TRENTON, NJ – Legislation sponsored Senator Nellie Pou (D-35) to protect workers from “getting screwed” when their employers go into bankruptcy or close their doors was signed into law Thursday by Governor Phil Murphy. The law, S-3170, makes New Jersey the first state in the country to guarantee severance pay in the wake of mass layoffs. 

“In the event of corporate losses and bankruptcies, the first people to think of, the first people to protect, must be the employees,” said Pou. “When Toys R Us went under, they left their employees out in the cold with next to no paycheck or lead time to prepare while the executives divvied up massive bonuses. This is unacceptable and the workers of New Jersey deserve better. They deserve the protections in this bill.”

The new worker protection law increases the pre-notification time and severance pay for business closings, mass layoffs and transfers under the Worker Adjustment and Retraining Notification (WARN) Act. The legislators acted in response to the rash of business closings and bankruptcies where workers were left jobless and without severance compensation, including Toys ‘R’ Us, which closed operations at its Wayne headquarters and Flanders distribution center. In this and other cases, the bankrupt companies were purchased by private equity firms that imposed massive layoffs while top executives walked away with millions of dollars in bonuses.

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“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,” said Senator Joe Cryan (D-Union), the co-sponsor of the bill. “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.”

The new law could tip the scales in favor of keeping stores and factories open and people employed by making companies think twice about whether laying off workers is their go-to solution for every problem that they face, Senator Cryan noted.

The law increases the minimum number of days of notice from 60 to 90 that employers of 100 or more full time employees when there is a mass layoff, plant closing or transfer resulting in 50 or more employees losing their jobs. It will also require severance pay equal to one week for each year of service. The severance would be “earned in full” upon the termination of employment.

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