N.J.’s WARN Act rules were set to become nation’s strongest … until COVID forced delay in implementation

Like most, it seems like a lifetime ago to employment law attorney Kathleen Connelly.

It was pre-pandemic January … that’s when New Jersey’s leaders chose to give more of a bite to the legal obligations for companies considering laying off workers.

Then, a highly contagious virus chewed away at the entire economy, leaving just about all companies having to make that consideration.

The difference between now and the seemingly simpler time of just six months back has created a lot of uncertainty — and, for some, anxiety — about the state’s version of the Worker Adjustment and Retraining Notification Act, or WARN Act, according to Connelly.

“New Jersey’s statute has a lot of muscle to it,” Connelly said. “Were it to have gone into effect in mid-July, as initially planned, it would’ve made the state’s statute the strongest in the country in comparison to other state, as well as federal, iterations of the WARN Act.”

There have been no plans to defang New Jersey’s rules requiring advance notice and severance pay when companies lay off a total of 50 full-time or part-time workers. The law that was passed in January is set to make the Garden State’s regulations the strictest in the country.

However, in mid-April, Gov. Phil Murphy postponed the date of its implementation to 90 days after the termination of the still-active state of emergency declaration. Among its changes would’ve been the requirement that employers provide severance pay to each laid-off employee, one week’s pay for each year of employment. Previously, employers had to make these payments if mass layoffs came without 60 days’ notice to workers. Employers also have to give 90 days of notice now, or risk paying four weeks of severance.

Connelly, who shepherds clients through these rules in her role as partner at Lindabury, McCormick, Estabrook & Cooper P.C., said the postponement during the COVID-19 crisis came as a relief to employers, even if the sort of temporary furloughs some businesses have had to do weren’t rising to the level of triggering the advance notice requirements.

“WARN Acts weren’t designed to penalize employers who are facing a sudden disastrous and unforeseeable event and, as a result, have to lay off massive amounts of people,” she said. “They were designed for employers to be careful and be thoughtful about cessation of operations, instead of just pulling the rug out from under their employees.”

The state’s law once left it unclear whether a pandemic was envisioned as one of the emergency situations that could exclude employers from having to abide by all of the notice and severance rules during mass layoffs. The governor’s mid-April amendment to the law made clear that it would count as an exclusion.

“And that helps,” Connelly said, “but there is a problem: Many employers don’t know how quickly they’ll be able to return to normal operations long after this situation, or if they’ll ever regain their market share.”

Going forward, Connelly sees the potential of businesses that feel they either won’t be able to bring back furloughed employees or will have to lay off more workers trying to do so ahead of the law’s new effective date — 90 days after the expiration of New Jersey’s state of emergency.

“Sadly, it is going to lead to at least some employers in the next few months to announce layoffs in advance of that (WARN Act) triggering date,” she said. “Hopefully — we all hope — that business does return to pre-COVID-19 levels. But, if it doesn’t, it’s going to be something businesses will be considering soon.”

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