Recently, the state of New Jersey enacted a new law with which New Jersey employers having 100 or more employees will have to comply when implementing layoffs — the Millville Dallas Airmotive Plant Job Loss Notification Act (the “NJ WARN Act”).  The law went into effect on December 20, 2007, and requires employers to provide advance notice to employees who are terminated in a mass layoff or in a shutdown of operations where certain triggering thresholds are implicated.  The NJ WARN Act tracks the language of the federal Work Adjustment and Retraining Notification Act (the “federal WARN Act”) but differs from and supplements the federal law in significant ways.  Some of the more significant differences are highlighted below.

Similar to the federal WARN Act, the NJ WARN Act requires an employer to give 60 days’ notice prior to any mass layoff, if in any 30-day period at a single place of employment, at least 500 full-time workers or one-third of the workforce with a minimum of 50 full-time employees, experience a loss of employment or at least 50 employees are terminated in a transfer or termination of operations.  The failure to provide such notice may result in significant penalties.

For example, under the federal WARN Act, employers who fail to provide the full 60 days’ notice to employees are liable for back pay and benefits for each day of the  violation, to a maximum of 60 days.  Under the NJ WARN Act, however, any full-time employee who does not receive the full 60 days’ notice is entitled to severance pay of one week for every full year of service.  Therefore, an employer that fails to provide the requisite 60 days’ notice even by one day may be potentially liable for the full severance pay penalty, as if no notice had been given at all.  New Jersey’s approach is extreme and may result in windfalls for employees with lengthy service times.

Additionally, the exact notice requirements under the NJ WARN Act remain unclear.  A literal reading of the NJ WARN Act indicates that all employees who will suffer a loss of employment must be given notice if their termination is to occur in connection with the mass layoff or shutdown of operations.  This may include part-time employees or employees who are terminated outside of the 60-day window, if those terminations are determined to be in connection with the mass layoff or shutdown of operations.  It is also unclear how the language requiring notice to be provided before the first termination of employment will be interpreted.  For example, in a situation where phased layoffs are to occur, it may be impractical to provide notice to all employees 60 days prior to the first termination of an employee.

One area in which the NJ WARN Act is clear involves the information required to be included in the notice to employees.  The NJ WARN Act specifically requires that the notice shall include, among other things, information on the number of employees being terminated; the reason for the termination; the dates of the layoffs or shutdown; a disclosure of any severance pay that is owed to the employee due to a violation of the notice provision; information regarding employee rights with respect to wages, severance pay, benefits, pensions or other terms of employment; and information on any employment available elsewhere in the employers’ business, including the compensation, benefits, and terms and conditions of employment.

Last, the NJ WARN Act is more onerous than the federal WARN Act because it fails to allow for certain exceptional situations where sufficient notice might be impossible to give.  The federal WARN Act allows an employer to give less than 60 days’ notice where the mass layoff or shutdown of operations is a result of circumstances that were not reasonably foreseeable or where providing notice would jeopardize the employer’s efforts to seek capital, which if successful, would obviate the need for a shutdown of operations.  The NJ WARN Act, however, contains no such provision, often referred to as the “faltering business” exception.

In conclusion, New Jersey employers contemplating layoffs or shutdowns should consult with experienced counsel to determine whether the NJ WARN Act is triggered sufficiently in advance of the date of the proposed action, to allow adequate notice to be provided and to avoid significant monetary penalties.