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On January 20, 2020, New Jersey enacted several laws that significantly affect the workplace.  These laws require mandatory severance pay for layoffs subject to the New Jersey version of the WARN Act, requirements for a successor employer to hire and retain the predecessor’s employees for up to two years, certain protections for call-center workers, and additional remedies and protections to discourage employers from misclassifying workers as independent contractors. Below is a summary of these changes. 

Expanded Obligations under the New Jersey WARN Act

On January 20, 2020 New Jersey enacted S. 3170, which amended the state’s Millville Dallas Airmotive Plant Job Loss Notification Act (New Jersey’s version of the federal WARN Act) in four critical respects. 

  1. The amendment requires employers who implement a reduction in force that amounts to a Termination of Operations or a Mass Layoff and that affects at least 50 full time employees to provide the affected employees with one week of severance pay for each year of employment, which is in addition to any other severance due under a collective bargaining agreement or employer policy. The severance pay is based on the “average regular rate of compensation received during the employee’s last three years of employment with the employer or the final regular rate of compensation paid to the employee, whichever is greater.” Employees cannot waive their right to severance pay unless the waiver is approved by the Commissioner of Labor and Workforce Development (Commissioner) or a court.
  2. The amendment expands the required notice period for a Termination of Operations or a Mass Layoff from 60 days to 90 days.
  3. The amendment requires employers who fail to provide the required 90-day’s advance notice to pay the affected employees an additional four weeks’ pay.
  4. The amendment creates significant protections for employees whose employers employ 50 or more employees and experience a change in control, which is defined as “any material change in ownership of an employer or any filing seeking bankruptcy protection.” For two years after a change-of-control event, the successor employer (the employer who controls a business after a change in control) must retain all the predecessor’s covered employees (generally hourly employees), other than employees terminated for cause, unless the Commissioner grants a waiver. The Commissioner can only grant a waiver if the successor employer demonstrates, by a preponderance of the evidence, that it has conducted a study of the nature and scope of the work done by the employees whose positions are being eliminated showing that the elimination is necessary for the continued solvency of the business. Additionally, during the first 180 days, the successor employer cannot reduce the covered employees’ total compensation.

The amendment takes effect on July 18, 2020, 180 days after its enactment. 

Protections for Call Center Workers

Governor Murphy also signed off on the “New Jersey Call Center Jobs Act,” A.1992, which penalizes New Jersey-based call centers that off-shore their work.  Under the Act, call centers in New Jersey with more than 50 employees must employ enough workers to handle 65 percent of phone calls, emails, “or other electronic communication” originating from New Jersey callers or locations. Call centers intending to transfer 20 percent or more of their operations serving New Jersey customers must give the Commissioner of Labor 90 days’ notice of their intent to do so; if they don’t, they can be penalized up to $7,500 per day for each day under the 90-day notice period. 

The Commissioner is required to compile a monthly list of all call center employers who provide such relocation notices, and those employers remain on the list for three years. Call center employers on the list are ineligible for grants, guaranteed loans, tax benefits, or any other financial support from the State. However, training assistance for particular groups is exempted.

The Call Center Jobs Act takes effect July 20, 2020.

Worker Misclassification

In an effort to further protect workers against misclassification, on January 20, 2020, Governor Murphy also passed a package of bills that provide for (1) stop-work orders against employers in violation of state wage, benefit and tax law; (2) increased financial penalties for misclassification; (3) joint liability between contractors and employers; (4) posting requirements; (5) publishing of violators; and (6) inter-agency sharing of tax data in connection with enforcing the classification laws.

A brief description of each of the bills is provided below: 

Stop-Work Order - 5838

This bill took effect on January 20, 2020 and provides the Commissioner with the authority to issue a stop-work order against an employer in violation of any state wage, benefit, or tax law. Once a stop-work order is issued, the employer must stop all business operations at any site where a violation occurred. The employer may promptly appeal the order and ask for a hearing, but the stop-work order will be lifted only after the employer agrees to cure the violations (i.e., pay the wages and any penalty assessed). A civil penalty of $5,000 per day may be assessed for each day an employer operates in violation of the stop-work order. 

Financial Penalties - 539

This bill took effect on January 20, 2020 and provides for financial penalties for misclassification of $250 per misclassified employee for the first violation and up to $1,000 per misclassified employee for subsequent violations.

Additionally, the bill provides for “a penalty to be provided for the misclassified worker of not more than five percent of the worker’s gross earnings over the past 12 months from the employer who failed to properly classify them.” Also, “the employer may be required to make these penalty payments to the Commissioner to be held in a special account in trust for the worker, or paid on order of the Commissioner directly to the worker.”

Joint Liability - 5840

This bill took effect on January 20, 2020 and makes any client employer and any labor contractor providing workers to the client employer subject to joint and several liability and shared civil legal responsibility for any violations of New Jersey wage and hour laws and employer tax laws, including laws concerning the misclassification of workers. Additionally, the bill prohibits client employers from shifting responsibility for compliance with the Worker Health and Safety Act to the labor contractor.

Posting Requirements - 5843

This bill will take effect on April 20, 2020 and requires employers to post a notice regarding employee misclassification, in a place or places accessible to all employees, and in a form issued by the Commissioner, explaining:  

  1. The prohibition against employers misclassifying employees; 
  2. the standard that is applied by the department to determine whether one is an employee or an independent contractor;
  3. the benefits and protections to which an employee is entitled under State wage, benefit and tax laws;
  4. the remedies under New Jersey law to which workers affected by misclassification may be entitled; and
  5. the information on how a worker or a worker's authorized representative may contact, by telephone, mail and e-mail, a representative of the Commissioner to provide information to, or file a complaint with, the representative regarding possible worker misclassification.

Additionally, the bill protects workers against employer retaliation. Where an employer is found to have retaliated against a worker for reporting a complaint or making an inquiry regarding misclassification, the Commissioner may assess a fine of $100 to $1,000, and any worker terminated in retaliation for such inquiry/complaint is entitled to reinstatement as well as back pay, attorneys’ fees, and punitive damages equal to two times the lost wages and benefits.

Publishing Violators - 4226

This bill took effect immediately and permits the Commissioner to publish online the name of any person found to be in violation of state wage, benefit, or tax law and against whom the Commissioner or other appropriate agency officer has issued a final order.

Inter-Agency Information Sharing - 4228

This bill took effect immediately and allows the New Jersey Division of Taxation to share tax data with the Department of Labor and Workforce Development in connection with enforcing violations of the law.