New Jersey Law Forces Bed Bath & Beyond to Pay Severance Pay

Bed Bath & Beyond's financial woes have left employees shocked to learn they will not receive severance pay when laid off employees and locations close down, reported 11Alive partner Atlanta Business Chronicle.

Sales at this home goods retailer have been declining and its CEO believes changes need to be implemented. Workers affected in past rounds of cuts received severance packages as part of those cuts.

Company lays off more than 1300 workers

Bed Bath & Beyond announced over 1,300 employee layoffs in its home state of New Jersey through WARN notices filed at its Port Reading and Secaucus locations, and plans to close several of its Harmons health and beauty stores affecting an additional 262 workers.

As reported earlier this month, this retailer is struggling to attract shoppers amid falling sales and mounting losses, warning it may run out of cash and file for bankruptcy protection as suppliers demand upfront payment or cease shipping goods altogether. Store shelves have become emptier as suppliers demand upfront payment or have stopped sending goods altogether.

In a memo to employees, the company explained this move was part of its plan to achieve annual savings target of $382 million by 2024. They've also begun closing underperforming stores - this should save another $140 million annually - saving even more money for themselves and shareholders alike. Last week alone saw their stock fall nearly one-third as sales continued their slumping trajectory.

Bed Bath & Beyond's latest round of layoffs has left many employees questioning if the company will follow New Jersey law, which mandates one week of severance pay per year worked, by giving out severance pay. Former managers claim they were not compensated when laid off from their positions.

Retailer Target is restructuring its store layout and shifting more attention towards online shopping, which will lead to the reduction of its workforce by around 6% - including some managerial positions being eliminated and employees in online operations and warehouses being let go. Furthermore, the company plans on downsizing their fleet of trucks while emphasizing smaller warehouses as part of this transformation plan.

Former store manager filed a class-action suit alleging that her former company did not properly notify employees about layoffs and did not pay them severance packages, violating New Jersey's Worker Adjustment and Retraining Notification (WARN) Act, which mandates businesses provide 90-day notice of plant closures or mass layoffs instead of 60.

Former store manager sues over mass layoffs

Bed Bath & Beyond's high employee turnover rate has led one former store manager who was let go to sue over the company's treatment of its workers. According to this lawsuit, Bed Bath & Beyond did not give appropriate notice or provide severance pay when employees were let go as required under New Jersey law. Starting April 10, their expanded Worker Adjustment and Retraining Notification Act will require large employers with at least 50 employees be granted one week of pay for each year worked and minimum severance packages as mandated by this Act.

Bed Bath & Beyond employees in multiple stores and warehouses nationwide were informed their jobs are being eliminated, yet were denied an opportunity to discuss it with management or receive any severance packages, unlike previous closure rounds where employees received such packages. "This is an absolute disgrace," stated Bruce Miller of United for Respect who have been pushing for new legislation governing this practice; Bed Bath & Beyond have yet to make a statement in response to their lawsuit being filed.

Michael Palmeri is among 1300 workers laid off on Friday from Harmon Store Management of North Plainfield and his lawsuit claims they did not give enough notice and support to affected employees after announcing layoffs on Jan 26. Additionally, according to New Jersey law employees should receive 60-days advance notification as required under New Jersey's Worker Adjustment and Retraining Notification Act (WARN Act).

Layoffs were part of the company's effort to raise $1 billion in equity to avoid bankruptcy and reduce costs as it struggled against discount retailers and online-only companies such as Amazon. Furthermore, it plans on decreasing its range of in-house brands in favor of selling more established national ones.

Despite financial struggles, the company has been doing exceptionally well with its online business. Recently it formed an alliance with Walmart, and this year alone its stock has more than doubled in value.

New Jersey law requires companies to give 90 days’ notice of plant closures or mass layoffs

New Jersey is one of only a few states to require companies with 100 or more employees nationwide to provide advance notice and severance pay to affected workers in the event of mass layoffs, plant closures or termination of operations. Due to a recent amendment in state law, coverage has now expanded significantly; employers must now give 90 days' notice when engaged in mass layoffs, business closure or workforce reduction at one place of employment; previously only 60 days' notice was mandated by law.

The changes to the Millville Dallas Airmotive Plant Job Loss Act also eliminate distinctions between part-time and full-time employees when calculating coverage thresholds under this law, including all employees working at or reporting to an establishment irrespective of full or part-time status. Furthermore, its core definition of an "establishment" now encompasses all facilities located throughout Illinois such as offices and plants as well as temporary construction sites rather than being restricted to specific geographical regions.

Additionally, this amendment now encompasses reductions of workforce resulting from mass layoffs or the termination of operations at a facility rather than just those caused by national emergencies, like COVID-19 pandemic. However, "mass layoff" excludes reductions incurred as a result of changes to employee shift schedules or organizational restructuring as these do not fall within its definition.

With changes to New Jersey's WARN laws, employers looking to conduct mass layoffs or close plants in New Jersey must consult an experienced employment lawyer in order to assess their current notice and severance pay obligations and their likelihood of meeting 90-day notice and severance pay requirements before April 10 comes into force. Failure to do so could expose companies to significant liability; please call Seyfarth Shaw today on (212) 686-5707 so we can discuss these changes, their impact on business plans, and how best to prepare for potential mass layoffs or closings or potential closures or layoffs or closings.

New Jersey law requires companies to pay out severance

New Jersey recently implemented a law mandating businesses pay out severance pay in certain types of employment terminations, beginning April 10, 2023. The legislation expands on requirements set out under a state version of Worker Adjustment and Retraining Notification Act (WARN), applying to businesses who impose mass layoffs of 50+ workers at once or shift. Severance payment must cover at least one week's worth of an employee's annual salary at their former company.

The new law also significantly lengthens the period that companies must notify employees before mass layoffs; from 60 days to 90 days. This marks a notable difference from federal WARN rules which don't mandate notice.

Although the new law aims to increase financial security for laid-off workers, it could have unintended repercussions for businesses. A lawsuit has been filed in federal court in an effort to overturn costly severance pay requirements; this court has yet to make its ruling on this matter.

Some observers speculate that the new severance pay requirements were inspired in part by Toys "R" Us' collapse into bankruptcy, when thousands of workers lost their jobs without receiving any severance pay or benefits immediately. Now, a law requires companies conducting mass layoffs or plant closings give employees 90-day advance notice.

Under the amended law, companies will also be required to offer severance pay to any workers laid off as a result of plant closure, mass layoff or relocation. Severance pay must equal either their average regular rate of compensation over the previous three years or final regular rate of pay that they had.

Under this new law, those involved in planning large layoffs could face personal liability. Therefore, corporate officers and private equity investors who may take actions which result in mass layoffs should consult legal advice prior to taking any actions that could cause mass unemployment. Furthermore, it would be prudent for these individuals to review their D&O policies to make sure there is enough coverage in case legal liability should arise from their decisions.