N.J.

Becomes First State to Mandate Severance

For Workers If They Are Part of a Mass Layoff

New Jersey will become the first state in the country to force employers to pay severance to laid-off

workers, as Gov. Phil Murphy signed the landmark legislation into law Tuesday.

The law (S3170) requires that New Jersey employers with at least 100 employees provide their

workers 90 days notice — up from 60 — before a large layoff or a plant closing or transfer that will

put at least 50 people out of work. It would also force these businesses to pay their workers one

week’s severance for every year of service. The payout increases by an additional four weeks if the

employer doesn’t comply with the 90-day notification rules.

Lawmakers were motivated by the plight of unemployed Toys "R" Us workers.

More than 30,000 workers nationwide lost their jobs, including some 2,000 in New Jersey, when

the famous retail giant closed its doors. Employees were initially let go without severance. Two of

the private equity funds that owned Toys R’Us, facing public pressure, have since established a $20

million severance fund and workers won a $2 million settlement.

“When these corporate takeover artists plunge the companies into bankruptcy they walk away with

windfall profits and pay top executives huge bonuses, but the little guys get screwed,” state Sen. Joe

Cryan, D-Union, who sponsored the bill, said in a statement. “The law will now be upgraded to

better protect the rights of the employees. Workers’ performance and workers’ dedication to the

company were secondary. Now, hopefully, they’ll be moved more to the forefront.”

United For Respect, a nonprofit group advocating for the legislation has said New Jersey is the first

state in the nation with such a severance mandate.

Meanwhile, the New Jersey Business and Industry Association, which represents 20,000 businesses

here, has warned the bill will deter companies from locating or expanding in New Jersey.