Mass layoffs of hundreds and thousands of workers are daily stories in the news. From manufacturing to technology, no industry is safe from mass terminations as companies cut costs and backpedal on pandemic hiring. The federal WARN Act provides modest protections in the form of notice and, if notice is not given, severance pay. However, the federal law comes into play when large companies lay off a large number of full-time employees from a single site. Smaller layoffs or layoffs spaced out over time or multiple locations often skirt the legal requirements, leaving hundreds of employees without any protections or recourse.
As of April 10, 2023, the New Jersey WARN Act will offer stronger protections for more workers facing mass layoffs. New Jersey’s WARN Act will soon be one of the strongest in the nation and appears to be part of a recent trend in New Jersey of enhancing employee protections. The amended law takes a much broader view of what constitutes a mass layoff, provides for automatic payment of severance regardless of notice, and provides for additional severance is notice is not provided.
In January 2023, Governor Murphy signed into law numerous changes to New Jersey’s existing WARN Act, which largely followed the federal law. Originally passed by the legislature and signed by the governor shortly before the mass outbreak of COVID-19, these measures were temporarily put on hold during the worst of the pandemic. Now, the amendments will broaden the scope of the New Jersey WARN Act and provide much-needed benefits to employees laid off in mass termination events:
- The law now covers employers with at least 100 employees anywhere in the United States. All employees are counted for this threshold, regardless of tenure or weekly schedule.
- The law will apply in the event of a termination of 50 employees working at or reporting to any facilities within New Jersey operated by the employer for more than 3 years. This threshold also does not distinguish among employees.
- The law provides for a 90 day notice period.
- Severance pay is required for all terminated employees at a rate of 1 week’s pay for each full year of employment, even if full 90 days’ notice is given. Severance provided by the employer does, however, count toward the legally-mandated severance pay. Union contracts or other agreements may increase the amount of mandated severance.
- Failure to provide notice will result in an additional 4 weeks of severance pay. This penalty is automatic, whether notice is 1 day late or not provided at all, and must be paid to all employees, even those who would not receive the automatic severance based on a short term of employment.
- Employees are not able to waive their right to severance without the approval of a court or the state Commissioner of Labor.
- In counting the number of terminated employees, all terminations within thirty days are automatically counted toward the threshold of 50 unless the termination is made for misconduct.
- Employees may sue for lost wages up to the amount of the mandatory severance, benefits, possibly other compensation, and attorneys’ fees and costs. Employees will be awarded the greater of either the federal WARN Act damages or New Jersey WARN Act damages.
The law also expands the definition of employer to include individuals or corporations that own the employer performing the lay-offs and individuals or corporations that make the decision to implement a mass layoff. Along those lines, most federal and state WARN Acts do not provide for individual liability. Under the New Jersey WARN Act, individual employers may be held personally liable—not just the company or business entity.
Of course, there are open questions that have yet to be decided, most likely through litigation. One key question is the treatment of remote workers. The law counts terminations of employees working at or reporting to any and all facilities within New Jersey. It is possible that remote workers living in New Jersey who report to a New Jersey office would be covered by the law but not remote workers who are not tied to a New Jersey office. Likewise, it’s not clear whether remote workers living outside New Jersey but reporting to a New Jersey office would be protected by the law. Another question to be decided is under what circumstances performance is considered “misconduct,” such that a termination does not count toward the 50 termination threshold to trigger the law’s protections.
Workers have faced ongoing struggles since the outbreak of COVID-19, initially as businesses closed due to truly unavoidable and unpredictable circumstances. Since that time, the United States government has poured billions of dollars into supporting businesses and businesses have adjusted to a new normal. Yet workers continue to experience massive layoffs, sometimes with no notice or severance pay to cushion their fall.
If you have experienced a mass layoff, are not sure whether your termination has been part of a mass layoff, or have any other concerns about your employment, termination, or pay practices, it’s worth your time to contact an experienced professional to guide your through your options. At Pelton Graham we’ve litigated wage and hour actions, failure to pay prevailing wages, WARN Act/mass layoff cases, and many more. You can call, e-mail, or fill our website form. We’ll talk with you for free and guide you through your options.