How to Close a Business Legally in New Jersey
Mandatory severance, 90-day notice, and part-time workers counted — New Jersey has one of the toughest shutdown laws in the country.
New Jersey’s workplace shutdown law stands out nationally for two reasons: it requires mandatory severance pay, and it counts part-time workers in its thresholds. The NJ WARN Act, significantly strengthened by amendments enacted in 2020 (effective April 2023), creates obligations that go well beyond what federal WARN or most other state WARN laws require.
For employers planning a shutdown, mass layoff, or relocation in New Jersey, the law adds a mandatory severance payment that applies regardless of whether you gave proper notice — and quadruples the penalty if you didn’t.
How the NJ WARN Act Differs from Federal WARN
The NJ WARN Act (N.J.S.A. 34:21-1 et seq.) is distinctive in several critical ways:
| Regulation | What it means for employers |
|---|---|
| Mandatory severance pay | New Jersey is one of the few states requiring severance: one week of pay for each full year of service. This isn’t a penalty — it’s owed even when the employer provides full 90-day notice. |
| Part-time workers are counted | Both the 100-employee threshold and the 50-employee trigger include part-time workers. Under federal WARN, employees working fewer than 20 hours per week are excluded. |
| 90 days of notice | Like New York, New Jersey requires 90 days — 30 days more than federal WARN. |
| Penalty severance for inadequate notice | If you don’t give the required 90-day notice, you owe an additional four weeks of pay per affected employee on top of the standard severance. |
| Transfer of operations coverage | The NJ WARN Act covers situations where operations transfer to a successor employer, creating potential obligations for both the departing and incoming employer. |
What Triggers the NJ WARN Act? Thresholds and Coverage
Does the NJ WARN Act Apply to My Business? (100+ Employees Including Part-Time)
The law applies to employers with 100 or more employees, counting both full-time and part-time workers. This is the same headcount threshold as federal WARN, but the inclusion of part-time workers means many employers who fall below the federal threshold are captured by NJ WARN.
Example: A restaurant group with 60 full-time employees and 45 part-time employees has 105 total workers. Under federal WARN, only the 60 full-time employees count — below the 100 threshold. Under NJ WARN, all 105 count, and the employer is covered.
What Events Trigger NJ WARN Notice and Mandatory Severance Pay?
| Event | Threshold | NJ WARN triggered? |
|---|---|---|
| Plant closure | 50+ employees lose jobs within 30 days | Yes |
| Mass layoff | 50+ employees within 30 days | Yes |
| Transfer of operations | 50+ employees lose jobs | Yes |
| Layoff of 49 employees | Below threshold | No |
How Are Employees Counted Under the NJ WARN Act?
NJ WARN counts employment losses within a 30-day period. But employers should also watch for aggregation: if layoffs over a 90-day period appear to be part of a single plan, the Department of Labor may aggregate them to determine whether the 50-employee threshold is met.
NJ WARN Act Mandatory Severance Pay: How Much and Who Qualifies
This is the provision that sets New Jersey apart from every other state except a handful.
How Much Severance Must NJ Employers Pay? (One Week per Year of Service)
When the employer provides the full 90-day advance notice:
| Rule | Details |
|---|---|
| Amount | One week of pay for each full year of employment for every affected employee |
| Coverage | Applies to both full-time and part-time workers |
| Calculation basis | Average weekly wages over the last three years of employment (or the duration of employment if less than three years) |
| Payment timing | Must be paid within the regular pay cycle following the employee’s last day |
Example: A warehouse worker with 8 years of service earning $800/week receives 8 weeks of severance ($6,400).
NJ WARN Penalty: 4 Extra Weeks of Severance for Inadequate Notice
If the employer fails to provide the full 90-day notice:
- All standard severance still applies (one week per year)
- Plus an additional four weeks of pay per affected employee
- The four-week penalty applies regardless of how much notice was actually given
Example: The same warehouse worker receives 8 weeks of standard severance plus 4 weeks of penalty severance = 12 weeks total ($9,600).
Do Part-Time Workers Get Severance Under the NJ WARN Act?
Part-time workers receive severance calculated on their average weekly hours over the last three years. A part-time employee who averaged 20 hours per week at $15/hour for 5 years of service receives: 5 weeks × ($15 × 20 hours) = $1,500 in severance.
NJ WARN Severance Calculation Examples
| Employee | Tenure | Avg weekly pay | Standard severance | Penalty severance (if under 90 days notice) | Total |
|---|---|---|---|---|---|
| Full-time manager | 10 years | $1,200 | $12,000 (10 weeks) | $4,800 (4 weeks) | $16,800 |
| Part-time cashier | 3 years | $450 | $1,350 (3 weeks) | $1,800 (4 weeks) | $3,150 |
| Full-time warehouse | 1 year | $800 | $800 (1 week) | $3,200 (4 weeks) | $4,000 |
Notice the pattern: for short-tenure employees, the penalty severance (4 weeks) exceeds the standard severance. A sole proprietor with 50 employees averaging 5 years of service at $700/week faces approximately $175,000 in standard severance — or $315,000 if notice falls short of 90 days.
