By Reema Chandnani, Esq.
As we have previously reported, the amendments to the to the Millville Dallas Airmotive Plant Job Loss Notification (the “Act”) are set to go into effect on April 10, 2023. These amendments will significantly impact companies during periods of mass layoffs, plant closings and/or transfers of operations.
In relevant part, if the amendments go into effect as currently scheduled, the following will occur:
- The Act will apply to companies with 100 employees, regardless of full-time or part-time status;
- It will apply to the termination of 50 or more employees in New Jersey during any 30-day period;
- An establishment will consist of all facilities an employer has within New Jersey;
- Employers will be required to provide affected employees one week of severance for each full year of employment (additional payments apply if no proper WARN notice is given); and
- Employers are required to provide 90 days’ notice instead of the prior 60 days’ notice.
In response to the amendments, the ERISA Industry Committee (“ERIC”) filed a lawsuit against Robert Asaro-Angelo, in his official capacity as the Commissioner of the New Jersey Department of Labor and Workforce Development (“the Commissioner”), claiming that the amendments to the Act are preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”). Specifically, ERIC argues that requiring New Jersey employers to provide severance payments during mass layoffs falls under ERISA’s preemption provision, which states that ERISA provisions “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan . . . .” 29 U.S.C. 1144(a). ERIC asserts that the required severance pay is considered an employee benefit plan, for which it will require an ongoing administrative scheme. In particular, the amendments would require ongoing administration by employers to determine whether an employee’s termination fits within a mass layoff and to determine whether severance payments are required to be paid under the Act.
In response, the Commissioner filed a Motion to Dismiss the Complaint. While the Motion to Dismiss was still pending, ERIC filed a Motion for Summary Judgement (“MSJ”) despite no discovery having been conducted. The Motion to Dismiss was ultimately denied. In Opposition to the MSJ, the Commissioner submitted a Rule 56(d) Declaration, arguing that it could not properly respond to the MSJ without discovery on whether ERIC has standing to bring this lawsuit. The Commissioner specifically requested discovery regarding:
- ERIC’s required efforts “to educate member companies” on the amendments to the Act;
- ERIC’s “day-to-day operations and how much normal operations differed from the actions taken to educate member companies on” the amendments to the Act;
- Documents on the “administrative schemes and procedures [ERIC]’s member companies have in place to comply with the” pre-amendment version of the Act; and
- The steps that “may be necessary to update [ERIC]’s existing scheme and procedures to comply with the” amendments to the Act.
With its Reply Brief, ERIC submitted a Declaration of the Senior Vice President, Retirement & Compensation Policy, Aliya Robinson (“Robinson Declaration”), arguing that ERIC did have standing since it “spent a significant amount of time, money, and resources to address the harm that would arise from the enforcement of” the Act and that it incurred thousands in costs to educate ERIC members on the impact of the amendments.
On February 16, 2023, Judge Zahid N. Quraishi agreed with the Commissioner. It found that ERIC was required to present more than just mere allegations to satisfy the injury-in-fact requirement for a showing of standing. Judge Quraishi also held that the Commissioner did not have an opportunity to inquire into the Robinson Declaration. With that, ERIC’s MSJ was denied without prejudice and Judge Quraishi granted the Commissioner’s request for discovery limited to the issue of whether ERIC has demonstrated an injury-in-fact and to the statements made in the Robinson Declaration. After the limited discovery was completed, ERIC was given the opportunity to renew its MSJ, which it did on March 14, 2023.
The outcome and timing of the decision on this renewed MSJ may restrict the legislature’s efforts with the Act. Whether the Act’s amendments will go into effect on April 10, 2023, as currently planned, will ultimately come down to wire. Stay tuned to find out.
Please contact an NFC team member if you have any questions or seek further assistance.