Does New Jersey require severance pay?

Yes — and this is unusual. NJ-WARN (N.J. Stat. § 34:21-2, as amended effective April 10, 2023) requires employers with 100 or more employees to pay statutory severance of one week of pay per full year of employment to every employee terminated in a covered mass layoff, transfer, or termination of operations. The rate is the higher of the employee's average regular rate over the last three years or the final regular rate. If the employer fails to give the full 90 days advance notice, it must add another four weeks of severance per affected employee. This severance is mandatory and runs in addition to (not in place of) any contractual or plan-based severance.

How is severance taxed in New Jersey?

New Jersey does not publish a flat supplemental withholding rate. Severance is withheld using the graduated NJ-WT / NJ-WT Supplemental tables — bracket rates run from 1.4% on low brackets up to 11.8% on income over $1,000,000. This calculator uses 6.37% as a blended estimate — that is the NJ bracket covering $75K–$500K taxable income, which is the typical severance-recipient range. If your taxable income falls in a different bracket, your actual NJ withholding will be lower (low brackets: 1.4%, 1.75%, 3.5%, 5.525%) or higher (high brackets: 8.97% over $500K, 10.75% over $1M for single, 11.8% over $1M for joint). Your actual NJ withholding also depends on YTD wages and W-4 filing status. On top of NJ state tax, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% up to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above the threshold).

What is NJ-WARN and how is it different from federal WARN?

NJ-WARN (the Millville Dallas Airmotive Plant Job Loss Notification Act) is materially stricter than federal WARN. (1) It applies to employers with 100 or more total employees anywhere — full- and part-time alike — vs. federal WARN's 100 full-time-equivalent test. (2) Required notice is 90 days vs. federal 60. (3) NJ counts 50+ affected employees across one or more NJ establishments in a 30-day period — there is no single-site requirement and no 33% workforce trigger. (4) Most importantly, NJ-WARN mandates severance (one week per year of service) for every covered termination, regardless of whether notice was deficient. Federal WARN provides only back pay for the days notice was missed.

Can I collect New Jersey unemployment while receiving severance?

Generally yes — but the structure matters. Under N.J. Admin. Code § 12:17-8.7, severance based on past services performed (paid as lump sum or periodic) does NOT disqualify you from unemployment benefits and does NOT extend your employment period. File your NJ unemployment claim as soon as you stop working full-time. However, "remuneration in lieu of notice" — payments obligated by contract or custom to substitute for advance notice — IS treated as an extension of employment and disqualifies you for those weeks. If your severance agreement labels payments as "wages in lieu of notice" or "pay in lieu," expect a delay; if it calls them severance for past service, file immediately.

Are non-competes enforceable in New Jersey?

Yes, but only under the common-law Solari/Whitmyer reasonableness test. New Jersey has no statute restricting non-competes (as of May 2026). Courts evaluate three factors: (1) the employer's legitimate protectable interest (trade secrets, confidential information, customer goodwill); (2) undue hardship to the employee; and (3) public-interest impact. Reasonable scope, geography, and duration (typically two years or less) are required. A bill (S 4385, introduced May 2025; preceded by A1650) would ban most non-competes in New Jersey but has not been enacted as of this writing. In practice, severance is often used as consideration for a non-compete release in NJ — you can negotiate to narrow or strike non-compete clauses in exchange for signing the release.

Can my employer make NJ-WARN severance replace its contractual severance plan?

No. NJ-WARN statutory severance is the minimum the employer must pay; it does not satisfy or substitute for additional contractual, plan-based, or negotiated severance unless the employer's plan explicitly says so. If your contractual severance is more generous than one week per year (for example, two weeks per year, or a flat number of months), you receive the more generous amount — not the statutory floor. If the employer's plan or offer letter is silent or less generous than NJ-WARN, you are entitled to the NJ-WARN minimum. Severance under NJ-WARN is treated as wages for tax and (where structured properly) unemployment-eligibility purposes.

New Jersey Severance — 1-Week-per-Year Statutory Mandate, 6.37% Effective Tax (Graduated), 2026

By Severance Calculator Editorial · Updated May 12, 2026

New Jersey WARN: what applies

The New Jersey Millville Dallas Airmotive Plant Job Loss Notification Act (NJ-WARN) — substantially expanded by S3170, effective April 10, 2023 — applies to all employers with 100 or more employees anywhere in the United States that have operated in New Jersey for more than three years. Covered actions (mass layoff, transfer of operations, or termination of operations affecting 50+ employees in any 30-day period at one or more establishments in NJ) require 90 days advance written notice AND mandatory severance pay equal to one week of pay for each full year of service. If the employer gives less than 90 days notice, it must pay an additional four weeks of severance. The severance rate is the average regular rate over the last three years or the final regular rate, whichever is higher. Unlike most state mini-WARN laws, NJ's severance mandate is statutory and runs regardless of whether notice was deficient.

How severance is taxed in New Jersey

New Jersey does not publish a flat supplemental withholding rate. Severance and bonuses are withheld using the graduated NJ-WT aggregate method — bracket rates span 1.4% to 11.8%, with the 11.8% top bracket applying only to taxable income above $1,000,000. This calculator uses 6.37% — the NJ bracket for $75K–$500K taxable income — as a blended middle-bracket estimate for the typical severance-recipient range. Your actual NJ withholding depends on YTD wages and W-4 filing status; employers should use Form NJ-WT and the NJ-WT Supplemental Withholding Tables.

