Originally posted on: https://www.employmentlit.com/2022/11/23/employer-obligations-regarding-mass-layoffs-and-plant-closings/
By: Ty Hyderally, Esq., Jennifer Vorih, Esq., and Tom Daly
Elon Musk purchased Twitter on October 27, 2022, paying $44 billion to make the company private. The highly publicized deal began in April this year, when Musk made a formal offer to purchase Twitter for $54.20 per share. The months following Musk’s offer could have been a script to a Wall Street thriller in which the parties changed positions, were accused of playing dirty, and were repeatedly accused of mischaracterizing each other’s intentions. However, the dust of the purchase has now settled and Musk is in charge. However, there appears to be a great deal of upheaval at Twitter, subsequent to Musk asserting control. In a purchase of this size, it is typical for a new owner to “clean house” and replace the old management team with people who share the new owner’s vision for the company. Executive leadership is almost always the first to go. True to form, Musk himself has replaced Parag Agrawal as CEO of Twitter, and also fired Twitter’s old CFO (Ned Segal), General Counsel (Sean Edgett), and policy head (Vijaya Gadde). While job security for upper-level management is not guaranteed in a situation such as this, there are state and federal laws in place to protect lower-level employees from these types of “mass firing” events.
Federally, the Worker Readjustment and Retraining Notification Act (WARN Act) protects employees from layoffs by requiring companies to give workers at least 60 days of notice before closing a plant or instituting a mass layoff event. 29 USCS § 2101, et seq. The WARN Act applies to employers who have 100 or more full-time employees, or 100 or more employees who average 40 hours per week exclusive of overtime. 29 USCS § 2101(a)(1). The WARN Act was passed in 1988, to protect employees, their families, and communities from devastating ripple effects caused by high-level business decisions.
Under the WARN Act, a plant closing is defined as the permanent or temporary shutdown of a single site of employment, or one or more facilities within a single site of employment, if the shutdown results in the loss of employment for 50 or more employees during a 30-day period. 29 USCS § 2101(a)(2). A mass layoff event is defined as a reduction of workforce, during a 30-day period, which is not due to a plant closing and results in the loss of employment for at least 500 employees, or at least 50 full-time employees if they make up at least 33% of full-time employees. 29 USCS § 2101(a)(3). The 60-day notice requirement provides these affected employees with critical time needed to look for other sources of income and to make other arrangements in preparation for their loss of employment. Employees who are entitled to notice include managers, supervisors, hourly workers, and salaried workers. The WARN Act also requires the employer to provide notice to union representatives, to a State’s dislocated worker unit, and to the chief elected official of the local government within which such closing or layoff is to occur. 29 USCS § 2102(a).
Despite the above, the notice requirement may be reduced or avoided for several reasons. An employer may order a shutdown or mass layoff if, at the time notice would have been required, the employer was actively seeking financing that would have enabled them to avoid the shutdown or layoff and the employer reasonably believed that giving notice to employees would have precluded the employer from obtaining the financing. 29 USCS § 2102(b)(1). Additionally, an employer may order a shutdown or mass layoff before the conclusion of the 60-day period due to unforeseeable business circumstances or reasons associated with a natural disaster. 29 USCS § 2102(b)(2).
Any employer in violation of the WARN Act can be liable to affected employees for back pay, benefits, and attorney’s fees and costs. 29 USCS § 2104(a)(1), (6). Additionally, employers who violate the WARN Act may also be liable to the local government for $500 for each day they violate the Act. 29 USCS § 2104(a)(3).
New Jersey offers employees protections under the Millville Dallas Airmotive Plant Job Loss Notification Act. The protections afforded employees under New Jersey law and federal law are very similar, with a few differences:
- Both require New Jersey and federal law require a 60-day notice period.
- New Jersey and federal law define plant closings and mass layoffs similarly.
- New Jersey law includes individual employers, whereas federal law only covers business enterprises. Compare NJSA § 34:21-1, with 29 USCS § 2101(a)(1).
- New Jersey law requires that union representatives and their individual members be notified, whereas federal law only requires employers to notify union representatives and unrepresented employees. Compare NJSA § 34:21-3, with 29 USCS § 2102(a).
- Crucially, New Jersey law requires employers to provide affected full-time employees with severance pay equal to one week of pay for each full year of employment. NJSA § 34:21-2(b). If an employee is entitled to severance pay, they are still able to recover damages for backpay, loss of benefits, and attorneys’ fees and costs. NJSA § 34:21-6.
While Elon Musk’s recent actions toward Twitter employees have put the spotlight on the issue, mass layoffs are nothing new. Federal and State legislation was passed to provide employees a small bit of job security. If your employment was terminated as part of a mass layoff event or a plant closing, your employer may offer you a severance package and ask you to waive your notice rights. If so, you probably want to consult with an attorney before signing any document your employer gives you.
For more information on New Jersey Protections, click here: https://www.nj.gov/labor/lwdhome/warn/njwarn.html.
For more information on the New Jersey Dislocated Workers’ Program, click here: https://www.nj.gov/labor/wioa/dislocated/dislocated_worker_index.html.
