New Jersey now protects health care workers after sales, mergers and other control changes. Ballard Spahr LLP

On August 18, New Jersey Governor Phil Murphy signed the law into law S315 (22R), whose purpose is to protect jobs and wages and benefits during a change in control of health care facilities. When there is a change in control, former and “successor” healthcare employers will now have new, and more important, legal obligations. This legislation has the potential to dramatically change the healthcare procurement landscape across the Garden State.

The law takes effect on November 16, 2022 (90 days after enactment).

Continued employment and benefits

The most notable liability of the law is imposed on purchasers or other successor employers. Specifically, for a period of four months following a change in control (the “transition period”), successor employers may not cease wages or paid time off, or the total value of benefits (eg, health care, retirement, and education benefits) to eligible employees.

If an employee accepts a job offer, the successor employer may not terminate the employee without cause during the transition period, unless the employee reduction is part of a major reduction in force and the selection of retained employees is based on seniority and experience. Following the transition period, the successor employer must also evaluate all retained employees, and offer to continue their employment if their performance is satisfactory.

A successor employer must keep records of each employment offer and performance evaluation for at least three years after the offer or evaluation.

Other Obligations

The law also requires a written agreement between former and successor employers, outlining the new law’s obligations. and requires the former employer to provide the successor employer and any collective bargaining representatives with a list of eligible employees at least 30 days prior to the change in control. This list must include the name, address, date of hire, phone number, wage rate, and job classification of each eligible employee.

Also, at least 30 days before the change in control, the former employer must notify each eligible employee of their rights under this law and post a notice of these rights in the workplace.

Definitions

An “eligible employee” means any person employed at least 90 days prior to a change in control, and a “health care facility” means any health care facility licensed under PL 1971, c. 136, an employee registry, or home care service agency.

“Change in Control” means the sale, assignment, transfer, contribution or other disposition of all or substantially all of the assets used in the operation (including consolidation, merger or reorganization) of a healthcare entity. It does not include any change in control of the former or successor health care employer being a governmental entity.

NLRA prejudice?

Compliance with this new act creates substantial challenges for a unionized successor employer, including the obligation for that health care employer to identify and contract with the predecessor labor union and accept pre-existing collective bargaining agreements, consistent with legal principles established decades ago. Under the National Labor Relations Act.

But because these union-related obligations arise under the NLRA, there are arguments that the new NJ law is preempted. However, that question requires further analysis beyond the scope of this alert.

Punishment?

Retaliatory workers have a private right of action for unpaid wages if the successor employer fails to continue paying wages and other benefits at the previous rate or if the employer fails to offer employment to a qualified employee. Affected employees are entitled to all available remedies, including immediate reinstatement and compensation for unpaid wages.

In light of these potential penalties, New Jersey health care facilities considering a merger, reorganization, or transfer of control should keep this new law in mind and consult with experienced labor counsel before proceeding with the transaction.

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