Before New Jersey lawmakers passed mandatory severance pay and other changes to the WARN Act, a late amendment was added pushing out the effective date of the law to 180 days after enactment. When Gov. Phil Murphy signed the measure into law recently, that started the clock ticking, and employers in the state now are working to get up to speed, according to the employment lawyers who advise them.

"I have been fielding so many calls and emails lately," said Amber Spataro, a partner in the Newark office of Littler Mendelson who has been advising clients and writing about the changes.

Jonathan Ash of Fox Rothschild said, "This is going to require a lot more foresight."

"What I'm hearing from clients is an expression of frustration," said Fisher & Phillips associate Alvaro Hasani, who practices in its Murray Hill office.

The measure—S-3170, commonly referred to as the "Toys R Us bill" because it was spurred at least in part by the retail chain's bankruptcy last year—was signed Jan. 21, amending the state Worker Adjustment and Retraining Notification Act, which makes requirements of employers of 100 or more employees when there's a mass layoff or plant closing that affects 50 or more employees.

Once effective in July, the amended law's 50- and 100-employee thresholds will count all employees, not just full-time ones and will mandate severance pay of one week per year of service for employees losing their positions. The thresholds will now also apply in situations where employees are spread across several stores or plants, not just in a single location. It will also increase the required notice period for a mass layoff or plant closing from 60 days to 90 days. Also, the WARN Act has previously required that the 50-employee threshold is triggered only if the 50 or more employees affected constitutes one-third or more of the company's full-time employees, but that qualifier is removed in the amended law.

According to employment lawyers, the long-term effect could be that businesses seek to plan differently when forced to execute closures or force reductions—for instance, by budgeting for severance pay that will be required. But one short-term effect, they say, is that those teetering on such measures may look to take action before the July 2020 effective date.

"I've had clients say they are going to close up shop," Spataro said in an interview. "If they have something in the works, I've been advising them to move forward now."

Jonathan Ash of Fox Rothschild.

Ash said something similar of employers.

"If they call me tomorrow, I would tell them to move quickly," said Ash, a partner in the firm's Princeton office. "I would tell them to try to get this done."

Hasani added, "If you are considering a layoff in the near future, I would recommend that you proceed expeditiously now, before the law takes effect."

Spataro said the WARN Act amendments have staffing agencies "in a real panic," particularly those that provide seasonal employees to retail and other types of businesses. Those agencies want to know whether the dismissal of 50 or more seasonal workers from their placements will trigger the WARN Act, she said.

She also mentioned one client that owns three restaurants and soon will likely be covered by the law since the employees, though they are spread over three locations, are nevertheless numerous.

"These are not necessarily large businesses to me," Spataro said of the employers that stand to come under the WARN Act's aegis this July. "To me, someone with 100 employees is a midsize employer," not a large one, she said.

Alvero Hasani of Fisher & Phillips.

Hasani said his group's clients "are not your typical Fortune 500 companies." "They are not multi-million [or] -billion-dollar companies," he said.

Spataro said one long-term effect could be pushing more businesses to bankruptcy, where former employees become a creditor—"that's unfortunately been a consideration" for clients.

Indeed, all the lawyers said the severance mandate creates a significant budgeting consideration for businesses facing layoffs or closure, and they said those businesses typically are in poor position to withstand it.

"It's an added cost that employers who are complying with the WARN Act are trying to avoid," Ash said, adding that, in that way, the legislation "doesn't really account for the reasons that plant closings might occur."

Hasani said, "If you are engaged in an objective [evaluation] of who you lay off, cost certainly becomes a consideration," potentially with more-senior employees carrying a greater severance requirement staying on, while less-senior employees let go.

Proponents of the legislation, on the other hand, have said that it is intended to disincentivize layoffs or closures from being the "go-to option" for businesses going through private equity buyouts or other transitions, hopefully keeping plants open, according to sponsors.

A release issued shortly after Murphy's signature of S-3170 quoted both sponsors, Sens. Joseph Cryan, D-Union, and Nellie Pou, D-Passaic. Cryan said the WARN Act "will now be upgraded to better protect the rights of the employees" against "corporate takeover artists [who] plunge the companies into bankruptcy [and] walk away with windfall profits." Pou said: "When Toys R Us went under, they left their employees out in the cold with next to no paycheck or lead time to prepare while the executives divvied up massive bonuses."

There was sufficient support. S-3170 passed the Senate by a vote of 27-13, and the Assembly by a vote of 55-21. Shortly before passage, the legislation's effective date was change from immediate to 180 days following enactment.

The legislation is "perpetuating this idea that employers enjoy laying off employees," Ash said. "In my experience, that's not the case."

WARN Act litigation is not very common, the lawyers said, and it remains to be seen whether the amended law would affect the frequency of it.

For now, though, it is making work for the lawyers being asked for counseling on tough decisions or simply for help getting clients up to speed.

"Having very active legislatures expands work for us—not that I want to see our clients go through this," Spataro said.