United States - Redundancy/Layoff - On April 10, 2023, The Long-Delayed (and Seriously Impactful) Amendments To NJ WARN Take Effect (2024)

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16 January 2023

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On January 10, 2023, NJ Governor Phil Murphy signed into law a change in the effective date of the January 21, 2020 Amendments to New Jersey's Millville Dallas Airmotive Plant Job Loss Notification Act" ("NJ WARN").

United States Employment and HR

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Seyfarth Synopsis: On January 10,2023, NJ Governor Phil Murphy signed into law a change in theeffective date of the January 21, 2020 Amendments to NewJersey's Millville Dallas Airmotive Plant Job Loss NotificationAct" ("NJ WARN"). Those long-delayed January 21,2020 Amendments to NJ WARN will become effective on the 90th dayfollowing January 10, 2023 (in other words, April 10, 2023). By wayof background, on January 21, 2020 and April 14, 2020, New Jerseyamended NJ WARN. The January 21, 2020 Amendments have been on holddue to a declared state of emergency in NJ that has lasted nearlythree years. Now those January 21, 2020 Amendments will combinewith the previously effective April 14, 2020 Amendments to create aNJ WARN statute that has changed considerably from its 2007inception. Below are updated details on the major differencesbetween federal WARN ("FED WARN") andNJ WARN and how NJ WARN has changed.

NJ WARN became effective in 2007 and had not been amended until2020 when NJ Governor Phil Murphy signed into law the January 21,2020 Amendments and the April 14, 2020 Amendments.

The April 14, 2020 amendments had three basic purposes - (1)they ensured that COVID-19 related layoffs after March 9, 2020 wereexcluded from coverage under the mass layoff notice and severanceprovisions of NJ WARN (past or present); (2) they implemented a newnatural disaster/national emergency mass layoff exclusion; and (3)they changed the effective date of the January 21, 2020 Amendmentsfrom July 19, 2020 to an undetermined future date.

On January 10, 2023, NJ Governor Phil Murphy signed legislationwhich establish the effective date of the January 21, 2020Amendments as occurring "on the 90th day next following"January 10, 2023 (see here). Thus, the complete 2020 NJWARN Amendments will go into effect on or about April 10,2023. Attached for your convenience is a redlined version of the NJ WARN statuteshowing all adopted amendments to the Act (1/21/2020, 4/14/2020,& 1/10/2023).

This is a highly problematic development for NJ employersespecially in the face of potential recessionary fears. It appearsthat NJ employers will have a brief window (notices given on orbefore February 8) to plan and execute covered mass layoffs orclosures to be concluded by April 9, 2023 with only 60 days'notice and no severance under the existing NJ WARNrequirements.1

The impact of the 2020 amendments to NJ WARN is to transform thestatute from a notice statute like FED WARN into a penalty statutethat potentially restates employers' benefit plans and/or holdsexecutives personally liable for certain events. Below, we examinethe amendments, including the differences from FED WARN (theDepartment of Labor's fact sheet on FED WARN can be found here), the changes from the original NJ WARN,and some seemingly unresolved issues under the amendments.

APRIL 14, 2020 AMENDMENTS EFFECTIVE MARCH 9, 2020

The following amendments were made effective as of March 9,2020.

Adding a Natural Disaster Exception: During theCOVID-19 crisis, there were numerous questions about what eventstrigger notice, what excuses late notice, or whether COVID-relatedlosses are exempt from notice under FED WARN and NJ WARN. Therewere also many questions about the potential impact of thepreviously adopted January 21, 2020 amendments. The April 14, 2020amendments included a significant addition to NJ WARN (retroactiveto March 9, 2020) by creating a new exemption from the statute formass layoffs caused by "a fire, flood, natural disaster,national emergency, act of war, civil disorder or industrialsabotage, decertification from participation in the Medicare andMedicaid programs as provided under Titles XVIII and XIX of thefederal "Social Security Act," Pub.L. 74-271 (42 U.S.C.s.1395 et seq.) or license revocation pursuant to P.L.1971, c.136(C.26:2H-1 et al.)." This natural disaster/national emergencyexemption was made applicable to both a termination of operationsand for a mass layoff.

JANUARY 21, 2020 AMENDMENTS EFFECTIVE 90 DAYS AFTER JANUARY 10,2023

The following are the additional changes to NJ WARN that will gointo effect on April 10, 2023.

