NJ law would require severance pay for mass layoffs

Only a signature from the governor is needed to make New Jersey the first in the nation with a guaranteed severance-pay law.

Update: Gov. Phil Murphy signed the legislation in late January, a week after this article was first published.

Approved by both houses of the Legislature is a measure that requires employers of 100 or more full-time employees to award severance pay to laid-off workers — one week for every year of service — when at least 50 workers are getting the ax. The measure also states these employers will have to give workers 90 days' notice, rather than 60, of a business closure or mass-layoff situation.

"No one wants their company to shutter but in the case that does happen, it's the workers who've been working at those companies for any amount of years who should be given the respect of severance pay," said Adil Ahmed with Make the Road New Jersey, one of the groups that worked with lawmakers on the issue.

The proposed law was sparked in response to a series of major business closings and bankruptcies where workers were left jobless and without severance compensation, in some cases while executives received bonuses. An outcry from laid-off Toys R Us employees led to a severance fund from which former workers ended up getting paid.

"Working people are the backbone of our economy and I'm proud to stand on the right side of history with them," said state Sen. Joe Cryan, D-Union, a sponsor of the measure.

The New Jersey Business & Industry Association said the proposed law would add to the many challenges New Jersey faces in attracting businesses and owners face in operating their businesses.

"This legislation will force businesses to make difficult decisions about reductions in workforce in a more compressed time frame, which could lead to unintended consequences," said Michael Wallace, NJBIA's senior vice president of government affairs. "Also, requiring a mandatory severance as part of the changes proposed would be the first of its kind in the nation in WARN Notice Law."

The bill would take effect 180 days after enactment. Because the bill was sent to Gov. Phil Murphy's desk just before the end of the legislative session, Murphy has until Tuesday to act on it.

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Contact reporter Dino Flammia at dino.flammia@townsquaremedia.com.