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It was a busy January 2020 in Trenton, with the state enacting several new employment laws, with more apparently on the way. This is in addition to the slew of new laws adopted in 2019 impacting New Jersey employers. Here’s a summary of recent employment law developments in New Jersey just one month into 2020, a look at what may be on the way, and a recap of 2019’s changes.

2020 … So Far

Independent Contractor Misclassification

Governor Phil Murphy has made rooting out independent contractor misclassification a priority in his administration. Although efforts stalled last year to codify a more stringent version of the “ABC test,” which is used to determine independent contractor status under various New Jersey laws, the state has recently enacted several other laws aimed at discouraging and punishing the misclassification of employees as independent contractors. (The state’s efforts to modify the ABC test are not dead, as discussed below.) In January 2020, Governor Murphy signed the following new laws:

  • A5838 (P.L. 2019, c. 372). This law authorizes the New Jersey Department of Labor and Workforce Development (NJDOL), upon a finding of violations of state wage, benefit, and tax laws (including those resulting from the misclassification of an employee as an independent contractor), to issue a stop-work order at the location where the violation occurred. Stop-work orders will remain effective until further order of the commissioner of the NJDOL or a court, and the commissioner may assess civil penalties of up to $5,000 for each day a business operates in violation of a stop-work order. This law is effective immediately.
  • A5839 (P.L. 2019, c. 373). This law authorizes the NJDOL to assess additional penalties for employee misclassification, beyond those provided by any other law (including, presumably, the New Jersey Wage Theft Act, which was just enacted in August 2019). This law is effective immediately.
  • A5840 (P.L. 2019, c. 374). The Wage Theft Act already provides that employers and staffing agencies shall be jointly and severally liable for violations of New Jersey wage laws. This law expands such joint and several liability to violations of New Jersey tax laws. The law explicitly imposes liability on owners, directors, officers, and managers who violate New Jersey wage or tax laws on behalf of an employer or a staffing agency. This law is effective immediately.
  • A5843 (P.L. 2019, c. 375). This law requires businesses to post notices regarding employee misclassification “in a form issued by the Commissioner” and provides new penalties and remedies for retaliation against any “employee” who complains about worker misclassification. This law is effective on April 1, 2020.
  • S4228 (P.L. 2019, c. 367). This law significantly expands the categories of otherwise-confidential tax information the director of the Division of Taxation may share with the NJDOL so as to assist with NJDOL investigations. This law is effective immediately.

Please see our detailed article, New Jersey Resumes Efforts to Amend ABC Test for Independent Contractor Status, Passes Slate of Laws Targeting Misclassification, for more information about these new laws.

Severance Pay for Mass Layoffs

On January 21, 2020, Governor Murphy signed into law S3170 (P.L. 2019, c. 423), which expands the New Jersey Millville Dallas Airmotive Plant Job Loss Notification Act (NJWARN) to require 90 days’ advance notice of mass layoffs and plant closings (up from 60 days) and requires severance pay to employees affected by mass layoffs. The new law will take effect on July 19, 2020. Here is a summary of the key changes:

