New Jersey passed a smart law last year requiring companies to give workers notice before they get laid off. Unfortunately, in its first big test, the law failed to provide the intended protection.
Last month, Burlington County's Jevic Transportation Inc. abruptly closed its doors. More than 1,000 Jevic employees were stunned when they reported to work May 19 to learn that it would be their last day of employment.
The workers were sent packing with no severance pay, health benefits or heads-up to find other jobs. Many had worked for the company for 10 years or more.
The new state law - as well as a federal law - requires companies with at least 100 employees to give 60 days' notice of any layoffs. But the federal law has a loophole that Jevic invoked when it laid off its workers.
Jevic officials, who did not return calls for comment, cited an exemption in the federal law that waives the layoff notice for businesses that are seeking additional financing to right themselves.
The tougher New Jersey law, passed last December, lacks the financing exemption and raises the amount employees can win in a lawsuit. The law allows for exceptions only in extreme cases, such as war, fire or floods.
Without notice, the state law calls for workers to get one week's pay for every year worked if the company misses the deadline.
But the trick for workers is to get the company to pay up.
Like the federal law, the state law requires employees to sue in order to enforce the law and get their back wages.
A day after closing, Jevic filed for Chapter 11 bankruptcy protection, which severely complicates workers' legal claims, as they must now get in line with other creditors. Jevic's trip to bankruptcy court was brought on by rising fuel costs and the sluggish economy, the company said.
Lawyer Robert F. O'Brien filed a lawsuit against Jevic on behalf of the laid-off workers. The suit requests class-action status and seeks to recoup lost wages for the former employees.
O'Brien says Jevic could owe workers up to $10 million. But even if the suit is successful, workers, like other creditors, will likely get paid pennies on the dollars owed.
This is where state officials could step in and toughen New Jersey's layoff law to better protect workers in the future. Legislators could put the burden on the state - and not wronged employees - to enforce the law.
As it stands now, the onus is on the individual workers to get Jevic to pay up. Most individuals - especially those who just got laid off - have neither the money nor the time to seek justice in court.
Indeed, only about one-third of companies nationally comply with the federal notification law, according to government estimates.
State Labor Commissioner David Socolow calls the Jevic shutdown "very troubling." State officials are trying to help employees land new jobs and secure medical benefits.