Employers need to understand the New Jersey employee separation process in order to comply with state-specific employee termination laws. Employer obligations differ considerably in different states.
This employee separation checklist and guide is designed to brief you on key considerations, including final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
New Jersey Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in New Jersey
New Jersey law mandates that, upon separation, employees must receive their final wages promptly. Whether an employee is terminated or resigns, they must be paid all earned wages on the next scheduled payday. Furthermore, sales representatives earning commissions must receive payment within 30 days after contract termination or when the commissions are due, whichever comes later (N.J. Stat. Ann. § 2A:61A-2).
Employers are only required to pay out accrued vacation time if stipulated by the employee’s contract or company policy. The law doesn’t specify the method for delivering the final paycheck. However, it’s generally advisable to use the usual payment method. Employers who fail to comply may face significant penalties, including paying up to 200 percent of the withheld wages, and potential fines or imprisonment for repeated offenses.
2. Firing Employees in New Jersey
New Jersey is an at-will employment state, which usually makes firing employees a straightforward process. All employees in New Jersey, who separate from work for seven or more days, must be provided Form BC-10 – Instructions for Claiming Unemployment Benefits.
If you provide a group health insurance plan and have fewer than 51 employees, you must notify separated employees of their right to continue that coverage under New Jersey’s state-level COBRA law. This notice must be provided at the time of separation.
There are additional notice requirements for certain types of employers and separations. Under the New Jersey WARN Act, employers with 100 or more employees, known as “covered employers,” must provide affected employees with 90 days’ notice and severance pay before initiating a plant closing, mass layoff, or transfer of operations. Affected employees include anyone likely to experience termination or layoff exceeding six months, excluding cases of discharge for cause, voluntary departure, or retirement. Employers who fail to give 90 days’ notice are also required to provide an additional four weeks of severance pay.
Notices must be delivered to affected employees, collective bargaining units, the local chief elected official, and the New Jersey Commissioner of Labor and Workforce Development. Specific content, including details about the layoff, severance pay, and employee rights, must be included in the notice, using a form provided by the New Jersey Department of Labor and Workforce Development. Exceptions to the notice requirement apply in certain circumstances.
3. Severance Agreements in New Jersey
If you plan to use a severance agreement in New Jersey, there are several key considerations. If the agreement contains a confidentiality provision, employers must provide employees with a confidentiality notice. T
he notice should inform the employee that if they publicly disclose enough details of the agreement to make the employer identifiable, the confidentiality provision no longer applies to the employer. Furthermore, any claims releases must clearly list the specific federal and state law claims the employee is waiving.
In New Jersey, this includes claims under New Jersey Law Against Discrimination, New Jersey Conscientious Employee Protection Act, New Jersey Wage Payment Law, New Jersey Equal Pay Act, New Jersey COVID-19 Job Protection Act, New Jersey Wage and Hour Law, New Jersey Wage Collection Law, New Jersey Security and Financial Empowerment Act, Worker Freedom from Employer Intimidation Act, and New Jersey Family Medical Leave Act and other leave laws.
Note that non-disparagement clauses in New Jersey severance agreements cannot prevent employees from discussing or disclosing details related to claims of discrimination, retaliation, or harassment. This includes sexual harassment or assault disputes. Be sure that any release of claims only covers claims arising before the agreement’s effective date.
Finally, employers should also consider applicable federal employee termination laws and guidelines. For example, the NLRB’s 2023 McLaren decision suggests a restriction in the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in New Jersey
When separating from an employee with an Income Withholding for Support Order (“IWO”), promptly report the employee’s termination to the child support agency, court, or attorney that issued the IWO. You may register for online reporting with the Federal Office of Child Support Enforcement here.
You also may report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Then fax or mail it to the child support agency that issued it. You will need the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in New Jersey
If parting ways with your last New Jersey employee ends your business with the state, you may want to withdraw your business registration from the state. Organizations can file the appropriate form with the New Jersey Secretary of State: For-Profit Corporations must file a Certificate of Withdrawal, and obtain a clearance from the New Jersey Department of Taxation showing that all state taxes have been paid. Non-Profit Corporations must file this Certificate of Withdrawal. Finally, Limited Liability Companies (LLCs) should file this Certificate of Cancellation.
Stay Compliant with New Jersey Employee Separation Requirements
Understanding the requirements for a New Jersey Employee Separation Agreement helps employers ensure state and federal law compliance, respect employee rights, and lessen potential legal liability.
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