New Jersey Adopts Its Own Version of the WARN Act

Employment & Labor Law Alert
(Richard S. Zackin)
February 26, 2008

The New Jersey Legislature has enacted the “Millville Dallas Airmotive Plant Loss Job Notification Act,” N.J.S.A. § 34:21-1 et seq., (“NJ WARN”),which, although named after a specific employer, is, in reality, New Jersey’s counterpart to the federal Workers Readjustment and Notification Act, 29 U.S.C. §§ 2101, et seq., better known as WARN. NJ WARN became effective on December 20, 2007. As is the case with WARN, the purpose of NJ WARN is to impose on employers the obligation of notifying employees, employee representatives and government officials of upcoming terminations or layoffs of more than 6 months. Although NJ WARN operates in much the same way as WARN, there are important differences of which New jersey employers must be aware. The discussion below will outline the significant similarities and differences between the two statutes.

Events Triggering Notice Obligations

WARN - Requires an employer with at least 100 full time employees to give at least 60 days notice of either A “mass layoff” or a “plant closing.” A plant closing is defined as the shutdown of either (1) a single site of employment or (2) one or more facilities or operating units at a particular site, if the shutdown results in at least 50 full-time employees suffering an employment loss within a 30-day period. Mass layoffs are reductions-in-force at a single site of employment which are not plant closings and result, during a 30 day period, in either (1) at least 33 percent of the full-time employees experiencing an employment loss, provided that at least 50 employees experience an employment loss, or (2) 500 or more full-time employees experiencing an employment loss. When two or more events occur within a 90-day period and no single event qualifies as a “plant closing” or “mass layoff” but their combined effect is a “plant closing” or “mass layoff”, the statute’s notice requirement will apply unless the employer can establish that the separate events were the result of separate actions and causes.

NJ WARN - Essentially tracks WARN, with one major difference. While WARN refers to a “single site of employment,” NJ WARN refers to an “single establishment” for purposes of determining whether the required number of employee have suffered a termination of employment for notice purposes. Under NJ WARN, only an “establishment” that has been operating for more than 3 years is subject to the statute’s notice requirements. WARN has no such limitation wit regard red to a “single site of employment.” Also, what WARN refers to as a “plant closing” is referred to in NJ WARN either as a “termination of operations” or a “transfer of operations,” but this difference appears to be only one of semantics.

Employment Loss

WARN - Employees who (1) are terminated “for cause,” (2) voluntarily depart or retire, (3) refuse an offer to be transferred, with less than a 6-month break in employment, to a new site of employment within “a reasonable commuting distance” or (4) accept within 30 days an offer to be transferred to any new site of employment with less than a 6-month break in employment, will not be deemed to have suffered “an employment loss” for purposes of calculating wither a plant closing or a mass layoff has occurred. Also, employees hired for special projects or for seasonal work with the understanding that there employment is temporary are deemed to have suffered an employment loss.

NJ WARN - Refers to “termination of employment’ rather than “employment loss.” Employees who (1) are terminated for “misconduct,” (2) voluntarily depart or retire, (3) are seasonal employees, or (4) turn down an offer to be transferred to a new location in New Jersey not more than 50 miles from the prior place of employment shall not be deemed to have suffered a “termination of employment” for purposes of determining whether notice is required. NJ WARN seems more restrictive than WARN. WARN excludes as adversely affected employees (1) those employees terminated “for cause,” not just for “misconduct” and (2) any “special project” employees, not just “seasonal employees.” Whether there will be any real distinctions between the two statutes in these regards will likely depend on judicial interpretation.

Notice Recipients and Notice Contents

WARN - Employers must provide 60-days notice of a plant closing or mass layoff to all adversely affected employees unless the employees have union representation, in which case notice to the union representative will suffice. While part-time employees are not included in the threshold calculations to determine coverage by the act, part-time employees are entitled to notice directly or through their union representative. Notice must also be provided to the New Jersey Commissioner of Labor and Workforce Development and to the chief elected official of the municipality of the affected site of employment. The requirements as to the content of the notice are slightly different to each of these recipients and are set forth in detail in the regulations promulgated under the statute. These requirements can be found at 20 C.F.R. § 639.7.

