N.J. could soon guarantee severance pay for workers in mass layoffs

In January 2020, Gov. Phil Murphy signed a law making New Jersey the first state in the US to force employers to provide severance pay to workers who lose their jobs due to mass layoffs.

But the law did not work. It was suspended due to the coronavirus pandemic, which raised public sector enterprises.

Now, the Legislature has sent Murphy a bill that would require the law to take effect immediately.

State Sen. Joseph Cryan, D-Union, the primary sponsor of the measure (A4768), said that with the pandemic “reducing,” it is time to “put these worker protections in place.”

“Companies and hedge funds have exploited bankruptcy laws to protect their profits while workers lose their jobs, their paychecks, and are often cheated out of severance pay,” Cryan said. “Workers were left in the dark as companies were stripped of their assets. The law will be improved to better protect workers’ rights.”

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The state Assembly passed the new bill implementing the law 65-13 last week, and the state Senate followed suit 32-2 on Monday. It is now up to Murphy to decide whether to sign it into law.

Supporters were encouraged to push for the first law after Toys “R” Us closed its doors – causing more than 30,000 workers across the country to lose their jobs, including 2,000 more in New Jersey.

The sales force’s employees were initially released without stopping. In response to public pressure, the two private equity funds that Toys “R” Us has since established a $20 million severance fund, while employees won a $2 million payout.

New Jersey law requires state businesses with 100 or more employees to pay one week in each year of employment in the event of a major layoff or plant closing or transfer that will put at least 50 people out of a job.

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Companies are also required to notify workers of mass layoffs within 60 days – down from 90 under the previous law.

Rep. Nellie Pou, D-Passaic, said this would provide relief to workers “in these stressful, uncertain times.”

“New Jersey workers deserve at least some protection against sudden layoffs, and this legislation will help provide a cushion,” Pou added.

Labor rights advocates have repeatedly called on New Jersey leaders to finally enact the law, saying more than 28,000 New Jersey workers have lost their jobs and been denied aid during the delay.

Donna Fotiadas, a former Walmart employee who leads the group United for Respect, said they can now feel “hopeful about their future.”

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“The Guaranteed Severance Pay Act is critical to ensuring that essential workers have the support they need to take care of themselves and their families when they are hit by mass layoffs, and will ultimately hold companies accountable for the toll placed on working families and communities when domestic jobs are destroyed,” said Governor Fotiadas. Murphy has an opportunity to set a great example for the nation and show that he stands with working families.”

Critics of the law, including the New Jersey Business and Industry Association, warned the rule would cause other companies to decide whether to acquire or expand in New Jersey.

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Brent Johnson can be reached at [email protected]. Follow him @johnsb01.


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