Definition of Employer: There actually are atleast two definitions of "employer" in the amendedstatute, which may create confusion. The first definition remainsunchanged and states that an "employer" is "anindividual or private business entity which employs the workforceat an establishment." The second definition of"employer," which is new and which appears in Section 2dof the statute, states that for purposes of potential liability forfailing to perform any of the required acts (e.g., give notice, paybase or penalty severance, or notify the response team), an"employer" includes:

"any individual, partnership, association, corporation, orany person or group of persons acting directly or indirectly in theinterest of an employer in relation to an employee, and includesany person who,

  • directly or indirectly, owns and operates the nominalemployer,
  • or owns a corporate subsidiary that, directly or indirectly,owns and operates the nominal employer,
  • or makes the decision responsible for the employment actionthat gives rise to a mass layoff subject tonotification."

Differences from FEDWARN - limited to any business enterprise with 100 or moreemployees, excluding part time; or 100 or more employees, includingpart time, who work a combined total of at least 4,000 regularhours per week. This is the general definition -- there have beensome efforts to stretch coverage through actions seeking to piercethe corporate veil, or by asserting joint employer liability underthe criteria in 20 CFR 639.3(a)(2).

This amendment appears to impose potential liability uponexecutives, owners, and decision-makers for determinations theymake concerning their workforce. This differs from certain wagetheft laws, which punish only knowing violations with potentialpersonal liability, because NJ WARN does not consider the intent orwillfulness of the underlying conduct in assessing liability. Thus,decision-makers must now consider NJ WARN when planning businessexpansion and workforce expansion or contraction issues because iffor some reason the corporation cannot pay a future severancerequirement, the decision-makers may have to backstop thatobligation.

Timing of Layoff Notice: This was increasedfrom 60 days and is now 90 days prior to the qualifying NJ WARNevent in question. However, New Jersey appears to have applied thisnotice requirement only "in the case of an employer whoemploys 100 or more employees." It is subject tointerpretation as to whether the new law applies to only thoseemployers with 100 or more employees, or whether it may also applyto smaller employees with 50 to 99 employees that experience atriggering event.

Differences from FEDWARN - FED WARN still requires only 60 days' Notice.Additionally, while FED WARN has notice reduction provisions for"faltering" businesses and "unforeseen businesscirc*mstances," NJ WARN does not. Instead, NJ WARN has a morelimited exception to the 60-day (soon to be 90-day) noticerequirement if a layoff that was expected to be for six months orless is extended beyond six (6) months because of businesscirc*mstances that are not reasonably foreseeable. (FED WARN alsohas a similar "midstream" unforeseeable circ*mstancesprovision). As noted above, NJ WARN has adopted a new exemption(effective March 9, 2020) from coverage for events that wouldotherwise qualify as "mass layoffs," but which werecaused by certain natural disasters/national emergencies.

Which Employees Are Covered: The new statutewill now count all employees regardless of hoursworked or time having worked for the employer. This means that --different from the employee coverage since the 2007 statute wasadopted -- part-timers and employees that have worked less than six(6) of the preceding twelve (12) months are counted toward allthreshold numbers.

Differences from FEDWARN - FED WARN excludes part-time and "new"(i.e., those who have worked less than six (6) of the precedingtwelve (12) months prior to when the notice is due) employees fromthe 50 employment loss threshold under plant closing and masslayoff analysis. Note that if there is a covered FED WARN event bycounting only "full time" employment losses, the new andpart-time employees also will be entitled to notice.

Employee Threshold for Mass Layoff - Areduction in force which is not the result of a transfer ortermination of operations and which results in the termination ofemployment at an establishment during any 30-day period (or duringa 90 day aggregation period under certain circ*mstances) for 50 ormore of the employees at or reporting to the"establishment" (as defined below). Note - both"transfer of operations" and "termination ofoperations" are defined terms, the definition of which remainsunchanged from the existing law. This amendment extends coverage toeven smaller employers. Previously, the mass layoff had to involve500 employees or no less than 50 of 150 total employees (whilemaintaining a 1/3 impact requirement).

This change also has further implications for large employersbecause of the new definition of "establishment" - seebelow. Think of an employer with 50 or more locations in NJ. Itseems that it is soon to be the case that a mass layoff hasoccurred if that employer terminates/lays off one (1) employee ateach of its 50 plus locations within a 30- day period. While thestatute states that this would not include any job loss resultingfrom a "discharge or suspension for misconduct of theemployee," it is not clear that the term misconduct includespoor performance (though for purposes of a mass layoff statute itobviously should). Employers should also keep in mind that thereare carve outs for the layoff of "a seasonal employee"and where an employee is offered a transfer within the state andless than 50 miles away.

