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 U.S. to force employers give severance pay to workers who lost their jobs in mass layoffs.

But the law never took effect. It was put on hold because of the coronavirus pandemic, which upended the state’s business community.

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

State Sen. Joseph Cryan, D-Union, a main sponsor of the measure (A4768), said with the pandemic “subsiding,” it’s “time to put these worker protections into place.”

“Companies and hedge funds have exploited bankruptcy laws to protect their profits while workers lose their jobs, their paychecks, and often get cheated out of severance pay,” Cryan said. “The workers were left in the dark as companies were pillaged for their resources. The law will be upgraded to better protect the rights of the workers.”

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’s now up to Murphy to decide whether to sign it into law.

Sponsors were inspired to push the original law in the wake of Toys “R” Us closing its doors — which caused more than 30,000 workers nationwide to lose their jobs, including some 2,000 in New Jersey.

The retail giant’s employees were initially let go without severance. Facing public pressure, two of the private equity funds that owned Toys “R” Us have since established a $20 million severance fund, while workers won a $2 million settlement.

New Jersey’s legislation requires businesses in the state with 100 or more workers pay severance of one week for each year of work if the event of a large layoff or a plant closing or transfer that will put at least 50 people out of a job.

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

State Sen. Nellie Pou, D-Passaic, said this will provide relief for employees in “these still stressful, uncertain times.”

“Workers of New Jersey deserve at least some protections against sudden unemployment, and this law will help provide that cushion,” Pou added.

Worker-rights advocates repeatedly called for New Jersey’s leaders to finally enact the law, saying more than 28,000 New Jersey workers who lost their jobs have been denied help during the delay.

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

“The Guaranteed Severance Pay law is crucial to ensuring essential workers have the support they need to take care of themselves and their families in the event of mass layoffs, and will finally hold corporations accountable for the toll placed on working families and communities when local jobs are destroyed,” Fotiadas said. “Governor Murphy has an opportunity to set a major precedent for the nation and show he stands with working families.”

Critics of the law, including the New Jersey Business and Industry Association, warned the measure will prompt some companies to decide against locating or expanding in New Jersey.

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Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him at @johnsb01.