Under the new law, if a business lays off or transfers 50 or more employees at a time will have to pay a guaranteed severance package. New Jersey’s governor, Phil Murphy, signed the bill into law Tuesday, January 21, 2020, making companies liable for severance payments beginning in July 2020.
The law applies to companies with 100 or more employees, and the law also extends the mandatory notice for a layoff from 60 days to 90 days. The amount of severance pay will be at least a week’s wages for each year the employee has worked for the company.
This means that if an employer intends to layoff 50 or more employees, then they have to give a 90-day notice and pay each employee a week’s salary for how many years each employee has worked for the company. The bill was prompted by the 2018 closing of Toys R Us that laid off 2,000 employees in New Jersey.
A co-sponsor of the bill, state Sen. Joe Cryan, said, “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.”
The law comes on the heels of others pass in New Jersey that will affect business in the state. On January 1, 2020, the state began its first phase of a $15 minimum wage. Now employers have to pay $11 an hour, which will climb to $15 an hour by 2024.
In 2018, a new law went into effect that places a 2% business tax hike for any companies that earn over $1 million a year.