New Protections for Employees of Certain Health Care Organizations in New Jersey | Cozen O’Connor

Healthcare organizations, home health agencies and staffing registries considering a transaction in New Jersey will need to keep in mind the new obligations to certain employees. On August 18, 2022, Governor Murphy signed into law New Jersey Senate Bill 315 (the “Act”), which created broad protections for many health care workers in the event of a change in control. The law requires that any change in control be made pursuant to a contract or agreement between the parties that preserves the wages, benefits and employment status of eligible employees.

Health Entities Covered: Act covers health care facilities licensed under NJSA 26:211-1 and so on., which include, among others, general hospitals, diagnostic centers, treatment centers, rehabilitation centers, skilled nursing homes, nursing homes, outpatient clinics, home health agencies, and residential health facilities. The act also covers personnel registries and home care service agencies designated under NJSA 45:11-23.

Covered Transactions: “Change in Control” is broadly defined to include any transaction involving the sale, disposition or transfer of all or substantially all of the assets used in the operations of a healthcare entity, or of a controlling interest in such entity, and any event or a series of events, including the purchase, sale, or termination of a management or lease agreement, that results in a change in the identity of the employer of the healthcare entity. “Change in Control” does not include a change in control transaction in which both parties involved are governmental entities.

Covered Employees: The law protects all current employees employed by an affected healthcare facility during the 90-day period immediately preceding the change in management; other than (i) employees who are exempt from overtime under the executive exemption under the New Jersey Wage and Hour Law; and (ii) any employee terminated for cause during the 90-day period. The law also covers former employees of a health care organization who retain their rights to withdraw under an agreement with their former health care organization employer.

Effective date: The Act takes effect on November 16, 2022 (“Effective Date”) and applies to contracts or change-of-control agreements entered into on or after the Effective Date.

Required actions: By law, at least 30 days before a change in control, a covered health care organization that changes control must provide the receiving health care organization and any applicable collective bargaining representative with a list containing name, address, date of hire, telephone number, salary rate and employment classification of each eligible employee. The covered health care facility must also inform all eligible employees of their rights under the law and post a notice of those rights in a conspicuous place.

Successor Health Entities must offer continued employment to all eligible employees for a transition period of at least four (4) months following the change in control without reduction in wages, paid time off or the total value of their benefits. Offers must be in writing and remain open for at least ten business days. If the total number of available positions in the successor health care entity is less than the total number of eligible employees, employees must be offered positions based on seniority and experience.

Retained employees may not be terminated during the transition period unless they are released for cause or as a result of downsizing (with employees being retained based on seniority and experience). Laid-off employees must be offered all positions they previously held if those positions are reinstated during the transition period.

At the end of the transition period, each retained eligible employee must undergo a performance evaluation, the results of which must be recorded in writing. If the employee’s performance is satisfactory, the employee should be offered continued employment. Please see here the full text of the law.

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