On January 10, 2023, New Jersey’s governor Phil Murphy signed legislation that will make sweeping changes to New Jersey’s mini-WARN law (known officially as the Millville Dallas Airmotive Plant Job Loss Notification Act). These changes become effective on April 10, 2023. This three-part blog series will answer New Jersey employers’ frequently asked questions (FAQs) on these changes.
Part one below summarizes the major differences between the original law (“Original NJWARN”) and the amended version (“Amended NJWARN”) and provides an overview of the new definitions of key terms in Amended NJWARN. Part two will address Amended NJWARN’s new advance notice and severance pay obligations, and discuss the amended law’s release provisions. Finally, part three will analyze Amended NJWARN’s expanded employer liability and penalty provisions, and address questions about the transition from Original NJWARN to Amended NJWARN, and how the law applies to triggering events that straddle the new law’s effective date.
I. What’s New At a Glance
|Original NJWARN||Amended NJWARN|
|Covered Employer = 100+ Full-Time (FT) Employees
||Covered Employer = 100+ Employees regardless of hours of work or tenure
|Covered Mass Layoff = Reduction in Force (RIF) impacting:
||Covered Mass Layoff = RIF impacting:
|60 days’ advance notice required||90 days’ advance notice required|
|Severance pay requirement
||Severance pay requirement
|In short, under Amended NJWARN:
Please note that the above table and following FAQs are not intended to address every issue under the Original NJWARN and Amended NJWARN, but rather only those areas that are changing with the passage of Amended NJWARN.
II. “Employee” Definition
1. How has the definition of “employee” changed?
Original NJWARN distinguished full-time employees from part-time employees. Part-time employees were defined as employees who either work less than 20 hours per week or who have been employed for less than 6 months.
Amended NJWARN abolishes the distinction between full-time employees and part-time employees, and counts all employees regardless of hours of work or tenure the same.
2. Why does the change in definition of “employee” matter?
Original NJWARN excluded part-time employees from all aspects of the law. For example, under Original NJWARN, a covered employer was an employer that employed at least one hundred full-time employees. Under Original NJWARN, a covered mass layoff, termination of operations, or transfer of operations had to result in the termination of at least 50 full-time employees. These definitions are largely consistent with the federal Worker Adjustment and Retraining Notification (WARN) Act.
Under Amended NJWARN, a covered employer is an employer that employs at least one hundred employees, including formerly excluded part-time employees. This expands the reach of Amended NJWARN to many employers, including likely smaller employers, that were not covered by Original NJWARN.
Under Amended NJWARN, a covered mass layoff, termination of operations, or transfer of operations is one that results in the termination of at least 50 employees, including formerly excluded part-time employees. This expands the reach of Amended NJWARN to many reductions in force (RIF) and shutdown events, including smaller events, that were not covered by Original NJWARN.
The net effect of this change is to greatly expand the number of employers and the number of RIFs and shutdown events that are subject to New Jersey’s WARN Act, and will inevitably result in situations in which the federal WARN Act is not applicable but NJWARN is applicable.
3. What about seasonal employees and temporary employees?
Amended NJWARN does not address this. In the absence of further guidance, employers may decide to count such employees toward the various employee threshold levels.
4. What about independent contractors?
Amended NJWARN does not address this. A reasonable argument could possibly be made that if the legislature intended to extend the protections of Amended NJWARN to workers properly classified as independent contractors it would have expressly done so. That said, workers classified as independent contractor could allege they were misclassified and should be deemed an “employee” under Amended NJWARN.
III. “Mass Layoff” Definition
1. How has the definition of “mass layoff” changed?
Original NJWARN defined a covered “mass layoff” as a RIF resulting in the termination of employment at a single place of employment (i.e., an establishment) during a 30-day period of (1) at least 500 full-time employees or (2) at least 50 full-time employees who comprise at least one-third of the workforce at the establishment. These definitions are largely consistent with the federal WARN Act.
Amended NJWARN (1) eliminated the 500+ employee trigger and (2) eliminated the “at least 1/3 of the workforce” requirement from the 50+ employee trigger. As a result, many smaller RIFs—those impacting at least 50 employees regardless of the overall size of the workforce (for example, a RIF of 50 employees out of a workforce of 1,000 employees)—will become a covered mass layoff and trigger Amended NJWARN.
2. Must an employer now count RIF’ed remote workers toward a “mass layoff”?
Amended NJWARN also expanded the definition of “mass layoff” to include not only RIF’ed employees “at the establishment,” but also RIF’ed employees “reporting to the establishment.” As a result, for purposes of the 50-employee termination threshold, an employer must count RIF’ed remote employees who report to an employer’s location in New Jersey, apparently including remote employees who work out of state but report to an employer’s location in New Jersey. Pending further guidance, employers may decide to count remote employees, wherever located, who report to an employer’s location in New Jersey.
And as a related point, if an employer is required to count remote workers (both in state and out of state) reporting to an employer’s location in New Jersey, those employees would also be subject to Amended NJWARN’s notice and severance pay requirements if the 50-employee threshold is satisfied.
