New Severance Entitlement to New Jersey Employees Subject to Mass Layoffs

New Jersey law will begin requiring some employers to pay severance payBeginning on April 11, 2023, an important new employment law will go into effect pursuant to which many employees who lose their jobs in New Jersey will be legally entitled to receive severance pay.  Specifically, covered employees will be entitled to at least one week of severance per year they worked for their employer.

This new severance pay requirement does not apply to every employee who loses his or her job.  For example, it applies only to individuals who lose their jobs as a result of a mass layoff or a transfer or termination of operations that results in at least 50 employees who report to work at a single facility (including employees who work remotely and report to that facility) losing their jobs within a 30 day period (or, sometimes within a 90 day period).  A facility can be a single location, a group of locations that form a single office or industrial park, or separate locations across the street from each other.

In addition, companies that have at least 100 employees must provide covered employees at least 90 days of notice before their layoff becomes effective.  There is a penalty when an employer fails to provide an employee that notice, namely that the employees is entitled to an extra four weeks of severance pay.

None of the new requirements apply to employees who: (1) voluntarily end their employment, (2) were fired for misconduct, (3) were offered the same or an equivalent job (in terms of status, benefits, and compensation) with the same employer at a location in New Jersey that is no more than 50 miles from their previous place of employment, (4) were laid off because they are seasonal workers, or (5) the company has agreed to rehire within 6 months.

These new severance pay and notice requirements applies only to employers that have had a place of employment in New Jersey for more than three years.

Under the amended statute, an employee’s severance pay is calculated based on the greater of (1) his or her final compensation, and (2) the average of the employee’s compensation over the past three years.  By using the term “compensation,” severance pay appears to be based on not just on salary, but also bonuses, commissions and other payments the employee receives for working.

These new requirements are the result of S-3170, which is an amendment to a New Jersey law called the Millville Dallas Airmotive Plant Job Loss Notification Act, a law often referred to as the “mini-WARN Act,” since it is similar to the federal Worker Adjustment and Retraining Notification (“WARN”) Act of 1988.  Governor Murphy signed that amendment into law on January 14, 2020, but it was put on hold for three years as a result of the COVID-19 pandemic before it went into effect.

If you have been fired or laid off, you should make sure you receive all of the severance pay you deserve.  Feel free to call the New Jersey employment lawyers at Rabner Baumgart Ben-Asher & Nirenberg, P.C. at (201) 777-2250.

Contact Information