New Jersey Passes Groundbreaking Law Mandating Severance Pay

Many New Jersey workers affected by layoffs will benefit from a groundbreaking new law passed by the New Jersey legislature. The law requires employers with at least 100 employees to provide at least 90 days’ notice before a layoff, plant closing or plant transfer that will impact fifty or more employees. This extends the previous notification requirement of sixty days. The law also mandates that severance pay of one week for every year of service be paid to those employees, with an additional four weeks to be paid when employers’ notifications of termination fall short of ninety days. Governor Phil Murphy signed the bill, which was approved 55-21, into law last week. It will go into effect in six months.

State bill S3170 became known as the “Toys R Us” bill as it made its way through the legislature because it was instigated by the disastrous impact of the national Toys R Us layoff. When the chain store filed for bankruptcy in 2017, it affected more than 30,000 employees across the country, including 2,000 in the state of New Jersey alone. Initially employees were not provided with any severance pay, though a $20 million severance fund was later established by private equity funds under public pressure and facing legal action taken by the workers.

Other retailers’ closures — including Payless and Sears — similarly demonstrated the need for the bill. One impacted employee, Beth Hink, had worked as a store manager for Payless for 19 years before the company filed for Chapter 11 bankruptcy, yet she only received three days of severance pay. Speaking of the new law to The Washington Post, she said, “The retail apocalypse is not going away. It’s not going to give [people] another job, and it’s not going to take away that stress, but it might give them a little peace of mind.”

New Jersey’s law is the first of its kind in the nation, though many other states may follow as more retailers shut their doors. Speaking of the necessity for employee protection, primary sponsor Annette Quijano said, "Employees deserve to be treated fairly, especially when they are forced to leave a job due to circumstances beyond their control.”

Schorr & Associates exclusively represents New Jersey employees in employment disputes. If you have been negatively impacted by a layoff, by discriminatory actions, by harassment or retaliation or by wrongful termination, contact us today to learn how we can help.

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