31 Jan

January 2020 New Jersey HR Legal Updates

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Final Regulations for Earned Sick Leave Law Released

What happened?
The New Jersey Department of Labor and Workforce Development (the “Department”) issued regulations regarding enforcement of New Jersey’s Earned Sick Leave Law (ESLL), as well as its responses to comments about the initially proposed regulations on January 6, 2020. The final regulations contain minimal changes and therefore do not require additional public notice or comment.

What are the details?
One notable change from the proposed regulations is the deletion of language requiring employers to establish a single benefit year for all employees, which would have prohibited employers from defining the benefit year based on an employee’s anniversary date.

The Department declined to adopt that provision and indicated it will propose a new rule in the future to enable employers to establish multiple benefit years. The final regulations did not, however, affect the processes through which an employer may change a benefit year. 

Once the benefit year is established, employers can change it only by providing written notice to the Department at least 30 days prior to making the intended change. Such notice must include the proposed new benefit year, the reason for the change, and a list of employees with contact information and each employee’s two-year history of accrual, use, payment, payout, and carryover of earned sick leave. If the Department determines that an employer is changing the benefit year to prevent accrual or use of leave, it may impose a benefit year on the employer.

The Department clarified that if an employer chooses to maintain a single paid time off (PTO) bank to comply with the ESLL, the entire PTO bank must comply with the requirements of the ESLL. 

Thus, if an employer wants to satisfy its obligations under the ESLL with, for example, its single bank of 80 hours of PTO (which may be used for any purpose, including sick time, vacation, personal days, etc.), it must permit employees to use all 80 hours in accordance with the ESLL. This approach means employees would be permitted to use all 80 hours for sick time without providing advance notice to the employer and such absences could not be held against employees or counted under the employer’s attendance policy.

What do employers need to do?
Employers should review their current sick leave policies to ensure compliance.

Bill: https://www.nj.gov/labor/earnedsick/index.html

Article: https://www.littler.com/publication-press/publication/new-jersey-department-labor-releases-final-regulations-earned-sick


Warn Act Signed into Law

What happened?
On January 21, 2020, the Governor of New Jersey signed Senate Bill 3170 into law, pushing state law far past the corresponding federal requirements of the WARN Act. Governor Phil Murphy issued an omnibus press release identifying this new law as one of 153 pieces of legislation he signed into law on January 21, 2020. The law is scheduled to go into effect 180 days after the date of its enactment, which is July 19, 2020. Would make New Jersey the first state to require severance for layoffs of 50 or more within a 30-day period, while also vastly expanding the definition of “employer,” as well as including all part-time employees within the statute’s calculations.

What are the details?
As presently drafted and revised, S.3170 will change the scene for employers looking to establish sites in New Jersey and those contemplating whether to remain or grow there. The proposed amendments would result in significant changes, including:

  • Increase Notice. 
  • Part-Time Employee Coverage. 
  • Add a Severance Benefit and Enhance Severance Penalties. 
  • Eliminate Waivers. 
  • Make Everyone an Employer.

What do employers need to do?
Employers that are contemplating closures or mass layoffs should consider accelerating their analysis so as to utilize the 180-day safety period until the effective date of July 19, 2020 is reached. 

Bill: https://www.njleg.state.nj.us/2018/Bills/S3500/3170_R3.PDF

Article: https://www.seyfarth.com/news-insights/new-warn-act-signed-into-law-thou-shall-not-leavea-new-jersey-bill-awaiting-signature-by-the-governor-would-dramatically-re-write-existing-mass-layoff-laws.html 


Misclassification Laws: “Misclassification Package”

What happened?

The five new laws signed by Governor Murphy, referred to as “The Misclassification Package,” are meant to address misclassification of independent contractors by greatly increasing the DOL’s ability to enforce wage and hour and tax laws. The new laws also broaden private rights of action under New Jersey’s wage and hour laws and add joint and personal liability for contractors’ violations of tax and benefit laws.

What are the details?

