M E M O R A N D U M
TO: Members of the Senate Commerce Committee
FROM: Christina M. Renna, Senior Vice President, CCSNJ
to S-3170 (Cryan/Pou)
DATE: February 7, 2019
The Chamber of Commerce Southern New Jersey (CCSNJ) appreciates the opportunity to express its concerns with S-3170 (Cryan/Pou), which increases prenotification time and requires severance pay in certain plant closings, transfers, and mass layoffs.
The New Jersey WARN Act, which was enacted in 2007 after the closing of the Millville Dallas Airmotive Plant, requires companies with 100 or more employees to provide 60 days’ notice to the New Jersey Department of Labor & Workforce Development, to the Mayor of the municipality in which the facility is located and to each employee of plans for a mass layoff. Additionally, current law requires employers to provide severance to its employees only in the case where the employer did not meet the notice requirement; that is, the employer provided less than 60 days’ notice of the plant closing or lay-off.
As currently written, S-3170 (Cryan/Pou) proposes to increase the notification in the WARN Act to 90-days for all employees. Critically, the bill also requires companies to pay severance to employees equal to one week for each year of employment, regardless of whether they met the notice requirement.
Although well-intended after the sudden closures of Toys R’ Us and Sears in certain parts of the state, this legislation mandates an unrealistic standard asking employers – who are going out of business and therefore no longer financially viable – to pay employees a large severance payment. In these type of circumstances, it is highly unlikely that the company will have the financial capability to pay out what is required; as a result, additional money will need to be spent to file for bankruptcy and get these liabilities discharged there.
Additionally, some companies negotiate severance and/or furlough pay into agreements. As a result, there should be a collective bargaining agreement carveout to the severance provision or, at a minimum, those negotiated amounts should reduce the statutorily required severance.
This legislation goes well-above the federal WARN Act mandate, which will cause confusion and again put New Jersey at a competitive disadvantage with other states. For these reasons, the CCSNJ respectfully encourages the members of the Committee to vote NO on S-3170 (Cryan/Pou).