  • An employer with 100 or more employees must provide at least 90 days’ notice before the first employee is discharged as part of a mass layoff, termination of operations, or transfer of operations. The current NJWARN requires only 60 days’ notice.
  • To trigger the current NJWARN, a layoff must result in the discharge of at least 50 employees at the establishment, and the discharged employees must make up at least 33 percent of the total workforce of the establishment. The new NJWARN retains the 50-employee threshold, but eliminates the 33 percent requirement. Thus, as long as the event results in the discharge of at least 50 employees working at or reporting to the establishment (the definition of which also has changed, as discussed below), the layoff is covered, even if it represents a small percentage of the employees working there.
  • Employers must provide discharged employees with “severance pay equal to one week of pay for each full year of employment.” If an employer provides less than the required 90 days’ notice, it must pay the discharged employees “an additional four weeks of pay.” Under the current NJWARN, employers are only required to pay severance if they did not meet the notice requirement.
  • Under the current NJWARN employers are not required to consider part-time employees in calculating the 100-employee minimum for application of the Act or the 50-employee threshold for the notice requirement. Under the new NJWARN, however, employers must include part-time employees, regardless of hours worked, in both calculations. Also, part-time employees will be entitled to 90 days’ notice and severance just like full-time employees.
  • The new NJWARN defines “establishment” as “a place of employment which has been operated by an employer for a period longer than three years, but shall not include a temporary construction site.” It clarifies that an establishment “may be a single location or a group of locations, including any facilities located in [the state of New Jersey].” The prior definition of “establishment” was limited to “a single location or a group of contiguous locations, including groups of facilities which form an office or industrial park or separate facilities just across the street from each other.” Some may argue that this new definition aggregates all of an employer’s worksites in New Jersey as one “establishment” and, further, that the amended act applies to any employer that lays off 50 or more employees in New Jersey and has at least one facility that has been operating in New Jersey for more than three years, regardless of whether all of the affected employees work at that particular location.

Our detailed article, “New Jersey to Become First State to Guarantee Severance Payments Due to Mass Layoffs,” provides more information about this new law.

Final Paid Sick Leave Regulations Issued

After receiving more than one hundred comments from employers and other interested parties, the NJDOL issued its final regulations interpreting the New Jersey Paid Sick Leave Law (PSLL). The final regulations clarify a number of questions that arose from the proposed regulations. One of the most significant clarifications concerns an employer’s use of a PTO policy to satisfy the paid sick leave (PSL) requirements of the PSLL. According to the NJDOL, if an employer uses a PTO policy to comply with the PSLL, the employer must comply with all of the PSLL requirements as to all of the PTO time offered, not just 40 hours of PTO. As explained by the NJDOL:

N.J.A.C. 12:69-1.1(c) states that “[a]n employer shall be in compliance with [the PSLL] if the employer provides each employee with PTO, which may include leave types other than sick, such as personal and vacation, so long as the PTO meets or exceeds all of the requirements of [the PSLL]; that is, an employee must be permitted to use all of the PTO for any of the purposes set forth at N.J.A.C. 12:69-3.5(a), and the employer’s PTO program must meet or exceed the other requirements of [the PSLL] and this chapter, including, but not limited to: (1) Accrual in accordance with N.J.A.C. 12:69-3.4; (2) Use in accordance with N.J.A.C. 12:69-3.5; (3) Payment in accordance with N.J.A.C. 12:69-3.6; and (4) Payout and carry-over in accordance with N.J.A.C. 12:69-3.7.” Consequently, the employer who seeks to meet the requirements of [the PSLL] using a compliant PTO program must adhere to all of the requirements of [the PSLL] and the Department’s implementing rules, including the carry-over requirements, relative to all of the PTO, even where the employee is provided in excess of 40 hours of PTO. If the employer wishes to treat some PTO in a manner that does not comport with the requirements of [the PSLL] and implementing rules, then that PTO program would not be [PSLL] compliant. In the event that the employer wishes to deviate from any one or more of the requirements of [the PSLL] relative to hours of PTO afforded employees beyond the 40 hours required under [the PSLL], the employer always has the option of splitting its leave policies, so as to have an earned sick leave policy that is complaint with [the PSLL] and another [non-PSLL] compliant policy for other types of leave. (Emphasis added.)

Other areas addressed in the final regulations include the following:

