, and now cover more employers than did the prior version of the Act.
Looking Ahead: Employers currently evaluating or planning layoffs or a transfer/termination of operations must take notice of these changes and act accordingly. Employers that were not previously subject to the NJ WARN Act should reevaluate whether it now applies to them and also understand that a layoff impacting only 50 or more employees throughout the entire state now triggers NJ WARN notice requirements.
The long-awaited changes to the NJ WARN Act include:
Notice Period Expanded to 90 Days
Previously, the NJ WARN Act required employers to provide 60 days' advance notice for mass layoffs or transfer/termination of operations (consistent with the notice period under the federal WARN Act). Now, 90 days' advance notice is required.
Lower Threshold for Layoffs Triggering the NJ WARN Act
A "mass layoff" that triggers NJ WARN notice requirements is a reduction in force that impacts 50 or more employees across the entire state, regardless of whether they are part-time or full-time, the facility in which they work, or the percentage of the workforce they comprise. Previously, a "mass layoff" occurred when there was an employment loss for 500 or more employees, or 50 or more employees representing one-third or more of the workforce at an establishment, counting only full-time employees.
Employment Losses Are Aggregated Statewide
A covered "establishment" now includes all facilities located in the state, instead of a single site of employment. Layoffs at all of an employer's facilities or locations across New Jersey will be aggregated for evaluating whether notice is required.
More Employers Will Be Subject to the NJ WARN Act
When counting employees to determine coverage, the amendments remove the previous distinction between part-time and full-time employees. Employers with 100 or more employees—regardless of full-time or part-time status—are subject to the Act. Further, when counting employees to determine if notice is required due to a mass layoff or a termination or transfer of operations, both part-time and full-time employees must be counted.
The Amendments Mandate Severance Pay for All Affected Employees
When the law is triggered, all affected employees—regardless of whether they received notice—are entitled to severance at the rate of one week of pay per full year of employment. If an employer fails to provide 90 days' notice, each impacted employee is entitled to an additional four weeks of pay. If an employee is covered by a collective bargaining agreement ("CBA") or employer severance plan, the employee is entitled to the greater of the amount outlined in the amendments or the amount required by the CBA or severance plan. This severance provision cannot be waived without approval from a court or the Commissioner of the New Jersey Department of Labor and Workforce Development.
Legal Challenges
A trade association called the ERISA Industry Committee filed suit against the Commissioner of the New Jersey Department of Labor and Workforce Development seeking to enjoin the amendments and declare them preempted by ERISA. On April 6, 2023, the court issued an opinion denying summary judgment to the trade organization because the trade organization lacked standing to challenge the NJ WARN amendments.
Three Key Takeaways
- The NJ WARN Act amendments bring significant changes to the NJ WARN Act, including, for example, mandatory severance, an increased advance notice period, and statewide aggregation of employment losses.
- New Jersey employers should review existing policies and procedures to ensure compliance with the amendments.
- The NJ WARN Act amendments are expected to raise the costs of conducting a mass layoff or a transfer or termination of operations because more of these events will now trigger the NJ WARN Act, requiring employers to provide mandatory severance to impacted employees.
