New Jersey Employers Dealing With New Legislation on Severance, Leave Rights, and Fair Workweek Scheduling

Slew of Bills Out of Trenton Impose Increasing Burdens on Those Doing Business in the State


Read Part 1 of the series which addresses new penalties for misclassification of employees

It comes as no surprise that New Jersey has been a leader in legislative initiatives granting increasing employment rights to employees.   Be it expanded leave rights, discrimination protections, job security, or wage and hour enforcement, these laws impose increasing burdens and liabilities on employers, especially small employers ill equipped to keep up with the dizzying pace of developments on the employment law front.

In recent weeks the Legislature was especially prolific, passing and introducing legislation on a wide array of employment law topics, some of which are highlighted below.

EXPANSION OF THE NJ WARN ACT TO MANDATE SEVERANCE PAYMENTS.  As addressed in our previous post, on January 21, 2020, New Jersey amended the Millville Dallas Airmotive Plant Job Loss Notification Act (NJ WARN Act) to  became the first state to mandate employee severance payments in the event of a  closure of operations or mass layoff of employees.  The law goes into effect July 19, 2020.

Under current law, the NJ WARN Act only applies to those employers with 100 or more full-time employees who have been in operations for at least three years.   The Act’s notification requirements are triggered in the following two circumstances: 1) when an employer ceases or transfers operations at a single establishment during a continuous 30 day period (or 90 days if it cannot be proved that the terminations are for separate and distinct causes) that results in the termination of 50 or more full-time employees, or 2) a “mass layoff” at a single establishment during any 30 day period (or 90 days if it cannot be proved that the terminations are for separate and distinct causes) that impacts either 500 or more full-time employees or 50 or more full-time employees representing one-third or more of the employer’s full-time employees.  Employers are currently required to provide 60 days’ notice of termination and no severance payments are mandated unless the employer fails to provide the required notice.

Expanding coverage to more employers.    Commencing in mid-July, all employers with 100 or more employees, including full-time, part-time and temporary employees, will be a covered employer under the NJ WARN.

Lowering the bar for a covered closure of operations. Commencing in mid-July, a transfer or closure of operations triggering the Act will occur upon a termination or transfer of 50 or more employees (including full-time, part-time and temporary workers) in an “establishment” in a 30/90 day period.  Transferring employees out of state, no matter how close to the original worksite, or transferring employees more than 50 miles from that worksite, constitutes a “termination” if the employee does not accept the transfer.  

Lowering the bar for a covered “mass layoff.”   Similarly, a “mass layoff” will now include the termination of 50 or more employees (including full-time, part-time and temporary employees) in any “establishment” during any 30/90 day period.  No longer does the layoff have to affect at least 500 employees or 33% of the workforce.

Terminations will now include those at all worksites within the State, not a single facility. The amendments expanded the definition of “establishment” to now include all of the employer’s locations within the state, rather than a single contiguous location under current law.

New notice and severance obligations.  Employers must now give 90, not 60, days’ notice of termination.  In addition, employers must pay all affected employees one week of severance for each year of services upon termination.   Failure to provide 90 days’ notice or timely make the severance payments will result in a penalty of an additional four weeks of severance to each affected employee.  Severance payments cannot be waived by employees.  Due to the Act’s expansive definition of “employer,” corporate decision-makers may be personally liable for the severance obligation if not paid by the company.

These radical changes will result in many more layoffs being subject to the NJ WARN Act requirements and significant increased costs for employers downsizing operations in the State.   New Jersey employers considering any reductions in force should consult with employment counsel to ensure compliance with these new obligations.

LEAVE FOR ORGAN AND BONE MARROW DONORS.  Effective May 20, 2020, virtually all New Jersey employers must provide job-protected leave to employees collecting benefits under the Temporary Benefits Disability Law (“TDB”) due to donating an organ or bone marrow.  The Legislature noted that the TBD does not generally provide job security to individuals collecting benefits, but this new law now provides job security to those unable to work due to being a donor.   In addition, like individuals taking leave under the New Jersey  Family Leave Act, the one week waiting period to collect benefits is eliminated for organ and bone marrow donors. Although the bill does not expressly indicate the length of the protected leave, TDB benefits are available for up to 26 weeks, donors are protected for this period of time and must be restored to the same or comparable position regardless of the length of the leave.

Employers must educate management personnel in the requirements of this new law and incorporate organ and bone marrow donation leave policies into their employee handbooks.

ON THE HORIZON – THE NEW JERSEY FAIR WORKWEEK ACT.  In recent years there has been a wave of state and local legislative efforts to enact laws that provide low-wage hourly workers in certain industries predictable and stable schedules. Thus far, Oregon, New Hampshire, San Francisco and San Jose, CA have enacted these protections.  Not surprisingly, New Jersey is following suit with legislation proposed by Sen. Weinburg that is far broader than other initiatives and if passed in its current form, will be the strongest fair workweek statute in the country.   Below are only some of the highlights of the bill that would impose startling financial, operational and record-keeping burdens on employers.

Scheduling  requirements upon hire.  “Covered employers” (those with 250 or more employees worldwide, including ALL franchise employees and all full-time, part-time, seasonal and temporary workers) that operate “covered establishments” (mercantile, hospitality, restaurant or warehouse establishments) must obtain a written statement from newly-hired employees of their “desired” schedule of work hours, days and times, which may be modified thereafter by the employee.   The employer in turn must provide a written “good faith” estimate of the employee’s work schedule, including the shift, days, amount of time the employee is expected to work as well as the days the employee is not expected to work.  The estimate  may be revised if there is a significant change in the employee’s availability or the employer’s business needs. The hours can only exceed the estimate for a “bona fide business reason” and if it makes “every effort to schedule the employee for the employee’s desired number of weekly hours.”

Fourteen days written notice of work schedules.  Employer are required to post written schedules 14 days in advance, which identifies all employees scheduled to work as well as those  who are not scheduled.

Predictability Pay.  If a posted shift is schedule is changed, the affected employee is entitled to i) one hour of pay for each instance where hours are added or shifts are changed; ii) ½ times the employee’s hourly rate for any cancelled or reduced shift, with a minimum payment of four hours of pay.

Rest Shortfall Pay: Required consent of the employee to work a shift scheduled with less than 12 hours’ notice, and time and a half pay for all hours worked by the employee.

Scheduling existing employees before hiring new employees.  Employers must make every effort to schedule existing employees for their desired hours (per the written statement) before hiring new employees, unless current employees do not possess the requisite skills or it would result in overtime for current workers.

Guaranteed minimum weekly pay.  Employers will be required to pay an employee for at least nine hours of pay each week, regardless of whether hours are scheduled or worked.

Parity.  Employees with similar skill, effort, responsibilities and duties must receive equal wages and benefits.

Record Retention.  Extensive record-keeping requirements for 6 years.

Fines: Fines ranging from $200 to $500 “per employee and per instance basis for each violation.”

In the past, this proposed bill would not have been cause for concern because the likelihood of passage would have been remote.   However, similar fair workweek statutes have already gained a foothold in the United States, and it may only be a matter of time until this bill, in its current or hopefully a watered-down version becomes law.


Read Part 1 of the series which addresses new penalties for missclassification of employees

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