NJ WARN - Requires notice to the same individuals and entities as does WARN. Under NJ WARN, however, each adversely affected employee must be notified even when a union representative is available to receive notice. The content of the notice required by NJ WARN is decidedly more expansive than the notice required by WARN. For example, NJ WARN notice requires notification as to any employment available at the employer’s establishments not affected by the plant closing or mass layoff. The NJ WARN requirements for notice content can be found at N.J.S.A. § 34:21-3. The statute directs the Commissioner of Labor and Workforce Development to issue an acceptable form of notice within 90 days after the effective date of the statute (December 20, 2007). In situations in which both WARN and NJ WARN apply, the notice provided should meet the requirements of both statutes.

Reduction in Notice Period

WARN - Allows for as much notice as practicable rather, than 60-days notice, when a plant closing or mass layoff is the result of either: (1) a natural disaster, (2) not reasonably foreseeable business circumstances or (3) the failure to obtain capital or business if the employer in good faith believed that WARN notice would have precluded the employer from obtaining the capital or business.

NJ WARN - Does not require any notice when a termination of operations is the result of (1) a natural disaster, (2) national emergency, (3) act of war (4) civil disorder, (5) industrial sabotage or (6) decertification from a Medicare of Medicaid program. Although reasons(2) - (6) would likely qualify as not reasonably foreseeable business circumstances under WARN, the New Jersey statute has no general counterpart to WARN’s not reasonably foreseeable business circumstances exception. Nor does NJ WARN have a counterpart to WARN’s failure to obtain capital or business exception. Moreover, read literally NJ WARN would allow for the above noted exceptions to notice only in the event of a termination of operations and not in the event of a transfer of operations or a mass layoff.

Causes of Action

WARN - Actions to redress WARN violations may be brought by individual employees or their representatives. The employer is liable for back pay for each date of the violation as well as benefits which would have inured to the employee under an employee benefit plan during that time. Back pay is calculated using the higher of the employee’s average regular rate of pay over the previous 3 years or the final regular pay rate. The amount of the liability is to be reduced by any wages paid during the period of the violation, any additional unconditional payment not otherwise required by law and any payments made to a benefit or pension plan on the employee’s behalf during the period of the violation. There is also a $500.00 per day penalty payable to each applicable local government entity which does not receive notice. These liabilities and civil penalties are not, however, mandatory. The court has discretion to reduce any liability in the event the employer demonstrates that in good faith it had a reasonable basis to believe that it acted in compliance with WARN’s requirements. An award of attorneys’ fees is also discretionary with the court.

NJ WARN - An employer who fails to provide the requisite notice will be liable to each affected employee for “severance pay” in the amount of one week of pay for each full year of service as well lost benefits. Severance pay is calculated using the higher of the employee’s average regular rate of pay over the previous 3 years or the final regular pay rate. The employer does not receive a credit for severance paid under a collective bargaining agreement or under its normal severance policies. There is, however, a credit for any back pay payments made pursuant to WARN. Unlike WARN, there are no civil penalties to be assessed, but, also unlike WARN, an attorneys fees award to a prevailing employee is mandatory rather than discretionary. Finally, and significantly, under NJ WARN thee is no counterpart to WARN’s provision granting the court the discretion to reduce the amount of a damage award in the case of a “good faith” violation of the statute.

The Response Team

In enacting NJ WARN, the New Jersey legislature established a “response team” under the Department of Labor and Workforce Development (which has no WARN counterpart) to offer to meet with management and with affected employees to discuss public programs that might delay or prevent a transfer or termination of operations and to provide counseling as to employee rights. Employers are required to “provide the response team with the amount of on-site work-time access that the response team determines is necessary” to carry out its responsibilities.

Conclusion

Both WARN and NJ WARN are complicated statutes that employers must review with extreme care whenever contemplating the termination or layoff of at let 50 employees over a 30-day or 90-day period. The two statutes are similar in many respects, and it will not be surprising if the New Jersey courts, in interpreting NJ WARN provisions, will follow the lead of the federal courts’ interpretation of similar WARN provisions. It cannot be emphasized enough, however, that there are significant differences between the two statutes in each of the areas discusses above such it is imperative for employers to obtain expert legal advice to insure compliance with both statutes.