Calculate your situation

Inputs default to New Jersey; adjust to your specifics.

Your situation

Role level

Years of tenure

Base salary ($)

State of employment

Age

Severance benchmarks

Typical benchmark

$24,519

7.5 weeks · methodology: benchmarks are derived from publicly reported severance norms across us corporate layoffs. weeks/year scale with role level; tenure <1 year gets a floor; cap at 52 weeks. these are negotiation reference points, not promises.

Band	Weeks	Gross
Typical	7.5	$24,519
Good	12.5	$40,865
Aggressive	20.0	$65,385

Tax breakdown (typical band)

Gross	$24,519
Federal supplemental	−$5,394
State supplemental	−$1,562
FICA — Social Security	−$1,520
FICA — Medicare	−$356
FICA — Additional Medicare	−$0
Net cash	$15,687

WARN Act

Not a group layoff

OWBPA review window

Individual exit (21-day review window) under the Older Workers Benefit Protection Act, plus 7-day revocation right.

Review window: 21 days · Revocation: 7 days after signing

COBRA cost

Monthly: $0

Annual: $0

Enter your employer-side monthly premium for an estimate.

Equity at termination

Forfeited unvested: $0

ISO exercise window post-termination: 90 days

ISO holders: you typically have 90 days post-termination to exercise vested ISOs before they convert to NSOs.

FAQ

Does New Jersey require severance pay?: Yes — and this is unusual. NJ-WARN (N.J. Stat. § 34:21-2, as amended effective April 10, 2023) requires employers with 100 or more employees to pay statutory severance of one week of pay per full year of employment to every employee terminated in a covered mass layoff, transfer, or termination of operations. The rate is the higher of the employee's average regular rate over the last three years or the final regular rate. If the employer fails to give the full 90 days advance notice, it must add another four weeks of severance per affected employee. This severance is mandatory and runs in addition to (not in place of) any contractual or plan-based severance.
How is severance taxed in New Jersey?: New Jersey does not publish a flat supplemental withholding rate. Severance is withheld using the graduated NJ-WT / NJ-WT Supplemental tables — bracket rates run from 1.4% on low brackets up to 11.8% on income over $1,000,000. This calculator uses 6.37% as a blended estimate — that is the NJ bracket covering $75K–$500K taxable income, which is the typical severance-recipient range. If your taxable income falls in a different bracket, your actual NJ withholding will be lower (low brackets: 1.4%, 1.75%, 3.5%, 5.525%) or higher (high brackets: 8.97% over $500K, 10.75% over $1M for single, 11.8% over $1M for joint). Your actual NJ withholding also depends on YTD wages and W-4 filing status. On top of NJ state tax, severance is subject to the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 in a calendar year) and FICA (Social Security 6.2% up to the wage base, Medicare 1.45% plus 0.9% additional Medicare on wages above the threshold).
What is NJ-WARN and how is it different from federal WARN?: NJ-WARN (the Millville Dallas Airmotive Plant Job Loss Notification Act) is materially stricter than federal WARN. (1) It applies to employers with 100 or more total employees anywhere — full- and part-time alike — vs. federal WARN's 100 full-time-equivalent test. (2) Required notice is 90 days vs. federal 60. (3) NJ counts 50+ affected employees across one or more NJ establishments in a 30-day period — there is no single-site requirement and no 33% workforce trigger. (4) Most importantly, NJ-WARN mandates severance (one week per year of service) for every covered termination, regardless of whether notice was deficient. Federal WARN provides only back pay for the days notice was missed.
Can I collect New Jersey unemployment while receiving severance?: Generally yes — but the structure matters. Under N.J. Admin. Code § 12:17-8.7, severance based on past services performed (paid as lump sum or periodic) does NOT disqualify you from unemployment benefits and does NOT extend your employment period. File your NJ unemployment claim as soon as you stop working full-time. However, "remuneration in lieu of notice" — payments obligated by contract or custom to substitute for advance notice — IS treated as an extension of employment and disqualifies you for those weeks. If your severance agreement labels payments as "wages in lieu of notice" or "pay in lieu," expect a delay; if it calls them severance for past service, file immediately.
Are non-competes enforceable in New Jersey?: Yes, but only under the common-law Solari/Whitmyer reasonableness test. New Jersey has no statute restricting non-competes (as of May 2026). Courts evaluate three factors: (1) the employer's legitimate protectable interest (trade secrets, confidential information, customer goodwill); (2) undue hardship to the employee; and (3) public-interest impact. Reasonable scope, geography, and duration (typically two years or less) are required. A bill (S 4385, introduced May 2025; preceded by A1650) would ban most non-competes in New Jersey but has not been enacted as of this writing. In practice, severance is often used as consideration for a non-compete release in NJ — you can negotiate to narrow or strike non-compete clauses in exchange for signing the release.
Can my employer make NJ-WARN severance replace its contractual severance plan?: No. NJ-WARN statutory severance is the minimum the employer must pay; it does not satisfy or substitute for additional contractual, plan-based, or negotiated severance unless the employer's plan explicitly says so. If your contractual severance is more generous than one week per year (for example, two weeks per year, or a flat number of months), you receive the more generous amount — not the statutory floor. If the employer's plan or offer letter is silent or less generous than NJ-WARN, you are entitled to the NJ-WARN minimum. Severance under NJ-WARN is treated as wages for tax and (where structured properly) unemployment-eligibility purposes.