Trenton, NJ — Today, the Guaranteed Severance Pay Bill (A5145) advanced with majority support from New Jersey’s Assembly Labor Committee. The bill, whose primary sponsors are Assemblymembers Annette Quijano (D), Matthew W. Milam (D), and R. Bruce Land (D), was approved by legislators after hearing testimony from former Toys ‘R’ Us, Sears and Payless employees who were thrown into economic crisis by Wall Street private equity firms that drove their companies into bankruptcy.
The Guaranteed Severance Pay Bill cleared a major hurdle last week through the state’s Senate Budget and Appropriations Committee where it was also approved with majority support.
“We’re fighting to ensure Wall Street no longer ruins people’s lives,” said Bruce Miller, a United for Respect leader and former Sears employee. “Toys ‘R’ Us, Sears, and Kmart didn’t have to go bankrupt but Wall Street saddled the retailers with debt, ran them into the ground, and fled — leaving thousands of working people like me without severance pay. I’m thankful that New Jersey’s policymakers are putting an end to this predatory business practice and stepping up to protect families and hold greedy billionaires accountable.”
New Jersey policymakers are leading the way with an unprecedented Guaranteed Severance Pay Bill to address the jobs crisis generated by a wave of Wall-Street-driven retail bankruptcies at Toys ‘R’ Us and Sears. As the home to Toys ‘R’ Us headquarters, New Jersey saw more than 2,300 jobs destroyed in its state across 45 stores when the company buckled from debt stemming from a leveraged buyout by private equity firms. Toys ‘R’ Us employees and their families exposed the weak severance protections in the state, and nationally, when they didn’t receive nearly $75 million owed in promised severance pay.
Toys ‘R’ Us employees ultimately fought for, and won, an independent hardship fund which prompted other retail employees facing massive layoffs to organize and fight for policy change that holds Wall Street executives accountable.
“The closures of Toys ‘R’ Us and Sears exposed the get-rich-quick tactics of Wall Street that left working families unprotected.” said Senator Joseph Cryan (D). “Moreover, the tragic aftermath pushed hardworking families into financial crisis, and many are still struggling today. After all the years of ensuring these companies were successful, these families, at the very least, need to be able to count on severance pay to get back on their feet. We are excited at the prospect of delivering the new protections that the revamped WARN Act will provide and are working with the Assembly sponsor and leadership to get it moving in their house. Our economy has been roaring for about a decade, but now we are seeing the signs of a dip on the horizon. While we always want our economy to thrive, we want to protect the workers who keep it churning no matter what happens. Let’s swiftly pass the revamped WARN Act this session!”
In 2019, nearly 9,300 people in New Jersey have lost their jobs — including jobs in retail, pharmaceuticals, home lending and more — and nearly 3,000 more people are expected to be laid off by early February 2020. The proposed S3170 bill addresses the lack of financial protection and would guarantee a week of severance pay for every year worked for all employees in addition to expanding notice of a layoff to 90 days, define severance pay as compensation, establish joint employer responsibility, protect employment for an extended period of time during the bankruptcy process and attempts to close loopholes like forced arbitration provisions which prevent workers from seeking civil remedies.
“Today’s bill passage gives us and low-income workers across New Jersey hope that when a recession hits and our employers collapse or file for bankruptcy, we are not left with nothing to survive and take care of our families as we transition,” said Cesar de la Peña, a leader with Make the Road New Jersey and employee at Precision Escalator in Kenilworth, NJ. “We live paycheck to paycheck, so when mass layoffs occur, they wreak havoc in our communities. To be left with nothing due to no fault of our own shows a complete lack of corporate accountability. We saw it with Toys R’ Us, Sears, Forever 21, Payless, Gymboree, Radioshack, and more. It’s an old and tiring pattern. We appreciate Assembly Member Quijano and Senator Cryan’s leadership in shepherding this bill and will work hard to make it a reality for working class communities across New Jersey!”
As tens of thousands of people working at Toys ‘R’ Us, Sears and Kmart, Gymboree, Payless and Charlotte Russe are laid off nationwide with no legal requirement to receive severance pay, the need for reform is urgent. At a national level, legislators are advocating for reform with the Stop Wall Street Looting Act.
If A5145, and its companion bill S3170, is signed into law, New Jersey would be the first state in the country requiring companies to guarantee severance pay when employees are laid off.
Link to fact sheet on NJ Guaranteed Severance Pay Bill here.