  • The NJDOL confirmed that while an employee may be allowed to carry over unused PSL, an employer is not required to allow an employee to use more than 40 hours of PSL in a given year.
  • Although the federal Family and Medical Leave Act (FMLA) permits an employer to require an employee to exhaust paid sick leave before using unpaid FMLA leave, an employer may not require an employee to use available PSL before taking unpaid FMLA.
  • For calculation of an employee’s rate of pay for PSL purposes, an employer is not required to include discretionary bonuses; however, nondiscretionary bonuses (i.e., bonuses measured by hours worked, production, or efficiency) must be included in the calculation of PSL compensation.
  • Employers are not required to establish a single benefit year for all employees; instead, employers may establish any period of 12 consecutive months in which an employee may accrue and use PSL. For example, an employer may utilize an employee’s anniversary year as the benefit year.
  • Employers and employees covered by a collective bargaining agreement may negotiate benefits that are less generous than those required by the PSLL, and may negotiate to provide no paid sick leave benefits at all.
  • A school sporting event, play, or similar activity may under certain circumstances constitute a permitted reason to use earned PSL.
  • Where an employer establishes a policy whereby no employee may use earned sick leave in increments less than the number of hours the employee is scheduled to work during a given shift, then the employee who is scheduled to work, for example, a seven-hour shift, may not take earned sick leave during that shift in an increment less than seven hours. Thus, where the employee leaves work during the shift and indicates that he or she wishes to use earned sick leave for the absence, then the employer may deduct the full shift hours from the worker’s accrued earned sick leave bank.
  • The NJDOL intends to adopt a standard for determining coverage under the PSLL for employees who work both within New Jersey and outside New Jersey. That standard will be the same one that appears within the rules promulgated by the Division on Civil Rights for application to the New Jersey Family Leave Act; namely, where the employee routinely performs some work in New Jersey and the employee’s base of operations or the place from which such work is directed and controlled is in New Jersey, then the employee is entitled to the rights and protections afforded by the PSLL.

Pay Stub Requirements

The New Jersey Wage Payment Law (NJWPL) currently requires every employer to furnish each employee with a statement of deductions from his or her wages each pay period. Under a new law, S1791 (P.L. 2019, c. 399), employers with at least 10 employees must also provide the following information in an employee’s pay statement:

  • the employee’s gross wages;
  • the employee’s net wages;
  • the employee’s rate of pay; and
  • if relevant to the wage calculation, the number of hours worked by the employee during the pay period.

The new law also expressly provides that employee’s pay statements may be provided electronically, unless the employee requests the statement be provided in paper format.

Job Protection for Organ and Bone Marrow Donors

Under A1449 (P.L. 2019, c. 464), the New Jersey Temporary Disability Benefits Law (NJTDBL) was amended to provide that a person who receives NJTBL benefits as a result of donating an organ or bone marrow shall, after the period of disability ends, be restored to the position of employment the person held when the period of disability commenced, or to an equivalent position of like seniority, status, employment benefits, pay, and other terms and conditions of employment. This act takes effect on May 20, 2020.

Increase in Weekly Benefit Amounts

Effective January 1, 2020, the maximum weekly benefit amount for Unemployment Insurance beneficiaries increased to $713, from $696. The maximum weekly benefit for Temporary Disability and Family Leave Insurance claims increased to $667, from $650. The weekly benefit amount for Temporary Disability and Family Leave Insurance claims will increase again on July 1, 2020, to $881.

More on the Horizon?

Modification of the “ABC Test”

As noted above, efforts to modify the employee/independent contractor “ABC test” failed in 2019, but all indications are that the effort will be renewed in 2020. On January 14, 2020, the state senate introduced S863, a new version of the bill, which presents many of the same problems for New Jersey businesses that its predecessors did.

New Jersey uses the ABC test to determine whether a worker is an employee or an independent contractor for purposes of its Unemployment Compensation Law, the New Jersey Wage and Hour Law, and the New Jersey Wage Payment Law. Under New Jersey’s current version of the ABC test, a worker performing services for remuneration is presumed to be an employee unless the hiring entity proves each of three circumstances:

(A) [the] individual has been and will continue to be free from control or direction over the performance of [the] service, both under his contract of service and in fact;

(B) [the] service is either outside the usual course of the business for which [the] service is performed, or that [the] service is performed outside of all the places of business of the enterprise for which [the] service is performed; and

(C) [the] individual is customarily engaged in an independently established trade, occupation, profession or business.

