Add to this pending legislation regarding pay transparency, noncompete agreements and domestic workers, and employers must ensure they pay attention to these changes or risk significant liability.

Year after year, New Jersey continues its trend of adopting employee-friendly laws. With amendments to the state’s temporary workers bill of rights, a minimum wage increase (again), implementation of the country’s only severance mandate, additional unemployment obligations and increased government enforcement, 2023 was no different. Add to this pending legislation regarding pay transparency, noncompete agreements and domestic workers, and employers must ensure they pay attention to these changes or risk significant liability.

Minimum Wage Surpasses $15

Effective January 1, 2024, the state minimum wage will increase from $14.13 to $15.13 per hour due to 2019 legislation signed by Governor Phil Murphy that has been incrementally increasing the minimum wage over the last several years. Although the $15.13 minimum wage applies to most employees, there are several exceptions. The minimum wage will increase to $13.73 for small employers (fewer than six employees) and seasonal employers (those whose businesses operate only during the summer months or that pay 75 percent or more of their wages during a continuous four-month period). Additionally, direct care staff in long-term care facilities must be paid $18.13 an hour; agricultural workers will be entitled to $12.81 per hour; and tipped workers’ cash wages will remain at $5.26 an hour―however, employers will now be entitled to claim a tip credit of $9.87, up from $8.87.

Controversial Temporary Workers’ Bill of Rights Becomes Effective

On August 5, 2023, the New Jersey Temporary Worker Bill of Rights, intended to promote pay transparency and equalize the compensation of direct employees and temporary workers, fully went into effect. The law applies to “temporary laborers,” defined as people who contract “for employment in a designated classification placement with a temporary help service firm,” but coverage is limited only to those occupational categories considered to be “at greatest risk of exploitation,” i.e., protective service workers, food preparation and service related occupations, building and grounds cleaning and maintenance occupations, personal care and service occupations, construction laborers, helpers in construction trades, installation maintenance and repair occupations, production occupations, and transportation and material moving occupations.

Key takeaways include:

1. Temporary laborers must be paid the same average rate of pay and benefits as permanent employees employed directly by the employer and performing the same or substantially similar work.
2. Temporary help service firms must provide temporary laborers with a written statement in English and in the worker’s primary language using the assignment notification form, which includes the temporary employee’s name, the location and nature of the work, any equipment required, wages offered, entitlement of earned sick leave and more.
3. Temporary help service firms are required to provide each temporary laborer with a detailed itemized statement on their paystub.
4. Each temporary help service firm must register to operate in the state, pay an annual fee and obtain a surety bond of no less than $200,000.
5. When a temporary help service firm engages a temporary worker to fulfill a third-party employer’s needs, they must keep all records of that transaction and maintain same for six years.
6. A temporary help service firm may not place any restrictions on a temporary laborer’s ability to accept a permanent position with a third-party client. However, temporary service firms may charge a placement fee prescribed by the statute.

For additional information regarding compliance with the pay equity rules, see our prior Alerts on the law and related rules.

New Jersey Mini-WARN Act Overhaul Takes Effect

In January 2020, in the earliest stages of the COVID-19 pandemic, Governor Murphy signed into law Senate Bill 3170, which significantly amends the Millville Dallas Airmotive Plant Job Loss Notification Act (NJ WARN Act), New Jersey’s state law counterpart to the federal WARN Act. Originally intended to take effect in July 2020, the amendments were put on hold due to the pandemic and delayed indefinitely until the state of emergency was lifted. However, with the state of emergency still in place three years later, Governor Murphy signed into law Assembly Bill 4768, uncoupling the amendments and the state of emergency, allowing the amendments to take effect on April 10, 2023.

Among numerous changes, the most significant are:

1. Employers are required to provide a standard severance of one week pay for each full year of employment;
2. Both full-time and part-time employees are included in the 100-employee threshold for coverage;
3. Written notice is required if the employer terminates, within any 30-day period, 50 or more employees regardless of their full-time or part-time status and regardless of whether they work at or merely report to any establishment;
4. The notice period increased from 60 days (the length of time required under the federal WARN Act) to 90 days;
5. “Establishment” is redefined to include all locations in New Jersey, regardless of how far apart they are;
6. If the employer fails to provide the required 90-day notice, they are required to provide an additional four weeks of severance to each employee who received insufficient notice; and
7. Employers cannot provide a release in exchange for the mandated severance pay.

