New Jersey Becomes First State to Require Severance Pay for Mass Layoffs

New Jersey Phil Murphy talks about severance pay for mass layoffsIn a victory for New Jersey employees, on January 21, 2020, New Jersey Governor Phil Murphy signed legislation that guarantees severance pay to New Jersey employees who lose their jobs in mass layoffs. New Jersey is now the first state in the nation to require severance pay for mass layoff situations.

The new law, Senate Bill 3170, requires companies with 100 or more full-time employees to pay them one week’s pay for each year of service during a mass layoff, plant closing, or transfer resulting in 50 or more workers losing their jobs. Such pay is in addition to any severance pay to which the employees may be entitled under a collective bargaining agreement or for any other reason. This landmark new law was prompted by the recent closure of several big name retail companies throughout the State of New Jersey over the last two years, including Toys R Us and Payless. Thousands of New Jersey workers lost their jobs in these closures.

New Jersey, employees already have the right to a certain amount of notice before a plant closing or large-scale layoff under state and federal laws. Generally, the federal Worker Adjustment and Retraining Notification (“WARN”) Act requires employers with more than 100 employees to provide at least 60 days’ advance written notice to employees (or their union representatives) affected by a “mass layoff” or “plant closing,” as well as similar notice to designated state and local government officials. Failure to provide such notice could result in liability to affected employees for back wages and benefits for the period for which notice was not provided (up to the full 60 days), as well as civil fines. Similarly, the New Jersey Warn Act has required, and currently requires, covered employers to give 60 days’ advance notice whenever there is a “mass layoff,” “transfer of operations,” or a “termination of operations.”

Senate Bill 3170 increases the minimum number of days’ notice that covered employers must give to New Jersey employees of a covered plant closing, transfer, or mass layoff from 60 to 90 days. If companies fail to comply with the new notice provisions, they will be required to add an extra four-week payout to an employee’s severance package.

New Jersey Senator Joe Cryan, a co-sponsor of the Bill, applauded its passage, stating: “The law better protects the rights of the employees” and that “workers’ performance and workers’ dedication to the company were secondary. Now, they’ll be moved more to the forefront.” The new law goes into effect in July 2020.

Have questions about your severance pay, review or negotations? Contact the severance lawyers at Castronovo & McKinney today for a free consultation.