  1. Stop Work Orders (A5838) – This new law gives the Commissioner of Labor the ability to issue a stop work order against any company that the DOL determines is not in compliance with any wage, benefit, or tax law.
  2. Joint, Several, and Individual Liability (A5840) – This new law amends New Jersey’s wage and hour laws and tax laws (which include the unemployment law, temporary disability law, workers’ compensation law, and gross income tax law), creating joint and several liability for “Client Employers” and “Labor Contractors.”
  3. Additional Penalties (A5839) – This new law allows the Commissioner of Labor, upon a finding of misclassification under any state wage, benefit, or tax law, to assess penalties in addition to those provided by the other statutes.
  4. Retaliation Cause of Action & Posting (A5843) – This new law creates a private cause of action for discharge or discrimination against employees or contractors who inquire or complain about misclassification. Unlike the other laws in The Misclassification Package, this law does not take effect until April 1, 2020.
  5. Sharing of Confidential Tax Information (S4228) – This bill allows the Department of Treasury to provide the DOL with tax information, audit files, returns, or any other information that would assist in investigating wage, benefit, or tax law violations.

What do employers need to do?
Due to individual liability, the owners of the company would be liable for the assessment and fines, even if the company goes out of business. This is one simple illustration of the power of these new laws. It is strongly recommended that all companies review 1099s issued in 2019, along with reoccurring payments from cash ledgers, and reevaluate those relationships in light of these new laws.

Bill: Stop Work Orders A5838 Joint, Several and Individual Liability A5840; Additional Penalties A5839; Retaliation Cause of Action & Posting A5843; Sharing of Confidential Tax Information S4228

Article: https://www.fordharrison.com/the-gig-is-up-new-jersey-misclassification-laws-create-extreme-risk-for-anyone-utilizing-independent-contractors


Proposed Regulations to Affect All Employers Utilizing Tip Credits

What happened?
The New Jersey Department of Labor (NJDOL) has proposed regulations revising the current definition of “wages” to expressly exclude “any gratuities received” by a tipped employee from the employer’s obligations under the state’s hourly minimum wage requirement. The proposed regulations also define exceptions to the state’s minimum wage increases through 2024 and identify the minimum rates across all potential definitions of “employment.”

What are the details?
The proposed regulations follow federal law. They define a “tipped employee” to include “any employee engaged in an occupation in which he or she customarily and regularly receives more than $30 a month in tips.”

  • The NJDOL proposal sets out the cash minimum an employer must pay an employee to lawfully utilize the tip credit against the planned state minimum wage increases over the next several years. If the employer does not utilize the tip credit, even where an employee receives $30 or more a month in gratuities, the employer must pay the applicable minimum wage. The regulations expressly apply the tip credit on a workweek basis.
  • The proposed regulations prohibit an employer from utilizing any portion of the gratuity for any reason other than wages or in furtherance of a tip pooling arrangement. The prohibition expressly extends to an employer using a portion of the gratuity to offset any credit or debit card processing fees; the employer must pay to convert a customer’s credit or debit card tip into an employee’s wages at no cost to the employee.
  • The proposed regulations also acknowledge the lawfulness of voluntary tip pooling arrangements. Under such circumstances, the employer would have an affirmative obligation to notify employees of the required tip pool contributions. The employer may only take a tip credit in the amount an individual employee receives through the pool.
  • The NJDOL’s proposed regulations adopt the 80/20 rule the DOL abandoned because of the confusion and burden they put on employers. The proposed regulations state, “here a tipped employee spends a substantial amount of time (in excess of 20 percent in the workweek) performing related duties, no tip credit may be taken for the time spent in such duties.”

What do employers need to do?
A public hearing on New Jersey’s proposed regulations is scheduled for February 26, 2020, and comments will be accepted through April 3, 2020. Employers who employ tipped employees should carefully review their current practices against the proposed regulations and determine their potential business impact.

Article: https://www.jacksonlewis.com/publication/tipping-new-jersey-proposed-regulations-affect-all-employers-utilizing-tip-credits


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