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Does New Jersey Require Severance Pay in a Mass Layoff?


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Losing your job is never an easy experience, but it can be particularly tough when it happens as part of a mass layoff. In addition to the emotional and financial stress, many employees may wonder about their legal rights and entitlements in such a situation. In these cases, one question that often arises is whether the state requires employers to offer severance pay.

In New Jersey, the issue of mandatory severance pay is one that is often the subject of confusion and uncertainty, especially in the context of mass layoffs. The answer is not straightforward as New Jersey’s mass layoff laws can be complex and vary depending on the circumstances. In this article, we’ll explore the question of whether New Jersey businesses are required to pay severance in a mass layoff and what the requirements are that make severance mandatory.

What is a Mass Layoff?

When a company experiences financial difficulty or undergoes restructuring, it is not uncommon for them to lay off a significant number of employees. This process can be devastating for workers who lose their jobs and can leave them struggling to make ends meet as they search for new employment opportunities.

Before we dive into whether severance pay in New Jersey is mandatory in these situations, it’s important to define what a “mass” layoff is. How big does the reduction in force have to be in order to qualify? According to the New Jersey Worker Adjustment and Retraining Notification (NJ WARN) Act, a mass layoff occurs when a company (at a single site of employment) lays off or terminates at least 50 full-time or part-time employees or at least one-third of their workforce, whichever is greater, in any period of 30 days. This can also include situations where a company shuts down an entire facility, resulting in the termination of all employees at that location.

If an employer is subject to NJ WARN, they are required to provide written notice to all affected employees, their union representative (if applicable), and the Commissioner of Labor and Workforce Development at least 60 days before the layoff takes effect.

Recent Changes to the New Jersey WARN Act

In 2023, employers and employees alike need to be aware of the major changes to the New Jersey WARN Act and mandatory severance pay. In January 2020, Governor Phil Murphy signed a significant overhaul of the existing act into law. Unfortunately, the COVID-19 pandemic delayed the implementation of the new legislation. However, after nearly three years of waiting, the amended New Jersey WARN Act will finally go into effect on April 10, 2023.

This updated version of the New Jersey WARN Act expands the scope of the mass layoff laws and will make it easier for employees to receive notice in the event of such a layoff or plant closing and receive mandatory severance pay in these New Jersey layoff situations.

Understanding the Original NJ WARN Act

In an effort to protect workers from the adverse effects of mass layoffs, the original NJ WARN Act required certain employers to provide advanced notice of such events. Specifically, New Jersey employers with over 100 full-time employees had to give their staff at least 60 days’ notice if 50 or more full-time workers were going to be impacted by a mass layoff, transfer, or termination of operations.

Additionally, it was not mandatory for employers to pay severance under the original New Jersey WARN Act unless said employer failed to give proper notice of termination. However, with the recent amendment of the WARN Act, employers in the state are now subject to a new set of rules surrounding termination notices and severance pay.

Positive Changes for Employees Under the Amended NJ WARN Act

The New Jersey WARN Act, a state law that governs how employers handle mass layoffs and plant closures, has recently undergone significant changes. These changes offer New Jersey employees additional protection, including mandatory severance payments and a longer notice period.

Extended Termination Notice Period

The amended Act requires all employers with 100 or more employees to provide at least 90 days’ notice before the first covered termination occurs, 30 days more than the previous requirement. The longer notice period gives employees more time to prepare for the termination and look for new employment opportunities while helping minimize the impact of sudden job loss on their personal and professional lives.

Mandatory Severance Pay

In addition to the longer notice period, the Amended WARN Act makes it mandatory for New Jersey employers to provide severance payments to all impacted employees. Even if proper notice is provided, employers must now pay severance to affected employees. The severance payment must be equal to one week of pay for each full year of employment, with no cap on the payment amount. This means that long-term employees who lose their jobs will receive a higher severance payment than those who have been with the company for a shorter time.

The new law also specifies how severance payments should be calculated. Employers must use the employee’s average regular rate of compensation received during the last three years of employment, or the final regular rate that the employee received, whichever is higher. This ensures that employees receive an appropriate severance payment that reflects their contributions to the company — and it prevents employers from strategically cutting salaries prior to a layoff.

Overall, these changes to the NJ WARN Act represent a significant improvement in employee protections. The longer notice period and mandatory severance payments help ease the burden of job loss in New Jersey and provide a safety net for affected employees.

Does Your Situation Qualify?

As an employee, it’s important to understand your rights when it comes to severance pay. The Amended WARN Act outlines certain situations where severance pay is mandatory in New Jersey, but there are also exemptions that may apply. It’s crucial to know the difference.

Can I receive severance pay alongside other compensation?

According to the amended Act, severance payments are classified as compensation that is owed to employees for their loss and back pay related to employment termination. New Jersey businesses are required to provide this mandatory severance pay on top of any other severance payments that an employee may be eligible to receive under an existing collective bargaining agreement or other agreements at the time of their separation from the company. This provision ensures that affected employees receive fair and just compensation for their contributions and efforts during their employment with the company.

My employer failed to provide proper notice of my termination — what now?

Under the amended Act, if an employer fails to provide proper notice of the termination, the affected New Jersey employee will be entitled to an additional four weeks of mandatory severance pay. This penalty ensures that employers are incentivized to comply with the law and provide the required notice period.

When is severance pay not mandatory?

Under the new NJ WARN Act, there are some instances in which an employee leaves their place of work but severance pay is not mandatory. For instance, the Act does not cover voluntary departures, retirements, or suspensions and terminations due to misconduct. Seasonal layoffs are also exempt, as are cases where an employer offers to transfer the employee to another location within 50 miles of their original job site, with the same employment terms and benefits. If you find yourself in a situation where you are unsure whether your termination in New Jersey qualifies for mandatory severance pay, it’s important to seek legal guidance. An experienced attorney can help you determine your eligibility and negotiate the best possible outcome for you.

Speak With Our Experienced Severance Lawyers

If you are facing an employment separation, it is important to understand your rights and options when it comes to mandatory severance pay in New Jersey. Remember that severance pay is always negotiable, and you are not required to accept the business’s first offer. This is especially true in cases of mass layoffs.

If you find yourself in this situation, it’s important to seek the advice of experienced employment separation specialists. At Severance Lawyers, our award-winning team can help you navigate the negotiation process in New Jersey and get the most money from your former employer. Don’t hesitate to contact us today to schedule a consultation and learn how we can help. With our 24-hour response time to all initial inquiries, you can be sure that you’ll get the help you need when you need it most.

The post Does New Jersey Require Severance Pay in a Mass Layoff? appeared first on Severance Lawyers.

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