Client Alert
Legislature Amends N.J. WARN Act to Provide COVID-19 Relief
April 22, 2020
New Jersey enacted the Millville Dallas Airmotive Plant Job Loss Notification Act (the “NJ WARN Act”)—a state analog to the federal Worker Adjustment and Retraining Notification (“WARN”) Act—in 2007, generally requiring employers who lay off too many employees in too short a time period to provide them with advance written notice of their layoff.1
In January of this year, the state enacted sweeping amendments to the NJ WARN Act, originally scheduled to take effect on July 19, 2020.2 In the three months since passage of the January amendments, COVID-19 has radically disrupted the labor landscape, prompting the New Jersey legislature to provide employers some relief from both the pre-amendment NJ WARN Act as well as the January amendments.
The NJ WARN Act previously failed to include any natural disaster or other exception for mass layoffs. The New Jersey legislature just changed that: Retroactive to March 9, 2020, the term “mass layoff” now expressly excludes mass layoffs made necessary by a “national emergency.”3 This includes COVID-19, as President Trump declared a national emergency concerning COVID-19 in March.4 Indeed, the bill amending the NJ WARN Act recognized that the amendment would apply to COVID-19, describing the legislation as “concerning mass layoffs due to the coronavirus disease 2019 pandemic.”
This April amendment also pushes back the effective date of the January amendments until 90 days following the termination of Executive Order 103, in which Governor Phil Murphy declared a public health emergency in New Jersey.5
When the January amendments do become effective, the following changes will be in force:
Employers with 100 or more employees, regardless of tenure or the number of hours worked, may be subject to the NJ WARN Act. Previously, the NJ WARN Act did not count employees with fewer than six months of service or who worked fewer than 20 hours per week.
A “mass layoff” that triggers the NJ WARN Act’s notice requirements is a termination of employment during any 30-day period for 50 or more employees reporting to an establishment, regardless of the number of hours worked. Previously, the NJ WARN Act was only triggered by a termination of employment during a 30-day period for either 500 or more full-time employees or 50 or more employees representing at least 1/3 of the full-time employees at an establishment. It appears that by making a change to the definition of “establishment,” all terminations within the state will be counted toward the threshold, even if they are at disparate and distant locations.
The required notice period will increase from 60 days to 90 days, and if an employer does not comply with the 90- day notice requirement, it must provide an additional four weeks of pay to the affected employees.
If the NJ WARN Act is triggered, employers must pay all terminated employees severance of one week of pay per year of employment. Employees may not waive their right to that severance under the NJ WARN Act without approval of the state or a court. Previously, severance pay was required only if an employer failed to give 60 days’ notice, and there was no limitation on waivers.
The amendment purports to prohibit certain terminations of employment and reductions of pay during a 180-day period following a “change of control” and requirements to generally keep the workforce the same size for two years following a change of control, absent labor commissioner approval.
Legal practitioners and employers alike will want to keep an eye out for litigation challenging the NJ WARN Act’s severance provision as ERISA preempted. See, e.g., Simas v. Quaker Fabric Corp., 6 F.3d 849, 853, 856, 17 EB Cases 1433 (1st Cir. 1993) (holding that ERISA preempts a Massachusetts severance law because it created an ERISA “plan” by imposing substantial burdens on employers); but see Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 2 IER Cases 134 (1987) (holding that ERISA did not preempt a Maine severance pay law because the statutorily required severance arrangement was limited in duration, easy to administer, and required only lump- sum payments).
1 For an overview of the federal WARN Act and jurisdictions that have mini-WARN laws, see PH COVID-19 Client Alert Series: The WARN Act and Similar State Laws.
2 N.J. S.B. 3170 (2020), https://www.njleg.state.nj.us/2018/Bills/S3500/3170_R2.pdf.
3 N.J. P.L. 2020, c.22 (2020), https://www.njleg.state.nj.us/2020/Bills/S2500/2353_I1.htm. Fires, floods, natural disasters, acts of war, and civil disorder or industrial sabotage are also now excluded from the NJ WARN Act.
4 Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak, whitehouse.gov, https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/.
5 Executive Order No. 103, https://nj.gov/infobank/eo/056murphy/pdf/EO-103.pdf, extended by Executive Order No. 119, https://nj.gov/infobank/eo/056murphy/pdf/EO-119.pdf.
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