Senate Bill 315 adds protection for New Jersey healthcare workers

Effective November 16, 2022, non-governmental healthcare entities must offer eligible employees continued employment for at least four months after a change of control without any reduction in their wages and benefits – including paid time off, medical care health, retirement and education benefits according to Senate Bill 315 (the law). Change of control includes sales, transfers, assignments, mergers and reorganizations and is deemed to “occur on the date the document effecting the change is signed”.

“Eligible Employee” means any person employed in the Healthcare Entity in the 90 days prior to a Change of Control or any former employee with recall rights under a collective agreement. The law exempts managers, executives, or any employee terminated for cause during the 90-day period. However, the “cause” is not defined in the law.

At least thirty days prior to the change of control, a covered entity contemplating a change of control must provide the successor owner and any collective bargaining representative with a list of eligible employee contact information (i.e. names, addresses and telephone numbers), dates of hire, salary rates and job classifications; inform eligible employees in writing of their rights under the law; and post a notice of eligible employee rights in the workplace.

Upon a change of control, the successor entity must offer employment to eligible employees for a transition period of at least four months (“transition period”). All offers of employment must be in writing and remain open for at least ten working days from the date of the offer. If, at the time of the change of control or during the transition period, the number of employment positions is less than the number of eligible employees, employment decisions should be based on seniority and experience.

Eligible employees who accept employment may only be terminated for cause or as part of a downsizing during the transition period. After the transition period, the successor entity must provide each eligible employee retained with a written performance evaluation and offer continued employment if their performance has been satisfactory. In addition, the successor entity must retain each job offer and performance review for at least three years from the date of the offer or review.

The law requires that any change of control be made pursuant to a written contract between the previous owner and the successor owner setting out the requirements of the law. It covers all nongovernmental healthcare entities licensed under NJSA 26:2H-1 and following., which include, but are not limited to, hospitals, health care centers, diagnostic centers, rehabilitation centers, long-term care facilities, nursing homes, outpatient clinics, dispensaries and residential health care facilities. It also covers home health care service agencies as defined in NJSA 45:11-23 et seq., which include, but are not limited to, assisted living residences and programs, comprehensive personal care homes and other family care sponsoring agencies.

In addition, the law provides a private right of action for employees affected by its violations. Affected employees may be entitled to an injunction such as immediate reinstatement and will have the same remedies as for unpaid wages, which includes the possibility of liquidated damages of 200%. Therefore, providing a severance package equal to the amount of salary that would cover the period of guaranteed employment (or a remaining period of guaranteed employment) would not appear to satisfy an employer’s obligation to retain employees. for the required period.

New Jersey healthcare entities considering a change of control should consider these requirements during the due diligence review and then document them in any contract setting out the change of control between the former entity and the successor entity. In addition, New Jersey healthcare entities should consider the interplay between these new requirements and those set forth under the federal Worker Retraining and Notification Act (“WARN Act”), the New Jersey Millville Dallas Airmotive Plant Job Loss Notification Act, commonly referred to as the New Jersey WARN Act (“NJ WARN Act”)and pending amendments to the NJ WARN law, which have been put on hold due to the pandemic.

©2022 Epstein Becker & Green, PC All rights reserved.National Law Review, Volume XII, Number 321

Norman D. Briggs