S863 would amend and supplement the current law in important ways. Of particular note, the bill would amend prong C of the ABC test to read as follows: “The individual is customarily engaged in an independently established business or enterprise of the same nature as that involved in the work performed.” (Emphasis added.) While it is unclear precisely how this revision would be interpreted and applied, it is narrower than the existing prong C and clearly targets the gig economy. The proposed amendments to prong C would appear to require most part-time independent contractors or “gig” workers to be classified as employees.

Again, please see our detailed  article, “New Jersey Resumes Efforts to Amend ABC Test for Independent Contractor Status, Passes Slate of Laws Targeting Misclassification,” for more information about the proposed ABC test modification bill.

New Jersey Fair Workweek Act

In late January 2020, Senators Loretta Weinberg and Nia H. Gill introduced S921, a predictive scheduling bill called the “New Jersey Fair Workweek Act,” which could dramatically impact certain larger employers’ ability to make changes to employees’ work schedules. Among the bill’s provisions, which would apply to nonexempt employees (1) working in New Jersey for a mercantile, hospitality, restaurant, or warehouse establishment and (2) for an employer that employs at least 250 employees (worldwide, not just in New Jersey):

  • An employee, upon hire, must provide an employer with a written request of the employee’s preferred schedule, and the employer must provide a good-faith estimate of the employee’s projected schedule. The good-faith estimate must contain: the average number of work hours the employee can expect to work each work; the minimum and maximum number of hours the employee can expect to work each week; the minimum length of shifts that the employee can expect to work; and the number of days, the amount of time, and the number of shifts that the employee can expect to work, as well as the shifts the employee will not be scheduled to work.
  • An employee may make requests for a change to the schedule, and the employer is required to work in good faith to accommodate these requests if possible.
  • An employer must provide and post notice of an employee’s schedule at least 14 days prior to the start of the work period that the schedule covers. The employer is required to give prior notice to affected employees of any revision of the posted schedule and post the revised schedule within 24 hours. An employee is allowed to decline to work any shifts that are not posted in such a manner. The bill provides for employees to receive “predictability pay” (in amounts described in the bill) for any work schedule change that occurs after the above mentioned advanced notice has been provided.
  • An employee may decline any shifts scheduled less than 12 hours after the end of the employee’s most recent shift. Any shifts worked by the employee within 12 hours of their most recent shift shall be compensated with “rest shortfall pay” at one and one-half times the employee’s normal rate.
  • An employer must offer existing employees opportunities to work the desired number of weekly work hours they provided in their preferred schedule (i.e., increase the shifts of existing employees), within the limits of the law, before hiring new employees capable of performing the same tasks.
  • An employer must keep records detailing its compliance with these requirements, and those records must be accessible to the employees concerned.
  • An employer must pay an employee nine times the employee’s regular wage, or the minimum wage, whichever is larger, in “retention pay” for every 7-day work period; with an employee’s normal pay or paid time-off counting toward compliance with this requirement.
  • Employers covered by the law must post a notice setting forth the pertinent provisions of the law.
  • The law would not apply to collective bargaining agreements if the agreement waives specific provisions that are covered within the law, so long as the agreement addresses the topic of employee scheduling.

The bill includes a number of additional provisions, including some exceptions to the more potentially onerous terms summarized above, as well as substantial penalty and damages provisions.

Associational Discrimination Protections

Under S1136, the New Jersey Law Against Discrimination (NJLAD) would be amended to prohibit discrimination against an employee because of the protected category (e.g., race, gender, religion, etc.) of another individual with whom the employee is known or believed to have a relationship or association.

Family Leave Act Expansion

Continuing the expansion of the state’s Family Leave Act (NJFLA) and Family Leave Insurance Law (NJFLI), under S1001, an employee would be entitled to take family leave, and receive NJFLI benefits while taking leave, to care for a child born under a written agreement with a gestational carrier and to provide care to the woman whose pregnancy will result in the child.

Voting Leave

A2843 would require employers to provide paid leave to employees to vote in certain circumstances.

