Governor Murphy signs bill unfreezing severance protections

Severance protections long stalled by the pandemic are set to go into effect after Gov. Phil Murphy signed a bill ending their stasis.

The new law requires qualifying businesses with at least 100 full-time employees to provide severance pay when they lay off 50 or more workers within a 30-day period as part of a move or closure.

“Companies and hedge fund managers have been exploiting bankruptcy laws to protect their profits while workers lose their jobs, their paychecks and severance pay,” said Sen. Joe Cryan (D-Union), the bill’s prime sponsor. “Workers were left in the dark and cheated out of deserved compensation while the companies were pillaged for their resources. The law will help protect the rights of the workers from these abuses.”

It also triggers if layoffs of 50 or more workers impact a third or more of the firm’s staff and requires employees to get a week of severance per year of service.

Juliet Meneses, member leader from immigrant advocacy group Make the Road New Jersey, said in a statement the new law “sends a message that workers cannot be left behind when big corporations like Toys R Us or Sears go bankrupt.”

“Reactivating New Jersey’s historic Guaranteed Severance Pay Law yesterday is a tremendous victory for working families who will be protected if our employers close our facilities, downsize significantly, or file for bankruptcy,” Meneses said.

The protections, spurred by the collapse of Toys R Us during its 2018 bankruptcy and the mass layoffs that followed, were first signed into law in early 2020, but lawmakers delayed their enactment that April as businesses were ordered to shutter their doors to slow the spread of COVID-19.

It was set to go into effect once the state exited its COVID-19 state of emergency, but while the state has long shed its public health emergency declaration, it remains in a state of emergency over the lingering presence of the virus.