Officially passed in 2007, New Jersey’s WARN Act[1] – officially titled the “Millville Dallas Airmotive Plant Job Loss Notification Act” (hereinafter “NJ WARN Act” or “Act”) – is analogue to its federal counterpart, the Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C. § 2100 et seq. Similar to the WARN Act, the provisions in the NJ WARN Act require employers who meet the criteria to give their employees advance notice of mass layoffs that yield substantial reductions in force. Although the NJ WARN Act closely mirrored its federal counterpart since 2007, on January 10, 2023, Governor Murphy signed new legislation (Senate Bill 3710)[2] that implemented amendments with more expansive requirements and, therefore broadening the reach of NJ WARN Act.[3] These amendments are effective as of April 10, 2023.
Notice Period Extended to 90 days
Previously, the NJ WARN Act required employers with provide employees with 60 days’ advance notice for mass layoffs or plant closings, consistent with the requirements set forth in the federal WARN Act.[4] Under the amended law, employers with 100 or more employees nationwide are now required to provide 90 days’ advance notice.[5]
Additionally, the NJ WARN Act provides only one exception to the 90 days’ advance notice, i.e, the natural disaster exception, such as when mass layoff is the result of a flood, fire, or national emergency.[6] This is far more restrictive than the federal WARN Act, which allows for both the natural disaster exception and unforeseeable business circumstances.[7]
Lower Threshold for Layoffs
Prior to the amendments and largely consistent with the federal WARN Act, the “mass layoff” threshold was triggered when there was an employment loss of (1) at least 500 full-time employees or (2) at least 50 full-time employees representing one-third of the workforce at the establishment (i.e., a single place of employment).[8]
Now, the magic number has fallen to 50 employees, regardless of whether they are full-time or part-time.[9] Additionally, as mentioned later on, these 50 employees are aggregated across all an employer’s facilities or locations.[10] The amendments also eliminated the “one-third of the workforce” requirement, which means that an employer will trigger the NJ WARN Act if they lay off only 50 employees out of total workforce of 5,000 employees.[11]
Thus, “50 or more qualifying terminations will trigger the notice and severance requirements regardless of what percentage of the workforce that may constitute.”[12]
Abolishing Distinction Between Part-Time and Full-Time Employees
Largely consistent with the federal WARN Act, the previous NJ WARN Act created a distinction between part-time and full-time employees. A part-time employee was defined as one who worked “fewer than 20 hours per week” or who was “employed for fewer than six months.”[13] For purposes of employee thresholds, part-time employers were not counted towards the number of employees subject to layoffs.
The new Act completely abolishes this distinction between part-time and full-time employees. Now, regardless of hours of work, all employees are counted for purposes of the 50-employee threshold requirement. Additionally, both part-time and full-time employees are also aggregated for purposes of determining whether an employer is covered by the NJ WARN Act. To be counted, employers must employee 100 employees, which now includes both part-time and full-time workers.[14]
Therefore, many more New Jersey employers will be covered by the new, expansive reach of the NJ WARN Act. This is a huge win for part-time employees who are now afforded protections under the Act. It is also likely that smaller employers and businesses will now be covered by the Act.
Mandatory Severance Pay
Previously, the NJ WARN Act required employers who employ more than 100 full-time employees nationwide to pay severance to employees terminated in qualifying layoffs, transfer of operations, or termination of operations if the employer failed to provide advance notice.[15] Now, regardless of whether employers give advance notice, the amended law requires employers who conduct a “transfer, termination of operations, [or] mass transfer” to provide every affected employee “severance pay equal to one week of pay for each full year of employment.”[16] In other words, employers who provide timely notice about mass layoffs or plant closings are still required to provide mandatory severance pay. For affected employees entitled to severance pay under a collective bargaining agreement, employers are now “required to pay either the statutorily mandated severance or the severance provided for such other reasons, whichever is greater.”[17] Additionally, if an employer fails to provide the 90 days’ advance notice, the employer shall provide each employee who did not receive sufficient notice “with an additional four weeks of [severance] pay.”[18]
New Jersey is the only state to require mandatory severance pay for all employees terminated in qualifying layoffs, transfer of operations, or termination of operations.