3. Do other definitional changes in Amended NJWARN impact the new definition of “mass layoff”?
Yes. As noted above, Amended NJWARN abolished the distinction between full-time employees and part-time employees. This also has the effect of expanding the number of RIFs that will become a covered “mass layoff” and trigger Amended NJWARN, because RIF’ed employees formerly excluded based on their part-time status must not be counted toward the 50-employee threshold trigger.
And as discussed below, Amended NJWARN broadened the definition of “establishment,” which also has the effect of expanding the number of RIFs that will become a covered “mass layoff” and trigger Amended NJWARN.
IV. “Establishment” Definition
1. How has the definition of “establishment” changed?
Original NJWARN defined an “establishment” as a “single place of employment,” including a group of “contiguous locations,” such as facilities in an office or industrial park. These definitions are largely consistent with the federal WARN Act.
Amended NJWARN abolished the narrow “single” place of employment concept, and now provides that an establishment includes “a group of locations” (even if noncontiguous), “including any facilities located in this State.” This change appears to require an employer to aggregate all terminations (again both full and part-time employees) at all of an employer’s locations in the state within the applicable 30- (or 90-day) window. For example, a covered employer that RIFs 30 employees from a location in northern New Jersey and 20 employees from a location in southern New Jersey within a 30-day period would appear to trigger the new notice and severance requirements of Amended NJWARN.
2. How does the “in operation for three years” requirement factor into the statewide aggregation requirement?
Both Original NJWARN and Amended NJWARN state that an “establishment” is a place of employment “operated by an employer for a period longer than three years.” If an employer must aggregate RIFs at all of its locations in the state, does the employer only have to aggregate those locations that have been in operation for more than three years? Pending further guidance, and applying the language of Amended NJWARN literally, that appears to be a reasonable reading of the law.
3. Does the new “statewide establishment” definition apply when analyzing terminations under the 90-day rule?
Both Original NJWARN and Amended NJWARN require an employer to count whether a triggering event (i.e., a mass layoff, termination of operations, or transfer of operations) caused at least 50 terminations during a 30-day period and, under certain circumstances, during a 90-day period. This is consistent with the federal WARN Act.
Amended NJWARN’s new definition of “establishment”—specifically the statewide aggregation requirement—clearly applies when analyzing whether a triggering event has occurred under the 30-day rule. However, Amended NJWARN did not amend the 90-day rule to also include the new statewide aggregation requirement. Read literally, the 90-day rule only applies to “terminations of employment for two or more groups at a single establishment.” It is unclear whether the legislature intended to apply the new statewide definition of “establishment” to the 90-day rule. Pending further guidance, employers may decide to apply the new definition of “establishment” to the 90-day rule.
4. Is an employee’s home office an “establishment?”
As discussed above, Amended NJWARN requires an employer to aggregate terminations at all of its locations in the state to determine if an “establishment” experiences 50 employment terminations. With the explosion of remote work arrangements caused by the COVID-19 pandemic, employers may want to decide whether employees who work from home will be deemed to work at an “establishment.” If so, that means that (1) they must be counted when determining if a mass layoff or other triggering event has occurred and (2) if a mass layoff or other triggering event has occurred, they are protected by Amended NJWARN’s new notice and severance requirements.
Whether employees who work from home will be deemed to work at an “establishment” is unclear, but a reasonable argument can be made that an employee’s home is not an “establishment.” Under Original NJWARN and Amended NJWARN, an “establishment” is a “place of employment which has been operated by an employer for a period longer than three years.” The phrase “operated by an employer” seems incongruous with an employee’s home. Certainly there is a connection (literally and figuratively) between an employer and an employee’s home with respect to remote workers, but it seems a leap to say that an employee’s home is a “place of employment … operated by an employer.”
A further uncertainty involves the fact that an “establishment” must be operated “by an employer for a period longer than three years.” As such, even if a home office could be deemed an “establishment,” it would appear that an employer would only need to count the discharge of an employee who worked from home for more than three years. That in turn raises further questions about whether only full-time work-from-home employees would be counted, or also employees who work a hybrid home/office schedule.
Assuming an employee’s home is not an establishment, that does not mean employees who work from home never factor into an NJWARN analysis. As noted above, Amended NJWARN expanded the definition of “mass layoff” to include not only RIF’ed employees “at the establishment,” but also RIF’ed employees “reporting to the establishment.” Accordingly, pending further guidance, employees who work at home (either in New Jersey or elsewhere) and report to an employer’s facility in New Jersey may need to be counted toward the 50-employee termination threshold if they are impacted by a RIF. On the other hand, pending further guidance, employees who work at home (either in New Jersey or elsewhere) but report to an employer’s facility outside of New Jersey may not need to be counted toward the 50-employee termination threshold.
Ogletree Deakins will continue to monitor developments with respect to this law and will post updates on the firm’s New Jersey and Reductions in Force blogs as additional information becomes available. Stay tuned for parts two and three (described above) in this three-part blog. Mark Diana and Brandon R. Sher also recently presented a webinar, “New Jersey Mini-WARN Act Amendments: What’s New and How to Comply,” covering the amended law. Important information for employers is also available via the firm’s podcast programs.