Gov. Phil Murphy signed legislation Tuesday that officially made New Jersey the first state to require severance pay for mass layoffs, according to The New York Times. The law, approved by lawmakers last week, requires employers to provide not only severance pay, but also more advance notice to employees of such upcoming layoffs. The law is a result of a public backlash against the treatment of laid-off workers and goes into effect in July.
According to CBS News, the legislation was written in response to a series of closings and bankruptcies filed by big corporations such as Toys R Us and Payless, which fired thousands of employees with little or no compensation; about 2,000 employees in the state lost their jobs. The law only applies to employers or companies with 100 or more full- or part-time employees that lay off 50 or more individuals, The Washington Post reported. The legislation will require an employer to pay laid-off workers severance in the amount of a week's pay for each year they’ve worked for the employer in the event of a mass layoff or company closing, and to provide a minimum of 90 days’ notice instead of the previously stipulated 60 days.
“When businesses go bankrupt or close, far too often, workers are given little notice or severance pay. We saw this happen right here in New Jersey last year when Toys R Us filed for bankruptcy," a primary sponsor of the bill, New Jersey Assemblywoman Annette Quijano said in a statement, according to The Washington Post. ”Employees deserve to be treated fairly, especially when they are forced to leave a job due to circumstances beyond their control.”
Protests following the Toys R Us closure and a public relations campaign led “two of the private-equity firms that took over the retailer in a leveraged buyout in 20015 to create a $20 million financial assistance fund for workers in November,” CBS News reported. However, no law existed that guaranteed severance pay to employees, which resulted in New Jersey legislators taking matters into their own hands.
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"Companies have exploited bankruptcy laws to protect their profits while workers lose their jobs and severance pay," according to state Senator Joseph Cryan, a Democrat who sponsored the bill. "Employees shouldn't be left in the dark as companies are pillaged for their resources after equity firms load them down with debt and the top officials walk away with bonuses. The law needs to be upgraded to better protect the rights of the workers."
While employees and retail workers are in favor of the law, some local businesses fear the law will make New Jersey a less competitive state despite the alterations made since the bill was first introduced. According to The New York Times, the New Jersey Business and Industry Association criticized the law, saying it will add to other requirements, such as a higher minimum wage, and result in New Jersey becoming less competitive as corporations leave in response to such mandates. But that seems to be a risk legislators are willing to take in order to give employees justice.