Expansion of “Establishment” Definition
Prior to the amendments, the NJ WARN Act drew similar language from the federal WARN Act when defining “establishment,” i.e., “establishment” was defined as “a single location or a group of contiguous locations, including groups of facilities which form an office or industrial park or separate facilities just across the street from each other.”[19] The amendments have broadened this definition and abolished the concept of “single site of employment.” By removing “contagious” from the definition, an “establishment” may now be “a single location or a group of locations, including any facilities located in [the state of New Jersey” that the employer has operated for longer than 3 years.[20] In other words, the amended law treats all of an employer’s facilities or locations within New Jersey as one aggregate establishment. For purposes of the NJ WARN Act notice requirements, employers are now required to aggregate terminations at all of their facilities or locations within New Jersey.
For example, an employer who lays off 5 employees at their northern New Jersey facility and 45 employees at their central New Jersey facility will trigger the 50-employee threshold and severance requirements of the new NJ WARN Act. This prevents employers from utilizing the loopholes in the original Act, i.e., if an employer wished to lay off 500 full-time employees, the employer could strategically avoid triggering the NJ WARN Act by terminating 250 from the northern New Jersey establishment and another 250 from the central New Jersey establishment.
Because of the new aggregation principle, employers will be more likely to trigger the NJ WARN Act. Not only can the Act be triggered from terminating 50 employees working anywhere in New Jersey, but the Act’s expansive definition of “mass layoff” allows for the aggregation of employees who are not at the establishment, but who are “reporting to” a New Jersey establishment. Based on this language, it can be argued that remote workers who work out of state but report to an employer’s New Jersey location may be counted towards the threshold. Unfortunately, the Act provides no clear guidance as to whether employers are required to count remote workers who do not reside in New Jersey.
Other Expansive Measures
Both the previous version and amended version of the Act define “employer” as “an individual or private business entity which employs the workforce at an establishment.”[21] However, the following provision in the amended NJ WARN Act greatly expands the range of businesses and individuals that may be liable for purposes of notice and severance pay:
“For purposes of this section [requiring notice and severance pay], “employer” includes any individual, partnership, association, corporation, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee, and includes any person who, directly or indirectly, owns and operates the nominal employer, or owns a corporate subsidiary that, directly or indirectly, owns and operates the nominal employer or makes the decision responsible for the employment action that gives rise to a mass layoff subject to notification.”[22]
[1] N.J.S.A. § 34:21-1 et seq.
[2] S. 3170 (2023); See https://pub.njleg.gov/Bills/2018/S3500/3170_I1.HTM. Now codified as N.J.S.A. § 34:21-1 et seq.
[3] Wendy C. Butler et al., New Jersey WARN Act Amendments Expanding Coverage and Increasing Severance and Notice Requirements Now in Effect, Jones Day (Apr. 2023), https://www.jonesday.com/en/insights/2023/04/new-jersey-warn-act-amendments.
[4] P.L. 2007, c.212 (A1044 5R), https://pub.njleg.gov/bills/2006/PL07/212_.HTM?_ga=2.49117670.1530572353.1627318959-2114496007.1624388959.
[5] N.J.S.A. § 34:21-1.
[6] Id.
[7] 29 U.S.C. § 2102(b)(2).
[8] P.L. 2007, c.212 (A1044 5R), supra note 29.
[9] N.J.S.A. § 34:21-1.
[10] N.J.S.A. § 34:21-2.
[11] N.J.S.A. § 34:21-1.
[12] The ERISA Industry Committee v. Robert Asaro-Angelo, Civil Action No. 20-10094 (ZNQ) (TJB), 2023 U.S. Dist. LEXIS 26882, at *4 (D.N.J. Feb. 16, 2023).
[13] P.L. 2007, c.212 (A1044 5R), supra note 29.
[14] N.J.S.A. § 34:21-1.
[15] P.L. 2007, c.212 (A1044 5R).
[16] N.J.S.A. § 34:21-2.
[17] The ERISA Industry Committee, Civil Action No. 20-10094 (ZNQ) (TJB), 2023 U.S. Dist. LEXIS 26882, at*3-4 (internal quotations marks omitted).
[18] N.J.S.A. § 34:21-2.
[19] NJ Rev. Stat. § 34:21-1 (2016), https://law.justia.com/codes/new-jersey/2016/title-34/section-34-21-1.
[20] N.J.S.A. § 34:21-1. (emphasis added).
[21] N.J.S.A. § 34:21-1.; P.L. 2007, c.212 (A1044 5R).
[22] N.J.S.A. § 34:21-2.