In New Jersey, an employer is only required to advise an employee, in writing, if it is reducing its rate of pay/hours. In contrast an employer does not need to provide an employee notice of a furlough or layoff.
In light of the Coronavirus Pandemic, you as an employer, may decide to provide written notice to your employees of your decision, the reason for your decision and assurance that these measures are only being taken in response to the pandemic, with the ultimate goal of returning to business as usual as soon as possible.
A furlough is a temporary suspension of employment during which employees do not receive wages. It is important to note that those on furlough remain employed.
- You should advise employees they must not work during the furlough period and consider keeping employer issued mobile devices and limiting or cutting off email access.
- You should provide your employee with an explanation of the continuation of health benefits dependent on health insurance policies, plan documents and other policies or agreements in place with employees.
- You may restrict the use of vacation/PTO during the furlough.
- Your employee may be entitled to state sick pay under the New Jersey Paid Sick Leave (“NJ PSL”*).
- Your employee is entitled to federal sick pay under the Families First Coronavirus Response Act “FFCRA”** if employer has 500 or fewer employees.
- Your employees may receive Unemployment Compensation Insurance during the furlough.
Scenario: Layoff & Termination
A layoff is the removal of an employee from the workforce, without any guarantee of returning to work. A termination is a complete and permanent separation of employment.
- If you are subject to NJ WARN***, you must provide notice to your employees. See below regarding potential notice requirements under NJ WARN.
- Final pay is due to the employee and must be made no later than the next regular pay day (which may not be more than 10 days from the end of the work period for which such wages were earned). Unused vacation or PTO may need to be paid out depending on company policy.
- You are not required to pay accrued paid sick leave at time of termination or layoff.
- In the event that you layoff or terminate a salaried employee, you only need to pay them through the final day’s work.
- You must provide timely notice regarding COBRA benefits the employee is eligible for.
Scenario: Reduction in Pay
A reduction in pay constitutes reducing an employee’s hourly rate or prospective salary.
- You must ensure you pay hourly, non-exempt, non-tipped employees minimum wage. The statewide minimum wage is $11 per hour; however, municipalities may have higher minimum wages (there are also different hourly rates for workers in the fast food industry and those who receive tips).
- Be aware that a reduction in exempt salary may result in the employee’s exempt status.
- You may only reduce “going forward” pay, and must provide notice in writing to the employee.
Scenario: Reduction in Hours
A “reduction in hours” constitutes a reduction in hours for non-exempt employees and involves only paying the employee the hours worked.
- As an employer, take care not to reduce hours in a way that appears discriminatory – such as only for higher paid (and generally older) workers.
- Your employees may receive Unemployment Compensation Insurance.
*New Jersey Paid Sick Leave (PSL)
Under New Jersey’s Paid Sick Leave, an employee is entitled to up to five (5) days of paid leave to be used in any of the following instances:
- A person who has COVID-19, or symptoms of COVID-19;
- A worker was unable to work because of school or daycare closed for a public health reason;
- A worker was exposed and quarantined and his employer remains open;
- A person who is out of work because employer was ordered closed;
- An employer stays open in defiance of public health urging to close, and worker refuses to work;
- A worker is afraid of gathering in a group and refuses to go to work (self-distancing);
- A worker is immune-compromised and advised by healthcare provider to self-quarantine;
- A health care worker exposed at work and self-quarantine; or
- A worker is caring for a sick family member
**FFCRA – NJ
The Families First Coronavirus Response Act (“FFCRA”) is effective April 1, 2020. Employers of up to 500 employees are required to provide Emergency Paid Sick Leave (EPSL) to their employees without regard for eligibility or time worked requirements. Please note, if you allow an employee to go on leave (whether paid or unpaid) or furlough an employee (as opposed to a layoff), then your employees are entitled to this EPSL.
***New Jersey Warn Act
If you are an individual or private business establishment that has been in operation in the State of New Jersey for longer than three years and you employ 100 or more full-time employees, you must comply with the NJ WARN Act if you anticipate a “mass layoff.” A “mass layoff” means a reduction in force which is not the result of a transfer or termination of operations and which results in the termination of employment at an establishment during any 30-day period for 500 or more full-time employees or for 50 or more of the full-time employees representing one third or more of the full-time employees at the establishment.
Before the first termination of employment occurs, an employer must provide no less than 60 days advance notice in writing to the following entities:
- Commissioner of Labor and Workforce Development;
- The chief elected official of the municipality where the establishment is located;
- Each employee whose employment is to be terminated; and
- Any collective bargaining unit of employees at the establishment.
A severance must be provided to each full-time terminated employee to whom the employer provides less than the number of days of notification. Calculation is equal to one week of pay for each full year of employment and is in addition to any other severance paid for any reason. Back pay provided by the employer to conform to the WARN law is credited towards meeting this severance pay criteria.
On January 21, 2020, Governor Murphy signed Senate Bill 3170 into law effective July 19, 2020, amending the NJ WARN Act. The amendments, when they take effect, will dramatically alter the landscape for businesses instituting a large-scale reduction in force in New Jersey. As one of the changes, the July 2020 law will make New Jersey the first state in the Country mandating severance pay for mass lay-offs even if timely notice is given, which has increased from 60 to 90 days.