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Article | Global News Briefs

United States: New Jersey — Mandatory severance pay for collective (mass) dismissals

By Gary Chase | April 28, 2023

New Jersey becomes first state to mandate employer-paid severance pay for certain dismissals of 50 or more workers.
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Employer Action Code: Act

New Jersey has amended its Worker Adjustment and Retraining Notification Act (NJ-WARN Act), in terms of covered employers and notice requirements, and introducing a statutory severance pay entitlement independent of any notice requirements. As background, the existing federal WARN Act imposes minimum notification requirements in the event of certain collective dismissals and generally applies to employers in the private sector with 100 or more employees (excluding certain part-time employees), covering both hourly and salaried workers (including management and supervisory staff), and requires that companies provide at least 60 days' advance written notice (or pay in lieu) in the event of a plant closure or mass layoff affecting 50 or more employees at a single employment site. Some states have enacted “mini-WARN acts,” which are state laws that provide lower thresholds for a triggering event, additional notice requirements or other benefits for affected employees; however, no state has required employers to provide employer-paid severance in the event of a triggering event until New Jersey’s amended NJ-WARN Act became effective on April 10, 2023. (Note, Puerto Rico, a U.S. territory, also has such a mandate.)

Key details

  • Dismissal or transfer of 50 or more workers in companies with 100 or more employees is generally considered a ”triggering event” under the NJ-WARN Act. This threshold is based on all employees (full or part time) and is determined based on terminations at any of the employer’s facilities across the state of New Jersey. The prior trigger was based on changes in employment of 500 or more workers in total, or 50 or more workers if they accounted for one-third or more of the enterprise’s total workforce counting only full-time workers at a single or contiguous establishment.
  • Employees with at least one year of service are entitled to employer-paid severance of one week’s pay per full year of service in the event of mass dismissals. The prior entitlement was 60 days’ notice or severance pay of one week’s pay per year of service.
  • The minimum notice period is 90 days (previously 60 days). If the minimum notice is not provided, employees are now entitled to an additional four weeks of severance pay.

Employer implications

Whether New Jersey’s mandate for employer-paid severance pay will remain the exception or begin a new trend remains to be seen. Regardless, employers with operations in New Jersey should be aware of the new requirements and their implications if considering a layoff of New Jersey employees.


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