WARNing—Burdensome New Jersey WARN Act Amendments May Soon Become Effective

There is light at the end of the pandemic tunnel for New Jersey employers, as the state’s COVID-19 numbers continue to decline and Governor Philip Murphy continues to ease restrictions on businesses. But this good news comes with a dose of serious bad news for New Jersey employers too. The state previously adopted amendments to the New Jersey WARN Act (officially known as the Millville Dallas Airmotive Plant Job Loss Notification Act), which require employers to provide 90 days’ notice before the first employee is discharged as part of a mass layoff, termination of operations, or transfer of operations. More significantly, the amendments require that employers provide impacted employees with severance pay equal to one week of pay for each year of service. These new obligations were set to take effect in July 2020, but fortunately the state put them on hold to prevent economic disaster to businesses that were struggling to survive in the pandemic.

But that temporary reprieve may soon be over. The law that paused these amendments provides that they will become effective 90 days after the governor terminates Executive Order (EO) 103, which declared a state of emergency in March 2020. EO 103 automatically expires every 30 days unless the governor extends it. Although Governor Murphy extended EO 103 by another 30 days on May 14, 2021, he recently suggested at his daily news conference that he may not extend the EO any further and may allow the state of emergency to expire on or about June 14, 2021. If so, that will trigger the 90-day clock on the effective date of the New Jersey WARN Act amendments. So for example, if the state of emergency does expire on June 14, 2021, the amendments to the New Jersey WARN Act will become effective on September 13, 2021. Whether EO 103 is extended any further will depend on if New Jersey passes legislation that will enable Governor Murphy to manage the ongoing threat to public health, as well as recovery and vaccination efforts.

Employers have many questions about these new amendments, especially during the transition period shortly before and after the amendments take effect. For example, are employees who are let go in the 90-day period before the effective date entitled to 90 days’ advance notice and severance pay if, combined with employees let go after the effective date, the 50 employee threshold for New Jersey WARN Act coverage is triggered? And even if they are not, are employees laid off shortly after the effective date entitled to 90 days’ advance notice and severance pay, even if that means giving them notice before the new amendments take effect? Employers must carefully analyze these and other possible scenarios before the state of emergency is lifted if a mass layoff, termination of operations, or transfer of operations may occur (or begin) in the 90 days before the amendments take effect.

One bit of potential good news for employers is that a lawsuit has been filed in New Jersey federal court seeking to have the new severance pay requirements of the New Jersey WARN Act declared preempted (and thus void) under the Employee Retirement Income Security Act (ERISA). We will keep an eye on that and report any developments on that front.

Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Critical information for employers is also available via the firm’s webinar programs.