New Jersey Enacts Punitive Plant Closing Notification Law

New Jersey employers are now subject to a plant closing notification law that is significantly more punitive than the existing federal WARN Act under a bill signed into law by Governor Corzine, which became effective on December 20, 2007. 

The federal WARN (Worker Adjustment Retraining and Notification) Act generally requires that employers who have 100 or more employees must provide 60 calendar days advance notice to those employees affected by a “plant closing” or “mass layoff.” Generally speaking, advance notice is required when (1) 50 or more employees are to be terminated in a permanent shut down of operations at a single site of employment, (2) one-third of the workforce (so long as it is at least 50 or more employees) are laid off for at least six months at a single work site, or (3) 500 or more employees are laid off for more than six months at a single work site (even if that number is less than one-third of the number of employees working at that location).  Under the WARN Act, employers who fail to provide the requisite notice are liable to each affected employee for an amount equal to the lost pay for the time by which the employer misses the 60-day deadline (with some courts holding that hourly paid employees should receive a day of pay for each day by which the employer misses the deadline). 

New Jersey’s new law greatly expands the penalty for violating the advance notice requirement. Under the new law, an employer who misses the 60-day deadline, even by just one day, must pay each employee severance pay equal to one week’s pay for each full year of his/her employment. Further, the severance pay is in addition to any severance pay that may be due under a union contract or other agreement.  However, any back pay owed under the federal WARN Act is credited toward the severance pay obligation. 

The New Jersey law thus exponentially increases an employer’s exposure for delaying or failing to provide notification prior to a plant closing or mass layoff.  For example, if an employer is one week late in providing notice to employees, it is only liable under the federal law for one week’s pay to each affected employee.  Under the New Jersey law, the employer’s liability increases with the employee’s tenure – one week’s pay for a one year employee, five weeks’ pay for a five year employee, ten weeks’ pay for a ten year employee, etcetera. 

There are other differences between the two laws. Under the federal WARN Act, an employer is excused from the notice requirement if the employment loss is due to “unforeseeable business circumstances,” such as the loss of a major contract or an unanticipated economic downturn. The New Jersey law contains no such general exception; unforeseen business circumstances will only excuse a lack of notice that converts a lay off of less than six months to one that lasts longer than six months. Also, there are some differences in the content of the required notice under the federal and state laws.  For example, the New Jersey law requires that the notice include “a statement of any employment available to employees at any other establishment operated by the employer.”

Most other provisions of the New Jersey law are substantially similar to the federal law, although the New Jersey law is considerably less detailed, and thus numerous interpretation issues exist. If you have any questions about the New Jersey law, formally known as the “Millville Dallas Airmotive Plant Job Loss Notification Act,” or would like a copy of the law, please contact the Ogletree Deakins attorney with whom you normally work or the Client Services Department at 866-287-2576 or via e-mail at clientservices@ogletreedeakins.com.

Note: This article was published in the December 26, 2007 issue of the New Jersey eAuthority.