Mandatory Severance Under New Jersey’s WARN Act

Losing a job can be a devastating financial and emotional blow. In many cases, while a terminated employee is trying to figure out what they’ll do next, they’re presented a severance agreement that they must review in short order. It is very important to protect yourself in these situations by retaining an attorney who can analyze a proposed agreement and advise whether you should accept it or seek to negotiate more favorable terms.

Many contracts offered during the severance process require departing employees to forgo potential legal claims and accept onerous noncompete agreements. Of course, each case is unique and you should evaluate your severance package based on the consideration offered and your particular circumstances. You should also understand that in some cases, New Jersey law requires terminated workers to receive severance without giving up any of their rights. 

Amendments to the New Jersey Worker Adjustment and Retraining Notification Act (NJ WARN) have significantly reshaped employers’ obligations in mass layoff and closure situations. When an employee is covered under NJ WARN, they must receive one week of severance pay for each year of service. Unlike traditional severance arrangements, this payment is not discretionary and is considered a statutory entitlement. This means that a laid-off worker does not have to choose between funds that they might need badly and the ability to file an employment law action. Employers may still offer additional severance in exchange for a legal release, but the statutory portion must be paid regardless.

NJ WARN applies to employers with 100 or more full-time employees that terminate at least 50 workers. Formerly, workers who had been employed for fewer than six months or who averaged fewer than 20 hours per week were not included within the 100-employee threshold. Under the amendments, part-time and newer employees must now be counted when assessing coverage, significantly increasing the number of employers subject to the statute.

Moreover, the statute formerly focused on the number of job losses at a single establishment. The revised law removes that geographic limitation, meaning layoffs across multiple locations may be aggregated to determine whether the 50-employee trigger is met.

Whether NJ WARN applies in your situation or not, Kevin T. Kutyla, Esq., with offices in Succasunna and Newton, can review your severance offer and advise you on your legal rights and options. For an appointment at either my Morris or Sussex County location, please call 973-940-8970 or contact me online.