NJ Mandates Severance Pay Under NJ WARN Act Changes

On January 21, 2020 Governor Murphy signed a new bill into law that amends and significantly expands the existing NJ Worker Adjustment and Retraining Notification Acts (WARN) Act.

As a result of the amendments, which take effect July 19, 2020, the law will apply to more employers, increase the notice requirements for mass layoffs and mandate paid severance to affected workers.

WARN Act Background

The NJ WARN Act will now apply to all employers with 100 or more employees, regardless of their tenure or the number of hours they work each week. Previously, NJ WARN applied only to employers with 100 FULL-TIME employees, excluding those who work less than 20 hours a week or who had less than six months of service. All employees now count.

Presently, the NJ WARN Act is triggered when: (1) An employer terminates or transfers operations during any continuous 30-day period that results in the termination of employment of 50 or more full-time employees, or, (2) when there is a mass lay-off that results in an employment loss at a single place of employment (an “establishment”), for any continuous 30 day period that impacts 500 or more full-time employees, or 50 or more employees that represent 1/3 of the full-time employees at that establishment.


NJ WARN will now include part-time employees when calculating the number of employees impacted, and it eliminates the requirement that at least one-third of the workforce is affected by the mass layoff by expanding the definition of “mass layoff” to cover all reductions in force that result in the termination of 50 or more employees. NJ WARN will be triggered by a termination or transfer of operations, during any 30-day period that results in the termination of employment of 50 or more employees or a mass layoff that results in employment loss at an establishment during any 30-day period that impacts 50 or more employees at, or who report to, the establishment.

The notice period will now move from 60 days to 90 days. Such advanced notice is required to be given to the NJ Commissioner of Labor and Workforce Development, the Chief elected official of the municipality where the establishment is located, each employee whose employment is being terminated and any collective bargaining unit.

If you have any questions or would like to know if your organization is now impacted, please
contact a member of our team.

WARN Act Benefits

Perhaps the most significant change under the amended NJ WARN Act is that employers will be required to pay severance to all affected employees, regardless of whether advance notice is given. The required severance amount is equal to 1 week of pay for each full year of employment. Currently, severance is only required as a penalty for failure to provide WARN notice. Under the amended law, employers who fail to provide notice will be required to pay an additional 4 weeks of severance pay. There is no maximum cap on the severance pay obligation. When calculating the amount of severance pay, the rate of pay must be the greater of the employee’s average regular rate of compensation over the last 3 years or the employee’s regular final rate of pay. Furthermore, the severance pay is considered earned in full upon separation of employment, so severance pay must be included as part of the employee’s final wages.

If an employee is otherwise entitled to severance, say as a result of company policy or a collective bargaining agreement, the employee is still entitled to receive severance pay under NJ WARN, with the final amount being whichever arrangement provides a greater amount. The amended NJ WARN also prohibits waiver agreements without state or court approval, unless an employer offers more severance than is statutorily required under NJ WARN.

Employers who are contemplating actions that are covered under the law should take the time to understand their obligations to ensure compliance with this amended law.

New Jersey WARN Act Update

Author: Joan Kampo, MSM, SPHR, SHRM-SCP | [email protected]

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