NJ’s required severance for mass layoffs is national first

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New Jersey will be the first state in the nation that will require larger employers to provide severance pay to workers affected by mass layoffs.

Senate Bill 3170, was signed by Gov. Phil Murphy on Tuesday. It was sparked by woes of Toys R Us workers who lost their jobs when the Wayne-based retail giant declared bankruptcy and closed down its nationwide chain.

S3170 will require New Jersey employers with at least 100 workers to provide 90 days notice – up from 60 days – ahead of a layoff where at least 50 workers are terminated. The bill also requires one week of severance for every year of employment. Businesses that fail to comply with the 90-day layoff notice would be on the hook for another four weeks of pay.

The new rules take effect in six months.

“When these corporate takeover artists plunge the companies into bankruptcy they walk away with windfall profits and pay top executives huge bonuses, but the little guys get screwed,” the bill’s main sponsor, Sen. Joseph Cryan, D-20th District, said Tuesday in a statement.

“The law will now be upgraded to better protect the rights of the employees. Workers’ performance and workers’ dedication to the company were secondary. Now, hopefully, they’ll be moved more to the forefront.”

Many employees affected by layoffs at such companies as Toys R Us, Sears and Payless organized in support of the bill as part of the progressive advocacy group Make the Road New Jersey.

Business advocate groups such as the New Jersey Business & Industry Association and the Chamber of Commerce Southern New Jersey are concerned the measure will add to an ever-increasing cost of staying open in New Jersey.

“[T]his proposal would make our business climate even less competitive,” NJBIA Vice President for Government Affairs Mike Wallace said in December. “It would come after the enactment of a series of tax increases and other expensive mandates imposed on employers during the past year, including a higher corporate business tax, higher state income tax, new paid sick leave requirements and the signing of a $15 minimum wage.”

Editor’s note: This story was updated on Jan. 21, 2020 to include a more timely quote from Sen. Joseph Cryan.