Healthcare facilities, home health care agencies, and employment registries contemplating a transaction in New Jersey must consider new obligations to certain employees. On August 18, 2022, Governor Murphy signed New Jersey Senate Act No. 315 (the “Act”), creating comprehensive protections for many healthcare workers in the event of a change of control. The law requires that any change of control must be made pursuant to a contract or agreement between the parties that maintains the wages, benefits and employment status of eligible employees.
Covered Health Care Facilities: The Act applies to healthcare facilities licensed under NJSA 26:211-1 et seq., which may include, but are not limited to, general hospitals, diagnostic centers, treatment centers, rehabilitation centers, specialty nursing homes, nursing homes, outpatient clinics and home health care agencies, and residential healthcare facilities. The law also applies to personnel registries and home care agencies, which are defined at NJSA 45:11-23.
Covered Transactions: “Change of Control” is defined broadly to include any transaction involving a sale, disposal, or transfer of all or substantially all of the assets used in the operations of a healthcare facility, or a controlling interest in such facility, and any event or a Sequence of events, including purchase, sale, or termination of a management contract or lease, that result in a change of identity of the healthcare facility employer. A “change of control” does not include a change of control transaction where both parties involved are government entities.
Covered employees: The law protects all current employees employed by an affected healthcare facility during the 90 days immediately prior to a change of control; except for (i) employees who are exempt from overtime under the New Jersey Wage and Hours Act executive time off; and (ii) any employee fired for cause during the 90-day period. The law also applies to former employees of a healthcare facility who retain a right of withdrawal based on an agreement with their former employer at the healthcare facility.
Effective Date: The Act is effective on November 16, 2022 (“Effective Date”) and applies to any contract or change of control arrangement entered into on or after the Effective Date.
Measures required: Under the law, at least 30 days prior to a change of control, an affected healthcare facility that is changing control must provide the succeeding healthcare facility and all applicable collective bargaining representatives with a list of the name, address, hire date, phone number, salary, tariff, and employment classification of each eligible employee. The insured healthcare facility must also inform all eligible employees of their rights under the law and display a prominent notice of those rights.
Successor healthcare organizations must offer all eligible employees continued employment without reduction in wages, paid time off, or the total value of their benefits for a transition period of at least four (4) months after the change of control. The offers must be made in writing and remain open for at least ten working days. If the total number of positions available at the subsequent healthcare facility 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 dismissed for cause or due to downsizing (employment based on seniority and experience). The employees who have been made redundant must be offered their previous jobs if they are reintegrated during the transitional period.
At the end of the transition period, each retained eligible employee must undergo a performance review, the results of which must be recorded in writing. If the employee performs satisfactorily, the employee must be offered continued employment. The full text of the law can be found here.