NJ Amends State WARN Act to Give Employers Pandemic Flexibility

Categories : Coronavirus

Types : Alerts

On April 15, 2020, New Jersey lawmakers passed Senate Bill 2353, which amends the Millville Dallas Airmotive Plant Job Loss Notification Act (“NJ WARN”) in two important ways:

• Effective immediately: The bill amends the definition of “mass layoff” to exclude a “mass layoff made necessary because of a fire, flood, natural disaster, national emergency.”  It also excludes an “act of war, civil disorder or industrial sabotage, decertification from participation in the Medicare and Medicaid programs”.  This new definition also will be effective retroactively to March 9, 2020.
• 2020 Amendment: Delays the effective date of the NJ WARN amendment until 90 days after the termination of the March 9^th NJ Executive Order 103, in which Governor Murphy declared a public health emergency.

The bill does not specifically reference the current COVID-19 pandemic, however, that is believed to be the impetus for the amended definition of “mass layoff”.  The exclusion of national emergencies is a welcome clarification for New Jersey employers, many of whom already have or may be considering mass layoffs due to the COVID-19 pandemic.  This amendment directs that mass layoffs due to the pandemic will not trigger NJ WARN requirements.

What Will Change When the 2020 Amendment is Eventually Implemented?

New Jersey first passed a WARN Act in 2007, which currently requires employers to provide 60 days’ written notice to employees in advance of a termination due to a mass layoff.  New Jersey law defines “mass layoff” as a reduction in force that is not the result of a transfer or termination of operations and which results in termination of employment at a single place of employment during any 30-day period for: (a) 500 or more full-time employees; or (b) “50 or more of the full-time employees representing one third or more of the full-time employees at the establishment.” (N.J.S.A. 34:21-1).

In January 2020, New Jersey passed a significant amendment to the NJ WARN, which was set to go into effect on July 19, 2020.  While this amendment’s effective date has now been delayed until an unknown date, employers will need to be aware of several important changes to the employer obligations for covered mass layoffs when it does go into effect:

• Increased Applicability: NJ WARN Act will apply to all companies with 100 or more employees in New Jersey, regardless of full or part-time employee status.
• Reduction in Threshold of “Mass Layoff” Definition: NJ WARN Act will apply to any reduction in force which results in the termination of 50 or more employees within a 30-day period, regardless of those employee’s tenure, hours, or part-time status. The 50-employee threshold will consider layoffs within a 30-day period at all places of employment state-wide in New Jersey, not just at a single work location. Additionally, any terminations for two or more groups of employees at a single place of employment occurring within a 90-day period will be considered on an aggregate basis for determination of whether NJ WARN applies. Unless the company can demonstrate “separate and distinct” causes for the termination of each group, then aggregate terminations over 50 employees will be subject to NJ WARN.
• Increased Layoff Notice Period: NJ WARN notice now is required 90 days in advance of the date of termination, which is an increase from the previously-required 60-day notice period.
• Mandatory Severance Pay: New Jersey now mandates that, upon a triggering termination event, all employees are entitled to one week of severance pay for each year they have worked with the company. If an employer fails to provide timely 90 days’ notice of the layoff, the severance pay obligation increases to four weeks of severance pay for every employee affected by the triggering event.
• Change in Operational Control Requirements: The amendment has added a new section to address workforce reductions due to mergers and acquisitions. “Change in control” is defined by NJ WARN as “any material change in ownership of an employer or any filing seeking bankruptcy protection,” and it includes the change in control of the entire company or of a single work location. During a change in control, the only employees “covered” by NJ WARN are full-time employees and part-time employees working more than 20 hours per week, all of whom have been employed for 90 days prior to the change of control. The amendment details out specific notice and posting requirements for both the preceding and succeeding employers, as well as limitations on workforce changes that may be made by the succeeding employer for two years following the change in control.
• Individual Liability: NJ WARN amends the definition of “employer” to include, in relevant part, “any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee” or any person who “makes the decision responsible for the employment action that gives rise to a mass layoff subject to notification.”

Employers considering layoffs for any reason, including due to the COVID-19 pandemic, should consult a Labor and Employment attorney to discuss all applicable laws and notice requirements. Visit the firm’s Coronavirus (COVID-19) Resource Center for more information and updates on this constantly evolving situation.