New Jersey Just Passed the First Law in the Nation to Guarantee Severance Pay After Mass Layoffs

Wednesday, January 15, 2020
By Bryce Covert, The Nation

On Monday, the New Jersey legislature gave final approval to a bill that would make it the first state in the country to guarantee severance pay in the wake of mass layoffs. The bill ensures that workers at big companies have to be paid at least a week’s wages for every year of work. It now sits on the desk of Governor Phil Murphy, who has 30 days to sign or veto it; advocates say the governor has expressed support for it.

The bill is a response to a series of bankruptcies among major employers in the state over the past two years. When Toys “R” Us went bankrupt in 2017, the company had 1,500 employees in New Jersey. At first, it announced that it would let them go without any severance pay at all. Without this new law in place, it was perfectly legal to refuse to give longtime workers any financial cushion in the wake of sudden job loss. So employees came together, with the help of the worker-organizing nonprofit United for Respect (at the time called Rise Up Retail), to demand payment for their years of work at the toy retailer. They eventually secured a $20 million hardship fund from the company’s private equity owners, KKR and Bain, although it was a good deal less than the $75 million they had originally demanded. When Sears went bankrupt in 2018, its management similarly told employees they wouldn’t get severance pay, either. Workers pressured Eddie Lampert, whose hedge fund, ESL Investments Inc., bought the company in 2005, to agree to pay them up to $43 million, although he later tried to back out of the deal during the bankruptcy process.

Read the full story from The Nation

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