Extending Mass Layoff Warnings

NJBIZ, Apr 23, 2007 by Goldstein, Scott

STATEHOUSE

The state could get the longest notification requirement in country

NEW JERSEY would become the first state to require companies to give workers 90 days notice-30 days more than required by federal law-before implementing mass layoffs or shutting a plant, under a bill the Senate has passed and returned to the Assembly.

The bill (S-472) would create a new state law requiring companies to give workers the extended notice when 50 full- or part-time workers are to be laid off. The measure applies to companies with 100 or more employees. Exceptions would be made to the 90-day notice for government layoffs, seasonal employment or job losses caused by fires, natural disasters, court orders or anything else beyond the control of employers.

The measure, which has the staunch support of labor unions, passed the Senate 24-to -12 last month after winning approval in the Assembly by a vote of 52-to-24 with three abstentions. The Assembly is now considering Senate amendments and could vote as early as May 10.

Sponsors say the legislation targets big companies that lay off workers with little notice and move the jobs to other states. "When an employer resorts to cost-saving measures like plant closings and mass layoffs, they're saying the bottom line is more important than the livelihood of their workers," says Sen. Stephen M. Sweeney (D-Gloucester), a co-sponsor of the bill who works as a business representative for Ironworkers Union Local 399.

Senate co-sponsor Joseph V Doria (D-Hudson) says the bill, which would require the Department of Labor and Workforce Development to create plant-closing response teams to counsel laid-off workers, "is not aimed at the conscientious employers who try to do right by their workers."

Doria, who is also mayor of Bayonne, says the bill would help towns and cities that rely on property taxes to deal with the shutdown of a plant. "A factory or plant closing down leaves a fiscal hole in the municipality where it's located, and leaves loyal employees scrambling to support their families/' he says.

"Given a little advanced warning, everyone can make plans to mitigate the financial mess of mass layoffs and plant closings. Through this bill, we're giving employees and local officials the notice they need to prepare for downsizing."

But business lobbyists call the measure onerous and say it would contribute to the state's anti-business reputation. "Not every company that laysoff employees is going out of business," says Nichole E LoPresti, director of government relations at the Chamber of Commerce Southern New Jersey. "A business may use layoffs as a way to consolidate operations in an effort to turn the business around and avoid closure. Having to comply with a more stringent notification period will seriously hamper a business' ability to continue operating."

LoPresti says a company's clients could view the extended layoff warning as a precursor to closure and switch to a competitor. "This loss of business could be the death knell for a company trying to weather a business crisis/' she says.

Under the federal Worker Adjustment and Retraining Notification Act (WARN), companies must give 60 days notice before 50 employees are laid off in a 30-day period. Every state uses the WARN Act except for New York and Illinois, which have slightly different laws but still require 60 days notice.

John Rogers, vice president of human resource issues at the New Jersey Business & Industry Association, says extending the warning period to 90 days would penalize companies that suffer a sudden downturn. For example, "let's say you lose a top client with little or no notice," Rogers says.

Companies that violate the proposed law would have to give laid-off employees a week's worth of severance pay for every year they were employed, on top of any other severance the employers provide. The federal penalty is an extra day's wage to employees for every day they are laid off before the 60-day warning. This strikes business advocates as sufficient. "We believe the federal protection (of 60 days) under the WARN Act is sufficient/' says LoPresti.

The New Jersey State AFL-CIO disagrees. "Under our current system, it is very difficult for many workers to find new employment in 60 days or be retrained/' Charles Wowkanech, state AFLCIO president, and Laurel Brennan, secretarytreasurer, wrote in a letter to state senators. "Workers deserve to be made aware of their pending layoff as soon as possible so they can begin pursuing other employment or training."

E-mail to sgoldstein@njbiz.com