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New Jersey’s First-in-Nation Severance Mandate Draws ERISA Suit

Aug. 6, 2020, 7:05 PM

A recent amendment to New Jersey labor laws mandating severance payments for workers affected by mass layoffs is unenforceable because it’s preempted by the federal Employee Retirement Income Security Act, according to a lawsuit filed Thursday by a trade group advocating for nationally uniform benefit plan standards.

The ERISA Industry Committee (ERIC) wants a federal judge in New Jersey to halt enforcement of recent amendments to the state’s Millville Dallas Airmotive Plant Job Loss Notification Act, which are scheduled to go into effect in November. These worker-friendly amendments, signed by Gov. Phil Murphy (D) in January, made New Jersey the first state in the nation to require mandatory severance pay during mass layoffs.

ERIC says these expanded worker protections interfere with federal law governing employee benefits.

The amendments “mandate the creation of severance pay plans that require an ongoing administrative scheme that must be governed by ERISA exclusively,” ERIC said in a complaint filed in the U.S. District Court for the District of New Jersey.

Under the amendments, employers laying off 50 or more workers must provide affected employees one week of severance for each year of employment, even if the employer gave advance notice of the layoffs. The amendments also change how mass layoffs are determined, making it more likely that a given workforce reduction will trigger the severance mandate.

Causes of Action: Declaratory and injunctive relief.

Relief: Declaration of ERISA preemption, injunction blocking enforcement.

Response: The New Jersey Department of Labor and Workforce Development didn’t immediately respond to a request for comment.

Attorneys: Morgan, Lewis & Bockius LLP represents ERIC.

The case is ERISA Indus. Comm v. Asaro-Angelo, D.N.J., No. 3:20-cv-10094, complaint 8/6/20.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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