Worker layoffs likely to be become more complicated in New Jersey in 2023

At a glance

• Last month a Bill passed legislature which makes the amendments made to the Millville Dallas Airmotive Plant Job Loss Notification Act effective 90 days after the bill is signed into law. Read to find out more.

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In early 2020, the New Jersey Legislature enacted amendments to the Millville Dallas Airmotive Plant Job Loss Notification Act (i.e. the New Jersey WARN Act or NJ WARN), originally scheduled to become effective in July 2020. The effective date of these amendments was and continues to be delayed as a result of the COVID-19 pandemic.

However, a bill passed by the Legislature late last month will make these amendments effective 90 days after the bill is signed into law by Governor Phil Murphy, which is expected imminently.

The amendments to NJ WARN include the following significant changes to the existing law:

• NJ WARN would now cover all employers with 100 or more employees total, including both full-time and part-time employees and employees outside of New Jersey (as long as the employer has operated within New Jersey for at least three years).
• Employers would now have to provide 90 days advance notice of a mass layoff or workplace shutdown, increased from 60 days.
• The threshold for an event requiring advance notice under the law (i.e. a mass layoff or workplace shutdown) would be lowered to include when (i) an employer terminates or transfers its operations in an “establishment” during any continuous 30-day period (or during a 90-day aggregation period) that results in the termination of 50 or more employees (full- or part-time); or (ii) the employer conducts a “mass layoff” defined as a reduction in force (not the result of a transfer or termination of operations) that results in the termination of 50 or more employees (full- or part-time), at any group of locations within New Jersey, including employees who “report to” any location in New Jersey. This removes the requirement that the terminated employees comprise at least 33 percent of the applicable workforce.
• The definition of “establishment” now includes either a single site of employment in New Jersey or a group of locations within New Jersey, which do not need to be contiguous.
• Most notably, employers would now have to provide all employees terminated as part of a mass layoff or workplace shutdown with severance equal to one week of pay for each year of employment, regardless of whether the required advance notice was provided. If the employer fails to provide the required 90 days’ notice, it must also pay the terminated employees an additional four weeks of severance.
• Employees may not waive their right to severance without approval by the Commission of the New Jersey Department of Labour and Workforce Development or a court of competent jurisdiction.

Notably, an industry group (the ERISA Industry Committee or ERIC) filed a lawsuit nearly two and half years ago alleging that the Employee Retirement Income Security Act (ERISA) expressly pre-empts the NJ WARN amendments because it requires employers to pay severance, effectively violating ERISA’s prohibition on the establishment of administrative severance benefits programs by states. The lawsuit, and a motion for summary judgment filed by the ERIC, remain pending in the US District Court for the District of New Jersey.