In sum, it is unclear whether regular workforce changes such asthese were even contemplated by the legislature, but one wouldimagine that New Jersey was not intending to regulate ordinaryemployee turnover. Having said that, no interpretative regulationsare expected and it seems possible that litigation will ensue withsuch confusing verbiage.

Differences from FEDWARN - FED WARN includes only an employment loss at a"single site of employment" during any 30 day period for1) at least 500 full-time employees, or 2) 50 or more full timeemployees (not counting new or part-time employees) which is atleast 33% of the full-time employees.

Employment Site - "Establishment"means a place of employment which has been operated by an employerfor a period longer than three years, but shall not include atemporary construction site. The "establishment" may be asingle location or a group of locations, including any/allfacilities located in New Jersey.2 Previously, NJ WARNcovered only a single place of employment and contiguous facilitiesin immediate proximity to one another.

Differences from FEDWARN - FED WARN applies to a single site of employment, orone or more facilities or operating units within a single site ofemployment (with some limited exceptions).

This amendment appears to target larger employers (likeretailers, pharmacy or grocery operators) with multiple locationsthat may not employ a sufficient number of employees at just onesite to create coverage under the statute. As noted above, thislanguage would put the multi-store retailer at risk for singleterminations/layoffs accumulated at its many locations over a30-day period (or aggregated 90-day period).

Mandatory Severance - For a transfer ofoperations or a termination of operations resulting in thetermination of 50 or more employees in a period of not more than 30days or for a mass layoff as defined, the new NJ WARN Amendmentsrequire the employer to pay as compensation to each terminatedemployee severance equal to one (1) week of pay for each full yearof employment. The rate of severance pay is the average regularrate of pay in the last three (3) years of employment, or theemployee's final regular rate of pay, whichever rate is higher.Additionally, employers are required to pay the highest severancefrom any collective bargaining agreement covering displacedemployees or from any policy or from NJ WARN. There is, however, acredit to the severance requirements for any short-notice back payrequired under federal WARN.

Differences from FED WARN - FED WARN has nomandatory severance.

This severance requirement potentially intrudes upon an areagoverned by the Employee Retirement Income Security Act (ERISA) andlikely will be subject to a preemption challenge by employers whoseseverance plans are impacted. Moreover, even if these provisionswere not preempted, there is the potential for employers to simplyplan around the employment losses and stage them appropriately toescape the applicable 30 day or 90 day period. However, thoseentities (and their executives) that are terminating operations areclearly covered by the statute and should plan to comply orchallenge the viability of the statutes.

Severance Penalty - The Amendments furthermodify NJ WARN to require the employer to also pay an additionalfour (4) weeks of severance pay if the employer provides theemployee shorter advance notice then that required.

Differences from FEDWARN - Under FED WARN there is no severance penalty, butemployers that fail to give 60 days' notice must pay wages andbenefits amounts for each day required notice is less than 60days.

Effective Date: The January 21, 2020 amendmentsoriginally called for an effective date in 2020, but after lengthydelays their implementation is now scheduled for April 10, 2023. Itseems likely that this means that any qualifying event taking placeon or after April 10, 2023 will require 90 days of notice andmandatory severance. Having said that, it also would also appearlikely that any layoff or other qualifying event that is both (a)noticed prior to February 9, 2023 and (b) effective and completedby no later than April 9, 2023, will be subject to the 2007 NJ WARNrequirements and not these new amendments.

Footnotes

1 An argument also can be made that because the EffectiveDate will not occur until April 10, 2023, the 90-day noticerequirement only commences at that time, i.e., as to employmentlosses thereafter. Taking such a position carries significant risk,however, and various commentators are taking the position that anycovered layoffs or closures occurring after April 10, 2023 aresubject to the new requirements.

2 It is worth noting that there are some issues in thisupdated version of NJ WARN regarding the consistent use of the word"establishment." For instance, Section 2c references"single establishment." It is difficult to understandwhat that means and whether it was intended given the new meaningof the word establishment. Also, in Section 3c, there is aprovision referencing employment opportunities at "any otherestablishment" and further requiring the notice include thelocation of "the other establishment." This seeminglyindicates that the word "establishment" is singular. Insum, these references apparently maintain vestiges of the prior"single location" intent of 2007 NJ WARN even though theAmendments were supposed to eliminate that.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circ*mstances.

United States - Redundancy/Layoff - On April 10, 2023, The Long-Delayed (and Seriously Impactful) Amendments To NJ WARN Take Effect (2024)

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