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Will NJ’s Latest Approved Statute Throw Cold Water on Healthcare Transactions?

August 19, 2022

For more information about this blog post, please contact  Ryan L. O’Neill or Labinot Alexander Berlajolli.

On August 18, 2022, Governor Murphy signed Senate Bill No.315 (S-315) into law, establishing broad employment protections for workers in the healthcare sector when there is a change in control of a healthcare entity employer. When S-315 takes effect on November 16, 2022, a change in control of the applicable entity will have to occur with a written agreement that preserves the wages, benefits, and employment status of eligible employees. Under the law, a “change in control” is broadly defined as any transaction that will alter substantially all of the assets used in a healthcare entity's operations, the controlling interest in the healthcare entity, or the identity of the healthcare entity employer.

Terms Defined Under S-315

Healthcare entities covered by S-315 are currently limited to healthcare facilities licensed pursuant to N.J.S.A. § 26:2H-1 et seq., regardless of size, and staffing registries or home care services agencies as defined under N.J.S.A. § 45:11-23. In larger facilities where component departments may qualify, only those specific departments are subject to S-315. A “former healthcare entity employer” is any employer of eligible employees who owns, controls, or operates a healthcare entity where the eligible employees are employed right before the change in control of the entity. A “successor healthcare entity employer” is the entity taking ownership, control, or operation of a healthcare entity with eligible employees.

Eligible employees are defined as any person employed at an affected healthcare entity during the ninety (90) day period immediately preceding a change in control of a healthcare entity, or who retains recall rights under an agreement with the former healthcare entity employer.  Managerial employees do not qualify as “eligible employees.”  In addition, any person who was discharged with cause during the 90-day period preceding the change in control do not qualify as “eligible employees.”

Requirements Under S-315

Former healthcare Entity Employers

Not less than thirty (30) days prior to a change in control taking effect, the former healthcare entity employers must:

  1. Provide a list of eligible employees to the successor healthcare entity employer, and any collective bargaining representative the employees may have, containing the following information of each employee: name, address, date of hire, phone number, wage rate, and employment classification;
  2. Inform all eligible employees of their rights provided by this section; and
  3. Post a notice, in a conspicuous location or locations accessible to all employees, setting forth the rights provided by the statute.

Successor healthcare Entity Employers

  1. Offer employment during a transitional period of not less than four months following the change in control to each eligible employee, with no reduction of wages or paid time off, and no reduction of the total value of benefits, including healthcare, retirement, and education benefits, provided that:
    • The offer must be in writing and remain open for at least 10 business days from the date of the offer;
    • During the transition period, all available employment positions must be offered to eligible employees who had previously held the positions until the available employment positions are filled or until no more eligible employees are available; and
    • If, at the time of the change in control and throughout the transition period, the total number of employment positions is less than the total number of eligible employees, the choice of employees to be employed shall be based on seniority and experience.
  1. Refrain from discharging any eligible employee during the transitional period without cause, except that a successor employer may lay off eligible employees if the employer reduces the total number of employees, including at the time of the change in control. The choice of employees to be retained during a layoff must be based on seniority and experience, and the laid off employees must be offered any positions they had previously held that are subsequently restored during the transitional period.
  2. Perform a written performance evaluation at the end of the transitional period for each retained eligible employee, and offer the employee continued employment if an employee's performance during that period was satisfactory.
  3. Retain the employment offers and written performance evaluations, and provide to the employee or representative of the employee upon request, made pursuant to this subsection, for not less than three years from the date of the offer or evaluation, with each record including the name, address, date of hire, phone number, wage rate, and employment classification of the employee.

Penalties and Sanctions

Violations of S-315 will generally be subject to the same sanctions and remedies provided under N.J.S.A. § 34:11-4.1 et seq.  However, under S-315, failure to pay an employee wages, paid time off, or the value of benefits, as required under the law, will be regarded as a failure to pay the full amount of wages. Additionally, the discharge of an employee, or failure to offer employment or retain in employment an employee under S-315 will be regarded as retaliation against the employee. Finally, in civil actions brought by the employee, the court shall have authority to order injunctive or other permanent equitable relief, including, but not limited to, immediate reinstatement of any employee discharged or not retained in violation of this section.

Collective Bargaining

With the exception of actions specifically prohibited under S-315, no action taken in compliance with a collective bargaining agreement entered into by an exclusive representative of employees of a healthcare entity subject to a change in control section shall be considered a violation of S-315. Similarly, no new duty imposed under S-315 shall be construed as limiting, delaying, or preventing the recognition of a collective bargaining representative of the employees by a successor healthcare entity employer, or collective bargaining between the successor healthcare entity employer and the collective bargaining representative.


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