Pursuant to a Bill recently signed by New Jersey Governor Phil Murphy, the long-delayed changes to New Jersey’s mini-WARN Act will take effect on April 10, 2023. Employers in New Jersey contemplating a mass layoff, transfer of operations or termination of operations that will impact 50 or more employees (regardless of part-time or full-time status) will now be subject to an enhanced notice period (90 days) and mandatory severance payments to impacted employees, along with other changes to the prior law.
Governor Murphy first signed these amendments to the law three years ago (January 2020). However, the COVID-19 pandemic delayed the effective date of the changes until 90 days after Executive Order 103 (setting forth the state of emergency related to the pandemic) was lifted. Although Executive Order 103 remains in place, Governor Murphy signed new legislation earlier this month putting the WARN Act changes into effect on April 10, 2023.
- Lower threshold to trigger NJ WARN
- Currently, the WARN act is only triggered if an employee impacts 50 or more full time employees working at a single establishment.
- The new amendments remove the “full time” qualifier, includes employees “reporting to” the establishment (which may address remote employees), and broadens the definition of “establishment” so that it can include multiple locations throughout the state of New Jersey.
- Increased notice obligations
- The current version of the law requires sixty (60) days of notice to employees.
- The amended version of the law increases that time period to ninety (90) days.
- Mandatory severance
- The current version of the law only provides for severance if an employee does not receive the required notice.
- The amended law requires that every employee receive both notice and severance. Severance amounts must be at least one week of pay for every year of service, or a higher amount as provided by a collective bargaining agreement or other contract or policy.
- If the employee does not receive the full 90 days of notice, they must also receive an additional four weeks of severance.
- The law also expands the definition of “employer” with respect to who may be responsible for the severance payments to include affiliated entities and individuals.
Although the law takes effect on April 10, 2023, it is unclear how the law will operate with respect to terminations already contemplated and/or noticed under the prior WARN Act prior to the effective date, but which terminations will not occur until after April 10, 2023. Employers facing these types of situations should discuss with legal counsel.
Lastly, stay tuned for further updates as the law is challenged and interpreted in the Courts. The ERISA Industry Committee already filed a challenge to the law in the U.S. District Court for the District of New Jersey, arguing that the severance obligations are preempted by the Employee Retirement Income Security Act. This litigation remains pending under docket number 3:20-cv-10094.
Reed Smith’s Labor & Employment team will continue to monitor these developments and provide updates. Should you have any questions about the requirements under the new law or other issues impacting your work force, Reed Smith’s experienced attorneys are available to assist.