NJ WARN Act Applies to Parent Companies

The New Jersey WARN Act requires employers that close a location or implement a large layoff to provide employees at least 60 days notice or one week of severance pay for each year of service in lieu of that notice.  In DeRosa v. Accredited Home Lenders (June 14, 2011), the employer claimed that it was not required to provide the notice or severance pay because its parent company, a private equity fund, decided to fire the employees.  The private equity firm argued it was not the employees’ “direct employer.”  But a New Jersey appeals court decided in favor of the employees and ruled that the NJ WARN Act applies to affiliated and parent companies like the private equity firm.  In reaching this conclusion, the New Jersey Appellate Division looked to the federal WARN Act to interpret the New Jersey law.  Since the federal and NJ WARN Acts are similar, the court adopted federal law in applying the WARN Act to parent companies.

June 15, 2011 – Castronovo & McKinney, LLC – Paul Castronovo