New Jersey Enacts Job Protections for Health Care Workers Following Change in Control of Their Employer

Pursuant to New Jersey Senate Bill 315, effective November 16, 2022, certain health care entities are required to offer “eligible employees” continued employment for at least four (4) months  – without any reduction of wages, paid time off, or value of benefits – following a “change in control” of a predecessor heath care entity employer. 

Who is subject to this new law?

The law applies to all non-governmental health care entities licensed under N.J.S.A. 26:2H-1 et seq., which include hospitals, health care centers, rehabilitation centers, diagnostic centers, extended care facilities, nursing homes, outpatient clinics, residential health care facilities, and dispensaries. The law also applies to non-governmental home health care services agencies as defined under N.J.S.A. 45:11-23 et seq.

An “eligible employee” means any individual, except as set forth below, employed by a covered health care entity during the 90-day period before the “change in control” or any former employee with recall rights under a collective bargaining agreement. “Eligible employees” do not include managers or any employee discharged for cause during the aforementioned 90-day period. Notably, the law does not define what constitutes “cause.” 

What constitutes as a “change in control” to trigger the employment protections?

The new law defines a “change in control” as any sale, assignment, transfer, contribution, or other disposition of all or substantially all of a health care entity’s assets or controlling interest, including by consolidation, merger, or reorganization.  Further a “change in control” also includes “any event or sequence of events, including a purchase, sale, or termination of a management contract or lease, that causes the identity of the health care entity employer to change.” A “change in control” is deemed to “occur on the date of execution of the document effectuating the change.”

Are there obligations imposed upon the former employer?

At least thirty (30) days prior to the “change in control,” a covered health care entity must:

• Provide the successor employer and the employee’s collective bargaining representative (if applicable) a list containing the contact information, date of hire, wage rate, and employment classification of each “eligible employee;”
• Issue written notice to “eligible employees” of their rights under the law; and
• Post a notice of rights under the law in a conspicuous location in the workplace.

What are the successor employer’s obligations?

As noted above, the new law requires the covered successor health care entity to offer employment for a transition period of at least (4) months (the “transition period”) following the “change in control” to all “eligible employees,” with no reduction of wages, paid time off, or the value of benefits, including health care, retirement, and education benefits. The offer of employment must remain open for at least ten (10) business days. If the number of available employment positions is less than the number of “eligible employees” at the time of the “change in control,” then employment decisions must be based on seniority and experience.

Eligible employees who accept the offers of employment may be discharged only for cause or as part of a reduction in force during the transition period. Further, to the extent any positions are restored during the transition period, the covered successor health care entity must offer employees who were laid off at any point during the transition period (including at the time of the “change in control”) the positions they had previously held.

After the completion of the transition period, the successor entity must then provide each retained “eligible employee” with a written performance review and, if their performance is satisfactory, offer the employee continued employment. Significantly, the law does not impose any requirements as to the length of continued employment after the completion of the transition period.

The successor entity must maintain each offer of employment and performance evaluation for at least three (3) years from the date of the offer or evaluation.

What are the penalties for non-compliance?

The law provides for a private right of action for affected employees who may be entitled to injunctive relief (i.e., reinstatement) and the same remedies available for wage violations, including the potential for liquidated damages.

Overall, covered health care entities should speak with counsel regarding these significant employment protections. To the extent that any “change in control” is being contemplated, covered health care entities should memorialize compliance with this law in the contract effectuating the “change in control.”