Alerts and Updates

New Jersey Employers Be ForeWARNed: New Jersey Mass Layoff/Plant Closing Law Enacted

March 27, 2008

Given the current economic climate, many employers are likely to face workforce reductions in the upcoming year. Those with operations in New Jersey must take heed of New Jersey's new law governing mass layoffs and the transfer or termination of operations.

Effective December 20, 2007, the New Jersey Legislature enacted the Millville Dallas Airmotive Plant Job Loss Notification Act (likely to be referred to and hereinafter referred to as the "NJ WARN Act"). Like its federal law counterpart, the Worker Adjustment and Retraining Notification Act (the "WARN Act"), the NJ WARN Act imposes certain obligations on employers who shut down or downsize their operations in New Jersey.

Under the NJ WARN Act, an employer with 100 or more full-time employees must provide at least 60 days' notice of any one of the following three events: 1) a mass layoff, meaning a workforce reduction during any 30-day period affecting one-third or more of the workforce at an establishment, provided the layoff affects 50 or more full-time workers; 2) a transfer of operations, meaning a temporary or permanent transfer to another location of a single establishment or one or more facilities or operating units within a single establishment that results in the termination of employment of 50 or more full-time employees during any 30-day period; or 3) a termination of operations, meaning a temporary or permanent shutdown of a single establishment or one or more facilities or operating units within a single establishment that results in the termination of employment of 50 or more full-time employees during any 30-day period, except in certain specified emergent situations. To qualify as an "establishment" covered by the NJ WARN Act, an employer's operations must be in existence for longer than three years and may consist of a single location or a group of contiguous locations, including facilities in an office or industrial park or facilities across the street from one another. In the event two or more groups at a single establishment are subject to a termination of operations, transfer of operations or a mass layoff within any 90-day period, the number of employees affected will be aggregated, thereby triggering the NJ WARN Act notice requirements, unless the employer can demonstrate that the cause of the terminations for each group is separate and distinct.

The required NJ WARN Act notice must be provided to the affected employees, any collective bargaining representatives of those employees, the chief elected official of the municipality where the establishment is located, and the New Jersey Commissioner of Labor and Workforce Development as well as the U.S. Department of Labor where required under the WARN Act. Upon receipt of the required notice from an establishment that workers will be subject to a plant closing, transfer or mass layoffs, the Department of Labor and Workforce Development shall dispatch a response team to provide information and counseling to the affected employees and to facilitate the transition and/or the possible prevention of the transfer or termination of operations. The employer is required to provide the response team with on-site access to the affected employees during work hours for the length of time determined necessary by the response team to carry out its responsibilities.

There are substantive differences in the notice employers are required to give under the federal WARN Act and the NJ WARN Act. The differences in the notice requirements are summarized in the chart below, as are a few of the other significant differences between the two statutes.

WARN Act NJ WARN Act

Contents of the Notice

The notice must provide the following information:

  • Name and telephone number of a company official to contact for further information
  • An indication whether or not bumping rights exist, giving notice to affected employees, state dislocated worker unit, and chief elected official of local government unit
  • The job titles of affected positions and the names of the workers currently holding those jobs, giving notice to representative, state dislocated worker unit, and chief elected official of local government unit
  • The name of each union representing affected employees, and the name and address of the chief elected officer of each union, giving notice to state dislocated worker unit and chief elected official of local government unit

Contents of the Notice1

The notice must provide the following information:

  • The number of employees affected, the date or dates on which the mass layoff or transfer or termination of operations will occur, and the date each termination of employment will occur
  • A statement of reasons for the mass layoff or transfer or termination of operations
  • A statement of any employment available to employees at any other establishment operated by the employer, and information regarding the establishment
  • A statement of any employee rights with respect to wages, severance pay, benefits, pension or other terms of employment as they relate to the termination, including, but not limited to, any rights based on a collective bargaining agreement or other existing employer policy
  • A disclosure of the amount of severance pay which is payable as a penalty in the event the employer fails to provide the required 60 days' notice
  • A statement of the employees' right to receive from the response team information, referral and counseling regarding public programs which may make it possible to delay or prevent the transfer or termination of operations or mass layoff (such as economic development incentive and workforce development programs)
  • Information regarding public programs and benefits to assist the employees (such as unemployment compensation benefits, job training or retraining programs, and job search assistance)
  • Information regarding employee rights based on the NJ WARN Act or any other laws governing terms and conditions of employment

Exceptions

  • Faltering company
  • Unforeseeable business circumstances
  • Sale of a business

Exceptions

  • A termination of operations (but not a transfer of operations or mass layoff) is exempt if necessitated by a fire, flood, natural disaster, national emergency, act of war, civil disorder, industrial sabotage or other very limited circumstances, including decertification of a healthcare facility from participation in Medicare and Medicaid programs or revocation of its license

Penalty for Violation

  • Back pay and benefits are payable to the aggrieved employees for the period of the violation, up to 60 days (e.g., if 30 days' notice is given, 30 days of back pay and benefits)

Penalty for Violation

  • Each aggrieved employee is entitled to severance pay equal to one week of pay for each full year of employment. This pay is in addition to any severance pay provided by the employer pursuant to a collective bargaining agreement or for any other reason. Any back pay provided by the employer to the employee due to a violation of the WARN Act is to be credited toward meeting the severance pay penalty.

The most significant development under the NJ WARN Act is that employers who fail to provide affected employees with timely notice of the required information outlined above will be subject to hefty penalties, specifically payment to each employee of one week of severance pay per full year of service.

The NJ WARN Act provides that an existing or former aggrieved employee or an authorized representative of any such employee may bring suit individually or on behalf of the aggrieved employee in the Superior Court. The party initiating litigation must give notice of the claim to the Department of Labor and Workforce Development. If the Superior Court finds a violation of the law, the court shall award the following recoverable damages: costs of the action, reasonable attorneys' fees and compensatory damages, including lost wages, benefits and other remuneration. Any award of compensatory damages for lost wages shall be limited to the amount of severance pay penalty for non-compliance with the notice provisions.

What This Means for New Jersey Employers

New Jersey employers who are contemplating or implementing a reduction in workforce or the transfer or shutdown of their New Jersey operations should confer with their employment counsel to confirm compliance with the requirements of the applicable federal and state laws, specifically the WARN Act and the NJ WARN Act. Employers should be mindful that New Jersey's new law has more stringent notice requirements, imposes harsher penalties and has fewer exceptions than its federal law counterpart, all of which are delineated in the chart above. Employers also should review their existing severance pay policies and procedures, separation agreements, employment contracts and any applicable collective bargaining agreements to ensure that the provisions of those documents coincide with employers' legal obligations and provide for an offset for any severance payments required to be made under the NJ WARN Act. Employers may also want to enlist the guidance of counsel in the event a government response team is dispatched to their workplace.

For Further Information

If you have any questions about this Alert or would like more information, please contact Kathleen A. O'Malley, any of the other attorneys in the Employment & Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Footnote

1As of March 19, 2008, the Commissioner of the Department of Labor and Workforce Development will make available to employers a form for providing the required notice.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.