NJ WARN Act 90-Day Notice Requirements
Who Must Receive an NJ WARN Notice?
| Recipient | Method |
|---|---|
| Each affected employee (or union representative) | Individual written notice |
| NJ Department of Labor and Workforce Development | Written notice |
| Chief elected official of the municipality | Written notice |
| Local workforce development board | Written notice |
What Must an NJ WARN Notice Include?
The written notice must include:
| Required field | Details |
|---|---|
| Establishment info | Name and address of the establishment |
| Company contact | Name and phone number of the company official |
| Action type | Whether the action is a closure, mass layoff, or transfer |
| Separation date | Expected date of the first separation |
| Separation schedule | Anticipated schedule for subsequent separations |
| Affected positions | Job titles and number of employees in each |
| Bumping rights | Seniority-based bumping rights information |
| Union details | Representation details |
When Must New Jersey Employers Pay Final Wages After a Layoff?
New Jersey requires final wages on the next regular payday after termination. The law is less aggressive than California’s same-day requirement but still carries penalties for late payment:
| Component | Details |
|---|---|
| Wages and overtime | All earned wages, overtime, and commissions must be included |
| Vacation payout | Required if company policy provides for it (NJ does not mandate vacation payout by statute, but contractual and policy promises are enforceable) |
| Time records | Time tracking records should be finalized through the last day to ensure accurate final pay calculations |
Under the New Jersey Wage Payment Law, failure to pay final wages on time can result in penalties and the employee’s recovery of the full amount owed plus reasonable costs and attorneys’ fees.
Benefits and COBRA After a New Jersey Layoff
All benefits continue through the 90-day notice period. After termination, NJ continuation coverage extends to employers with 2–50 employees, providing up to 12 months of coverage for small group plans.
Does the NJ WARN Act Apply to Business Sales and Transfers of Operations?
The NJ WARN Act uniquely addresses situations where one employer takes over operations from another:
| Scenario | What happens |
|---|---|
| Departing employer skips 90-day notice | Penalty severance obligation applies |
| Successor hires affected employees within 180 days | Successor may avoid separate WARN obligations |
| Successor does not offer employment | Departing employer’s obligations remain |
This provision is particularly relevant for franchise closures, management company changes, and business acquisitions where operations continue under new ownership.
New Jersey Plant Closure Timeline: 90-Day Compliance Calendar
| Days before shutdown | Action |
|---|---|
| 90+ days | Issue NJ WARN notices to employees, DOL, municipality, and workforce board |
| 90 days | Confirm benefits continuation and begin severance calculations |
| 60 days | File federal WARN notice if separately required (100+ full-time employees) |
| 30 days | Calculate severance for all affected employees (including part-time) |
| 14 days | Prepare final paychecks; prepare COBRA election notices |
| 7 days | Verify time tracking records and severance calculations |
| Last day | Finalize time records; confirm final pay and severance distribution on next regular payday |
| Next payday | Distribute final wages and severance payments |
| Within 14 days | Issue COBRA/NJ continuation coverage election notices |
New Jersey Employer Shutdown Compliance Checklist
- NJ WARN notices sent 90 days in advance (100+ employees including part-time, 50+ affected)
- Severance calculated: one week per year of service for every affected employee (full-time and part-time)
- Penalty severance budget prepared (additional 4 weeks each) in case notice falls short of 90 days
- Existing severance plan offset reviewed against statutory requirement
- Transfer of operations / successor employer implications reviewed (if applicable)
- Vacation payout included if company policy provides for it (not required by NJ statute)
- Time tracking records finalized and archived
Shutdown laws vary by state. See our guides for California, Illinois, New York, and Texas, or read the complete workplace shutdown guide.
Frequently Asked Questions
Does NJ WARN apply to transfers of operations?
Yes. When operations transfer to a successor employer and the transfer results in employment loss for 50+ employees, the departing employer must provide 90-day notice and severance. If the successor employer offers jobs to the affected employees within 180 days, some obligations may shift. This provision is crucial for franchise transitions, management company changes, and business sales where the physical operation continues under new ownership.
How Is NJ WARN Severance Calculated for Short-Term Employees?
The NJ WARN Act requires one week of severance per full year of employment. Employees with less than one full year of service are not entitled to standard severance — but they are still covered by the 4-week penalty severance if the employer fails to provide 90 days of notice. This means short-tenure employees can still receive significant payments when notice is deficient.
Can Existing Severance Plans Offset the NJ WARN Severance Requirement?
Yes. The NJ WARN Act allows employers to offset voluntary severance pay, separation pay, or other payments against the statutory obligation — provided the voluntary payments equal or exceed the statutory amount. If your company already offers severance exceeding one week per year of service, the statutory requirement may already be satisfied. Document the offset clearly.
