Amendments to NJ WARN Act in 2023 Expand Definition of Employer, Impact Severance Amount, and More

In 2020, New Jersey became the first state to require employers to pay severance to workers who are laid-off or terminated through workforce reductions. Senate Bill 3170 expanded the Millville Dallas Airmotive Plant Job Loss Notification Act, a law that imposes certain obligations on covered employers before they conduct plant closings, transfers, or mass layoffs.

On April 10, 2023, changes to the law took effect that impact the severance amount, as well as expanded the definition of employer and further defined what is an establishment protected under the Act.

Who is a covered employer under the NJ WARN Act?

Employers with 100 or more full-time employees were required to comply with the requirements of the NJ Worker Adjustment and Retraining Notification Act (NJ WARN). The law had not counted those employees with fewer than six months of service or those working fewer than 20 hours per week.

Amendments to the law remove the distinctions above for a “full-time employee” for purposes of calculating the 100-employee coverage threshold and the 50 employees required to trigger a layoff. The law previously focused on the number of terminations at a single location, and this has been eliminated through these amendments to the law.

Additionally, the definition of employer has expanded. It now includes any individual, partnership, association, and corporation that acts directly or indirectly in the interest of the employer in relation to employees. Also, an establishment is defined as a place of employment that has been operated for more than three years by an employer; it may be a single location or a group of locations, including any facilities located in the state.

What are the NJ WARN Act Severance and Notice Requirements?

Employers with employees performing work in New Jersey and those considering expanding into New Jersey or opening operations in the state should consider the changes imposed under these amendments, as well as other provisions of the NJ WARN Act:

• A prior notice period of 90 days. Under federal law, covered employers must provide 60 days’ notice prior to a plant closing, transfer, or mass layoff. Under this state law, employers are required to provide 90 days’ notice in writing to:

1. The Commissioner of Labor and Workforce Development

2. The chief elected official of the municipality where the establishment is located

3. Each employee whose employment is to be terminated

4. Any collective bargaining unit of employees at the establishment

• Severance is more than a civil penalty. Under the amended law in 2023, employers are required to pay all terminated employees severance of one week of pay for each year of employment even if they provide the full requirement of 90 days’ notice. If an employer fails to give a full 90 days’ notice, they must pay an additional four weeks of pay to the employee. This severance must be paid in a lump sum on the first regularly scheduled payday after the final date of the employees’ employment.
• NJ WARN Severance payments can no longer be waived. Under NJ WARN, an employee was permitted to waive a NJ WARN severance payment. However, as of April 10, 2023, an employee may only waive a NJ WARN severance payment with approval from the N.J. Commissioner of Labor and Workforce Development or the court.

Looking Forward

New Jersey employers should review their legal requirements. Employers in the Garden State must be mindful of their obligations under state law, as well as obligations under federal law. Additional information is available on the state’s website devoted to Business Closing/Mass Layoff Notification Law.

Paychex can provide support to help your New Jersey business with its HR needs, including helping keep you up to date on federal and state regulations that affect your compliance.