New Jersey Law Requires Severance Pay In Mass Layoffs

Author:Mr John McDonald and Saranne E. Weimer
Profession:Reed Smith
 
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Governor Phil Murphy signed legislation yesterday, January 21, 2020, amending New Jersey's mini-WARN law, the Millville Dallas Airmotive Plant Job Loss Notification Act (the "Act"). Most notable among the changes is the requirement that companies with 100 or more employees (now including part-time workers) pay severance to employees impacted by a mass layoff. A "mass layoff" is considered any plant closing or transfer resulting in 50 or more employees losing their jobs.

Pursuant to the Act, impacted employees must receive at least one week of pay for every year of service as a severance payment. When calculating the amount of severance pay, the rate of pay must be the greater of the employee's average rate of compensation during the last three years or the employee's final rate of pay. If the employee is entitled to a greater amount of severance under any contract, policy, or collective bargaining agreement, the employee must receive the greater amount. The Act classifies the severance payments as "compensation due to an...

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