New Jersey Expected to Adopt Law with Mandatory Severance Pay for Large Layoffs and Plant Closings
By: Ellen O’Connell, Esq.
New Jersey is soon expected to require employers with 100 or more full-time workers who are planning layoffs, plant closings and transfers that will result in 50 or more employees losing their jobs to require a longer notice and provide severance pay under the Worker Adjustment and Retraining Notification Act (“baby-WARN”) that is expected to be signed by Governor Murphy before the end of the year. This is not to be confused with the federal law, also called WARN, that has been in effect since 1988.
New Jersey’s baby-WARN would increase the time when employers must give notice from 60 days under the federal law to a new requirement of 90 days before the plant closing or layoff. More significantly, the legislation would institute a mandatory severance pay requirement, requiring employers to pay terminated employees one week of salary for every week of service.
For those employers who planned to make an offer of severance pay tied to a release of claims, the new mandatory severance pay would change what they must offer as severance pay. In order to make the release of claims effective, the employer would have to offer the employee something in addition to that which the employee is already entitled. As a result, offering severance pay as a condition of signing a release would become more expensive for employers. If enacted, the law will require employers to pay employees more than one week of pay for every year of salary. Adding an additional benefit, such as paying for COBRA continuation premiums or even skipping the release altogether may be on the list of responses employers may consider in response to baby-WARN.
The law will become effective 90 days after signed by the Governor, who is expected to sign it by the end of the year.
Ellen O’Connell, Esq. is Of Counsel to Price Meese Shulman & D’Arminio, P.C. and has wide experience advising employers and individuals in labor and employment law matters.
