NJ Severance Pay Requirement Delayed Because of COVID-19

New Jersey lawmakers have rolled back the start date of a law that requires employers to pay workers severance pay if a mass layoff or plant closing occurs because of the pandemic. They also decided to exclude from the law’s compliance requirements mass layoffs resulting from COVID-19.

The lawmakers voted earlier this year to make New Jersey the first state in the nation to require that employers provide severance pay to workers after mass layoffs or plant closings. The “Millville Dallas Airmotive Plant Job Loss Notification Act,” as approved in January 2020 also increased the amount of notice that employers must provide to employees when mass layoffs or plant closings are on the horizon.

Originally, the changes were going to go into effect on July 19, 2020. However, the new compliance requirements will now go into effect 90 days after the termination of New Jersey Gov. Phil Murphy’s Executive Order declaring a state of emergency.

Murphy first declared a state of emergency on March 9 because of the coronavirus. He extended the state of emergency for another 30 days on June 4. The extension will remain in place through early July. NJ.com has reported that Murphy has extended the state of emergency several times for 30 days at a time.

Business advocacy groups such as the N.J. Chamber of Commerce and other employer groups had asked for relief from the requirements similar to the “unforeseen business circumstances” exception to the federal Worker Adjustment and Retraining Notification Act (WARN Act) given the government shutdowns and shelter-in-place orders caused by the COVID-19 pandemic, according to attorneys Lynne Anderson and Alexa Miller at law firm Faegre Drinker.

The New Jersey legislature approved the measure granting the requested relief and the governor signed it on April 14, 2020.

Approved law

WARN Acts are aimed at protecting employees by requiring that employers provide advance notice of plant closings and mass layoffs.

WARN Acts are aimed at protecting employees by requiring that employers provide advance notice of plant closings and mass layoffs. There is a federal WARN Act and most states also have such laws, often called “mini-WARN Acts.”

The January 2020 amendments to New Jersey’s existing WARN Act added the following employer requirements:

• Severance pay to laid off/terminated employees. Before the January 2020 changes, employers had to pay employees only in instances where the employer failed to provide employees with 60-days notice before the layoff or plant closing occurred. Now all employees can receive one week of severance pay for each year they have worked with the company. If an employer doesn’t provide timely notice of a layoff or plant closing, they must pay 4 weeks of severance.
• Notice mandatory when termination affects 50 or more full-time or part-time employees. Under the old rules, the NJ WARN Act required employers of 100 or more full-time employees to provide written notice 60 days before the first employee termination. Under the new rules, a WARN notice will be mandatory if the layoff affects at least 50 employees.
• Termination count no longer limited to a single place of employment. Under the new rules, in deciding whether to send out WARN notices, a company has to consider all the job terminations taking place in the state. Previously, only terminations occurring at a single place had to be counted.
• Expanded notice. The notice increased under the new rules from 60 days to 90 days. This means that employers must provide 90 days advance notice to employees about a mass layoff or plant closing.

Delayed law

In addition to postponing those requirements, the definition of a mass layoff was changed to exclude layoffs stemming from the coronavirus pandemic.

“Mass layoff” was changed to exempt layoffs which are caused by certain events such as:

• Fire
• Flood
• Natural disaster
• National emergency
• Act of war
• Civil disorder

This change is retroactive to March 9, 2020 — the date that Gov. Murphy declared a state of emergency. This means that mass layoffs conducted on or after March 9, 2020 because of the pandemic do not come under the NJ WARN Act compliance requirements because the COVID-19 pandemic has been declared a national emergency.

Mass layoffs conducted on or after March 9, 2020 because of the pandemic do not come under the NJ WARN Act compliance requirements.

Other states

The Garden State isn’t the only state taking a look at its WARN Act. California suspended its notice requirement for coronavirus-related layoffs under its mini-WARN Act. However, employers should provide as much notice as possible. In a March 17 Executive Order, California Gov. Gavin Newsom suspended the notice provisions for any employer ordering a mass layoff, relocation, or termination when unforeseeable business circumstances due to COVID-19 caused the closure.

While some states are relaxing compliance with existing laws on mass layoffs, the federal law is still in effect. The federal WARN Act applies to employers with 100 or more employees. It requires them to provide 60 days advance notice of plant closings and mass layoffs of employees; although if employees are laid off for less than 6 months, notice may not be required. However, a global pandemic likely qualifies as “unforeseeable business circumstances” that would qualify as an exception under the federal WARN Act, law firm Squire Patton Boggs says in a blog post.

Some employees are suing employers for alleged WARN Act violations. Hooters was recently taken to court by 2 former workers who have claimed in a class action lawsuit that the company violated the WARN Act when it enacted a mass layoff of about 679 workers on March 25 without notice.

In a March 26 statement on its website, the company noted that, with its dining rooms closed and the resulting loss of revenue, it “had no alternative but to dramatically reduce” the size of its workforce in response to the economic impact of the novel coronavirus.