Job Applicants

S1809 would prohibit employers from inquiring about the gender of job applicants unless gender is a bona fide occupational qualification, reasonably necessary to the normal operation of the particular business or enterprise.

2019 … A Year of Many Changes

In case you missed it, here is a recap of some of 2019’s significant developments for employers:

Expansion of New Jersey Family Leave, Family Leave Insurance, and SAFE Laws

New Jersey amended its NJFLA, NJFLI, and Security and Financial Empowerment (SAFE) Act laws to provide employees with greater rights. One significant change is that, effective July 2020, employees will be eligible for 12 weeks (not just 6 weeks) of wage replacement benefits from the state, and the weekly maximum benefit is increased to 85 percent of the employee’s weekly wage. For more information, please see “New Jersey Expands Family Leave Laws.”

Salary History Inquiry Ban

Effective January 1, 2020, employers are prohibited from asking about or considering an applicant’s wage or salary history when considering them for employment or negotiating an offer of employment, unless the applicant voluntarily and without employer prompting or coercion provides the employer with his/her salary history during the application process.

Increase to New Jersey Minimum Wage

New Jersey enacted a law to raise the minimum wage to $15 an hour by 2024. Under the new law, the first raise of $1.15—up to $10.00 an hour—became effective on July 1, 2019. Thereafter, the annual minimum wage will increase by the greater of either the federal consumer price index or $1.00 on the first day of each subsequent year, until it reaches at least $15.00 in 2024. For more information, see “New Jersey’s Minimum Wage to Reach at Least $15 by 2024.”

New Wage Rights Notice

In August 2019, New Jersey enacted a new “Wage Theft Act” which greatly expands employers’ liability for violation of the wage and hour laws and requires that employers provide current and newly hired employees a written statement of wage rights. The required notice will be produced by the NJDOL, but is not yet available. For more information, see “Employers Beware: New Jersey Enacts One of the Toughest “Wage Theft” Laws in the Country.

Confidentiality Provisions in Settlement Agreements

Effective March 18, 2019, a nondisclosure clause in an agreement settling a claim of discrimination is unenforceable. See “New Jersey Bars Nondisclosure Agreements in All Discrimination Settlements, Purports to Bar Arbitration Agreements,” for more information.

Mandatory Arbitration

Effective March 18, 2019, employers are prohibited from requiring employees to sign agreements that require mandatory binding arbitration of claims relating to any form of discrimination. (Again, please see our article, “New Jersey Bars Nondisclosure Agreements in All Discrimination Settlements, Purports to Bar Arbitration Agreements,” for more information.)

Medical Marijuana and Drug Testing

On July 2, 2019, Governor Murphy signed into law the Jake Honig Compassionate Use Medical Cannabis Act (P.L. 2019, c. 153) (CUMCA), which reforms the state’s medical marijuana program. Under CUMCA, employers are prohibited from taking any adverse employment action against a medical marijuana user if that adverse employment action is “based solely on the employee’s status” as a medical marijuana patient. Notably, however, CUMCA does not prevent employers from taking adverse employment action for the possession or use of intoxicating substances during work hours or on workplace premises outside of work hours. With respect to drug testing, when an employee or applicant tests positive for marijuana, CUMCA requires the employer to first give the employee or applicant written notice of the positive test result and an opportunity to provide a “legitimate medical explanation for the positive test result.” Within three working days after the employee or applicant receives the written notice, he or she may provide a legitimate medical reason for the positive test or request retesting at his or her expense. The legitimate medical reason may be an authorization for medical marijuana use by a health care provider, proof of registration for medical marijuana use, or both.

Hairstyle Discrimination Ban Enacted

On December 19, 2019, Governor Murphy signed into law S3945 (P.L. 2019, c. 272), the Create a Respectful and Open Workplace for Natural Hair Act (CROWN Act), which went into effect immediately. The CROWN Act amends the NJLAD to prohibit discrimination based upon “traits historically associated with race, including, but not limited to, hair texture, hair type, and protective hairstyles” such as braids, locks, and twists.


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