A New Jersey appeals court found that the parent or an affiliate of an employer that failed to provide the required notice of a closing under the New Jersey WARN Act may be liable for severance pay. The New Jersey WARN Act generally requires employers with 100 or more full-time employees to provide its employees with advance notice, or in the alternative, severance pay, in the event of a facility shutdown or mass layoff. In determining parent or affiliate severance payment liability, the court ruled the following 5-factor test applicable under the Federal Worker Adjustment and Retraining Notification Act of 1988 (the "Federal WARN Act") should be utilized: (i) common ownership, (ii) common directors and/or officers, (iii) de facto exercise of control, (iv) unity of personnel policies emanating from a common source and (v) the dependency of operations. The parent or affiliate will be held liable for severance payments if, after application of the test, there is evidence of significant involvement by the parent or affiliate in the employer's employment decisions.
DeRosa v. Accredited Home Lenders Inc., 2011 N.J. Super. LEXIS 109 (N.J. App. Div. June 14, 2011)