UPDATED Seyfarth Synopsis: This legal update has been modified to incorporate developments from June 4, 2021. New Jersey’s WARN Act (“NJ WARN”) was amended twice in 2020. The January 21, 2020 amendments (“Jan. 2020 Amendments”) were put on hold for the duration of New Jersey’s Executive Order 103 that declared a Public Health Emergency and State of Emergency. On June 4, 2021, Governor Murphy issued Executive Order 244 and signed legislation (A5820/S3866) that will lift, effective July 4, most executive orders (apparently including Executive Order 103) issued by the Governor in response to the pandemic. This means the effective date of the January 2020 NJ WARN amendments appears targeted for October 2, 2021. By no means is this a certainty. This (or any) effective date will bring to life the massive changes legislators have included in the amended law - most notably changed definitions of employer, establishments and covered employees, along with a 90 days’ notice requirement, and mandatory severance pay for all covered employees. Unfortunately, the Jan. 2020 Amendments also create ambiguity regarding the effective date and other important terms.
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As this firm covered extensively over the last year (here, here, here, and lastly, here), the Governor of New Jersey signed into law Senate Bill 3170 on January 21, 2020, modifying New Jersey’s “Millville Dallas Airmotive Plant Job Loss Notification Act” with sweeping changes, including mandatory severance for layoffs of 50 or more within a 30-day period. The law was scheduled to go into effect on July 19, 2020, 180 days after the date of its enactment. Of course, no one could have predicted how the world would change in just a few short months due to the COVID-19 pandemic. In response to the crisis and ballooning layoffs, the legislature passed S.2353 on April 14, 2020, containing an additional amendment to NJ WARN made retroactive to March 9, 2020, that worked to alleviate employer mass layoff notice requirements. The effective date of the Jan. 2020 Amendments was then postponed from July 19, 2020 to 90 days following termination of the Governor’s Executive Order 103 declaring and maintaining the Public Health Emergency.
Since that point, the legislature has not taken any steps to re-examine the law or its many ambiguities. On May 14, 2021, Governor Murphy issued Executive Order 240, which indicated that Executive Order 103 likely was to be lifted as of June 13, 2021. However, the Governor then changed course. Per Governor Murphy’s Executive Order 244 issued on June 4, 2021, he terminated the Public Health Emergency declared in Executive Order 103, while at the same time extending Executive Order 103’s State of Emergency. This action immediately followed the Governor’s signing of legislation (A5820/S3866) that will lift, effective July 4, most executive orders issued by the Governor in response to the pandemic. The paused Jan. 2020 Amendments to New Jersey’s WARN Act become effective 90 days after “termination of Executive Order 103 of 2020.” Since Executive Order 103 now seems intended to terminate fully on July 4 (although this is by no means a guarantee), the effective date of the January 2020 NJ WARN amendments correspondingly appears targeted for October 2, 2021. Please see our broader alert on Executive Order 244 and the new legislation here.
Quick Review of the January 2020 Amendments to NJ WARN
Attached here for convenience is a redlined version of the amended law showing changes to the 2007 statute. For a more comprehensive analysis of these changes, please see our earlier alert which contained a complete review of all NJ WARN amendments approved in 2020. In general, the Jan. 2020 Amendments that will go into effect on or about October 2, 2021 are briefly summarized below.
- Definition of Employer: There are actually two definitions of “employer” in the amended statute. The first definition remains unchanged and states that an “employer” is “an individual or private business entity which employs the workforce at an establishment.” The second definition of “employer,” which appears in Section 2d of the statute, greatly expands the prior definition to include many additional entities and persons as a means to guarantee recovery of potential unpaid liabilities for violations. The amendment thus imposes potential liability upon executives, owners, and decision-makers for choices they make concerning their workforce and in the event that there are penalties and unpaid severance due.
- Timing of Layoff Notice - This was increased from 60 days and is now 90 days preceding the event. Notice is required for any qualifying event relating to an employer of 100 or more employees. Despite the ambiguity referenced below regarding the “employer” definition, it appears that NJ WARN is intended to apply only to employers with more than 100 employees, but this is not clear.
- Which Employees Are Covered- The statute will cover virtually all employees - full-time and part-time.
- Employee Threshold for Mass Layoff- Applies to most employment losses of 50 or more employees at or reporting to the “establishment” (see details below).
