New NJ WARN Act Mandates Severance Pay
This is your warning.
The WARN Act is a U.S. labor law that requires employers to give a 60-day notice in certain situations of employee layoffs and plant closings. It was created to provide employees and local communities with advance notice of the financial impact. We’ve written about it before (here, here, and here). However, there are several states that have implemented stricter regulations (referred to as mini-WARNs). New Jersey happens to be one of them.
On April 10, 2023, the NJ WARN went into effect for New Jersey employers. Employers who fail to comply may face penalties as high as an additional four weeks of severance pay.
What is the NJ WARN Act?
The NJ WARN Act, also known as the Millville Dallas Airmotive Plant Job Loss Notification Act, is a state law that requires employers to provide advanced notice to employees and the state government in the event of a mass layoff, termination, or plant closure. Originally passed in 2007, the law was designed to give affected workers enough time to find new employment or undergo retraining before losing their jobs. On April 10 2023, amended regulations went into effect with many employee protections including mandated severance pay.
Who must comply with the NJ WARN Act?
The NJ WARN Act applies to an individual or private employers with 100 or more full-time employees that has been in operations for a period longer than three years.
During which events does the NJ WARN Act apply?
The NJ WARN Act 2023 applies when a qualified employer anticipates any of the following events:
“Mass Layoff” means a reduction in force which is not the result of a transfer or termination of operations and which results in the termination of employment at an establishment during any 30-day period for 50 or more of the employees at or reporting to the establishment.
“Termination of Operations” means the permanent or temporary shutdown of a single establishment, or of one or more facilities or operiating units within a single establishment, except that “termination of operations” shall not include a termination of operations made necessary because of a fire, flood, natural disaster, national emergency, act of war, civil disorder or industrial sabotage, decertification from particiatipion in the Medicare and Medcaid programs as provided under Titles XVIII and XIX of the federal “Social Security Act,” Pub. L. 74-271 (42 U.S.C. s. 1395 et seq.) or license revocation pursuant to P.L. 1971, c. 136 (C.26:2H-1 et al.).
“Transfer of operations” means the permanent or temporary transfer of a single establishment, or one or more facilities or operating units within a single establishment, to another location, inside or outside of this State.
What is considered a termination of employment under the NJ WARN Act?
Termination of employment” means the layoff of an employee without a commitment to reinstate the employee to his previous employment within six months of the layoff, except that “termination of employment” shall not mean a voluntary departure or retirement or a discharge or suspension for misconduct of the employee connected with the employment or any layoff of a seasonal employee or refer to any situation in which an employer offers to an employee, at a location inside the State and not more than 50 miles from the previous place of employment, the same employment or a position with equivalent status, benefits, pay and other terms and conditions of employment, and, except that a layoff of more than 6 months which, at its outset, was announced to be a layoff of six months is caused by business circumstances not reasonably foreseeable at the time of the initial layoff, and notice is given at the time it becomes reasonably foreseeable that the extension beyond six months will be required.
Does NJ WARN Act mandate employers to pay severance to terminated employees?
Yes. Severance pay is payable under the Act to each employee whose employment is terminated. Employers who must comply with NJ WARN Act shall provide to terminated employees severance pay equal to one week of pay for each full year of employment. If the employer provides any employee with less than 90 days notification before the first termination of employment occurs in connection with the termination or transfer of operations, or mass layoff, the employer shall provide that employee with an additional four weeks of severance pay. The rate of severance pay provided by the employer shall be the average regular rate of compensation received during the employee’s last three years of employment with the employer or the final regular rate of compensation paid to the employee, whichever rate is higher. Severance pay under the Act shall be regarded as compensation due to an employee for back pay and losses associated with the termination of the employment relationship, notwithstanding the calculation of the amount of the payment with reference to the employee’s length of service. An employer shall provide an employee the severance pay required under the Act or any severance pay provided by the employer pursuant to a collective bargaining agreement or for any other reason, whichever is greater. Any back pay provided by the employer to the employee pursuant to section 5 of the “Worker Adjustment and Retraining Notification Act, “Pub.L.100-379 (29 U.S.C. s.2104), because of a violation of section 3 of that act (29 U.S.C. s.2101) shall be credited toward meeting the severance pay requirements of the Millville Dallas Airmotive Job Loss Notification Act.
Who must employers notify employees to comply with the NJ WARN Act?
Provide notification of the termination or transfer of operations or mass layoff to the chief elected official of the municipality where the establishment is located, each employee whose employment is to be terminated, and any collective bargaining units of the employees at the establishment using a hard copy form provided by the state.
When must employers send notifications to comply with the NJ WARN Act?
Employers must notify employees 90 days in advance of the first termination of employment occurs in connection with the termination or transfer of operations, or mass layoff.
Resources provided by the New Jersey Department of Labor & Workforce Development?
New Jersey Department of Labor and Workforce Development Rapid Response assists both employers and workers involved in a closing or permanent mass layoff. The Rapid Response provides on-site assistance during your working hours and at no cost to the employer. impacted employers can contact Rapid Response Staff at 1-800-343-3919.
How Onwards HR can help employers comply?
As an employer in New Jersey, it is crucial to understand and comply with the NJ WARN Act. This includes ensuring that all affected employees receive timely and accurate notice of any mass layoff or termination. However, managing a mass layoff or termination can be challenging and time-consuming, particularly for employers who are not familiar with the NJ WARN Act requirements.
This is where Onwards HR can help. Onwards HR is an offboarding platform that specializes in helping businesses comply with employment laws and regulations. Our team of experienced HR compliance professionals can assist employers in developing and implementing a comprehensive NJ WARN Act compliance plan, including:
Determining if 50 or more employees are expected to be terminated within a 30 day period.
Dynamically creating and sending a NJ WARN Notice to affected employees.
Automating the severance pay required under the NJ WARN Act.
In conclusion, the NJ WARN Act is an important state law that all New Jersey employers should understand and comply with. Failure to comply can result in significant financial penalties and damage to the employer's reputation. Onwards HR can help employers navigate the NJ WARN Act requirements and ensure that all affected employees receive the proper notice and severance pay during a mass layoff or termination.
Contact us today to learn more about our NJ WARN Act compliance services.
References:
Source: NJ WARN Notification Form