Unlike the federal WARN Act, the NJ WARN Act does not contain the faltering company or unforeseeable business circumstances exceptions that afford employers relief under federal law. The amendments to the NJ WARN Act significantly expand the law’s reach and employers planning mass layoffs, termination of operations or transfers of operations should be sure to consider the impact of these new obligations. For additional information, see our prior Alert.

Changes to Unemployment Compensation Law

On July 31, 2023, several amendments to the New Jersey Unemployment Compensation Law went into effect. Key takeaways include:

1. Employers must “immediately and simultaneously” submit post-termination notification to the New Jersey Department of Labor & Workforce Development (NJ DOL) and separated employees using Form BC-10.
2. In addition to Form BC-10, employers must submit a form to the NJ DOL to assist the department with making an unemployment insurance eligibility determination. As of the date of this Alert, the NJ DOL has not yet published a form for this requirement.
3. An employer that “willfully fails or refuses to furnish any reports or information,” including separation information, will be liable for a fine of $500 or 25 percent of any amount fraudulently withheld, whichever is greater.

The amendments also update the timeline of the claim process. This includes notifying the employer of missing information within seven days of the employee’s unemployment insurance claim, making an initial benefits determination within three weeks of receiving a separated employee’s claim, and providing claimants 21 days to appeal an initial NJ DOL determination. For additional information, see our prior Alert.

More Protections for Striking Workers

In April, Governor Murphy signed Senate Bill S3215 expanding access to unemployment benefits for striking workers. The law took effect immediately and is applicable retroactively to all claims filed on or after January 1, 2022. Notably, the bill:

1. Permits employees to receive unemployment benefits during an employer lockout even if a strike did not immediately precede the lockout;
2. Decreases the waiting period before unemployment benefits may be paid from 30 days to 14 days following the commencement of a strike and allows immediate payment of benefits if replacement workers are hired on either a permanent or temporary basis; and

3. Clarifies that there is no disqualification of a claim if an issue in the labor dispute is the failure of the employer to comply with an agreement between the parties.

Increased Government Enforcement

In 2023, the New Jersey Office of Attorney General―for the very first time―issued a request for qualifications, seeking applications from private attorneys interested in serving as special counsel for affirmative labor enforcement and worker protection litigation, i.e., initiating civil litigation under the state’s Wage & Hour Law, Wage Payment Law, Unemployment Compensation Law, Child Labor Law, Diane B. Allen Equal Pay Act, Prevailing Wage Act, New Jersey Antitrust Act “and/or other relevant laws and regulations.” With the state’s intent to pursue more employment-related claims in mind, all businesses operating in the state, from mom-and-pop businesses to large corporations, should be equipped with formal policies and handbooks and should be auditing those policies on a regular basis to ensure they reflect the current state of the law. For additional information, see our prior Alert.

A Number of Pending Bills Could Drastically Affect New Jersey Employment Law

Pay Transparency

Assembly Bill 3937 would require New Jersey employers to disclose the hourly range, salary or range of compensation for each job posted. Current amendments would also require employers to make reasonable efforts to notify all current employees of the opportunities for promotion. 

Domestic Workers

Senate Bill S723 removes the exclusion of domestic workers from the Law Against Discrimination and the New Jersey State Wage and Hour Law. The term “domestic workers” includes workers employed in a residence caring for a child and those caring for an elderly, sick, convalescing or disabled person as well as housekeepers, house cleaners, cooks, gardeners and others performing domestic service.

Restrictive Covenants

Assembly Bill 3715, proposed in 2022 but still pending, aims to limit the scope and enforceability of restrictive covenants in New Jersey employment contracts, including exempting certain classes of workers entirely―i.e., nonexempt employees, seasonal or temporary employees, employees laid off or terminated without a misconduct determination, independent contractors and employees who have worked less than one year.

What This Means for Employers

Employers must continually monitor the ever-changing landscape of New Jersey employment laws. Given the new requirements for employers in 2023 and beyond, employers in New Jersey should review their current policies and practices and consult with counsel to ensure they are in compliance and prepared for upcoming changes.

For More Information

If you have any questions about this Alert or have specific questions and concerns related to your operations, please contact Michael R. Futterman, Kathleen O'Malley, Niyah Dantzler, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.