- Establishment- Expands the definition to all places of employment in New Jersey operated by the employer other than locations under three years old or temporary construction sites. Under NJ WARN, there is already a mechanism by which to potentially aggregate smaller events involving terminations of employment at a single establishment occurring within any 90-day period. This amendment thus targets larger employers (like retailers, pharmacy, or grocery operators) with multiple locations that may not employ a sufficient number of employees at just one site to result in a covered event under the statute. For example, a multi-store retailer would be at risk for single terminations accumulated at its many locations over a 30-day period (or aggregated 90-day period, under certain circumstances).
- Mandatory Severance- For a covered event involving 50 or more employment losses, severance equal to one (1) week of pay for each full year of employment (based on average rate of pay for prior 3 years) must be paid to each qualifying employee. Employers must pay the highest severance from any collective bargaining agreement covering displaced employees or from any policy or from NJ WARN. There is, however, an offset to the severance requirements for any short-notice backpay required under federal WARN. In sum, even those employees who do not sign a release agreement are entitled to this severance under the amendments to NJ WARN.
- Severance Penalty - An employer also must pay an additional four (4) weeks of severance pay if it provides the employee shorter advance notice than
- No Waiver- Employees cannot waive severance without approval of the waiver by the Commissioner of the Department of Labor or a court.
Ambiguities in the Amendments
There are troubling ambiguities that remain in the Jan. 2020 Amendments. Foremost is the ambiguity as to the application of the effective date in terms of the specific requirements of NJ WARN. Questions remain about what becomes effective when. A literal reading of an October 2, 2021 effective date (again we are assuming that is the effective date) may result in one concluding (and some pundits are) that any qualifying event after that date requires 90 days’ notice and severance. However, it would seem an odd construction of the amendments that an employer planning a qualifying NJ WARN event on October 2, 2021 would have to give notice by July 4, 2021 of this event. If that construction of the effective date were to be accepted, it would mean that on July 4, 2021, an employer planning a qualifying layoff would have to provide 90 days’ notice and severance under the amendments if the event was to occur on October 2, 2021, but that same employer would need to provide 60 days’ notice and no severance if the layoff was to take place on September 2, 2021. More pointedly, it would not appear to be logical to conclude that 90 days of advance notice pursuant to the new version of the law is required, while the state is still operating under the existing 2007 NJ WARN act strictures (which require no severance and only 60 days’ notice) through October 2, 2021.
It should be noted that NJ WARN is a notice statute at its core, and while the original 2007 version took effect immediately, the implication of that was that it required notice of qualifying layoffs that were to occur 60 or more days after the effective date. While some may believe or assert that an employer planning a qualifying NJ WARN event that commences on October 2, 2021 should give 90 days’ notice, it would seem that a better reading of the amended statute is that the amendments to the statute become effective on October 2, 2021, and the notice and other associated obligations (such as severance) will be required for events occurring 90 days after that point, i.e., on or after December 31, 2021. This seems to be a more rational explanation of the effective date.
A second point of ambiguity relates to the requirements of employee notice, severance and response team notification as provided in Section 2 of the amended statute. As written, the 90 day notice provision in Section 2a states that it is applicable only to an employer with 100 or more employees, while the balance of Section 2 (severance and response team notification) appears to apply to any employer that has 50 or more job losses due to a covered event. The question here is whether the legislature intends the statute to apply to only those employers with 100 or more employees that have qualifying job losses, or whether coverage is triggered solely by the number of job losses (50 or more). The former reading (a 100 employee requirement) is more consistent with the rest of the statute, as well as with federal WARN.
Finally, there remains ambiguity around the manner in which terminations (as opposed to layoffs) will be counted over a 30-day period. Here, it is unclear whether the legislature intended that simple employee discharges be aggregated across an employer’s multiple establishments in New Jersey. One would imagine this was not intended, but as presently written, large employers with multiple locations will have to be on guard continually about their employment losses so as to avoid triggering obligations under the amended statute.
Given New Jersey’s uncertain economic footing, employers across the state must hope for the legislature to provide clarification around these confusing terms that will be taking effect in either a matter of days or a few months. To help navigate the waters of federal WARN and NJ WARN, and for all your other labor employment questions, please reach out to your Seyfarth attorney.