This week's shutdown of Jevic Transportation Inc., which put more than 1,000 employees out of work on less than a day's notice, is raising questions over whether the company violated a New Jersey layoff-notification law.
Employment-law experts and a state senator pointed to a recently passed state law known informally as the New Jersey WARN Act, which requires firms to inform employees and the state government 60 days in advance of a mass layoff.
Under the federal WARN Act, among other things, employers of a certain size must give 60 days' notice to the government and all affected employees in the event of a plant closing in which at least 50 workers would lose their job in a 30-day period. Companies can avoid this requirement by claiming that they are seeking new financing to stay open or that they have been a victim of unforeseen business circumstances.
The New Jersey law, which also requires 60 days' notice, contains no such exemptions. It underscores the challenges in determining Jevic's legal obligations. The state law only specifies exceptions for catastrophes such as natural disasters or national emergencies.
A Jevic spokesman declined to comment today.
When the Delanco trucking company announced its shutdown Monday, it blamed rising fuel prices, a tighter credit market, and a poor economy. It then filed for Chapter 11 bankruptcy yesterday.
"I think the prevailing wisdom is [exceptions are] not in the law," said Chris Moran, a Philadelphia-based lawyer who has defended class-action suits over the federal WARN Act. "I would expect that if Jevic gets in litigation over it . . . their lawyers are going to try to argue that it somehow fits in one of the exceptions."
Sen. Diane B. Allen (R., Burlington), who said she had received a torrent of calls from laid-off workers, said the company appeared to have broken the law. She also said she had reached out to state labor department officials about it.
"The whole point of the law is to give folks the time to acclimate to what's going to happen, to make some changes in their lives, and to try and get things moving forward and secure their next position before they lose that job," Allen said.
Both federal and state laws require the employer to notify the chief municipal elected official 60 days in advance. Delanco Mayor Fern Ouellette showed a letter sent to him and to the state's Labor Department commissioner dated May 16 that said the company would close permanently June 30.
The letter, only referencing the federal law, cited one of the exemptions that is only permitted under federal law. It noted it was seeking financing that would have enabled it to continue operations. Those efforts were unsuccessful partly because of the "unforeseeable tightening of the credit markets," the company wrote.
"It is hard to think of a valid defense that the company could assert to justify its failure to provide the notice required under the New Jersey WARN Act," said Philip Harvey, an employment-law professor at Rutgers University-Camden.
The state law guarantees much higher penalties for violations, requiring employers to pay workers one week's wages for every year worked. Employees generally must sue to get the money, Harvey said.