Legal Alert: What to Watch in New Jersey – Pending Legislation

Date   Jul 18, 2012

Several bills are pending before the New Jersey legislature that, if enacted, could significantly impact New Jersey employers.

Several bills are pending before the New Jersey legislature that, if enacted, could significantly impact New Jersey employers.  This Alert highlights some of the more significant bills.

Minimum Wage

Two bills have been proposed that would automatically increase the state's minimum wage rate to $8.50 and tie it to the Consumer Price Index every year thereafter. 

Should this legislation pass, New Jersey would have third highest minimum wage rate after Oregon and Washington states.  New Jersey would become the second state in the region to establish an automatic-wage-increase index.  The Assembly bill has overwhelming support in the Assembly and the Senate bill is pending before the Budget Committee. 

Credit Checks

These bills propose severe restrictions on the use of credit checks by employers in hiring decisions.  S-455 passed by a Senate vote of 23-12 in May, but its Assembly counterpart, A-2840, has not moved.

Although the legislation includes exceptions for employers who are required by other laws to conduct a credit check and for positions in which an applicant's credit history is a "bona fide occupational qualification," there is concern in the business community that the current exemptions may not reflect workplace reality.  Since 2007, seven states – California, Connecticut, Hawaii, Illinois, Maryland, Oregon and Washington – have passed similar laws.  In the last year, 39 similar bills were introduced or are pending in 20 states. 

Social Media Passwords

These bills (A-2878/S-1916) attempt to protect online privacy rights of employees and applicants in response to reports of employers demanding social media passwords.  An amended version of the bill passed in the Assembly 76-1 in late June.  Action on S-1916 is expected in the fall.

If passed, the proposed law would have little additional impact for employers already wrestling with the new challenges social media presents.  For example, a recent New Jersey federal court decision found an employee had stated a valid invasion of privacy claim where her employer viewed her Facebook post over the shoulder of a co-worker.  The NLRB has also been active in pursuing employers who take action against employees based on social media.  Employers must be cognizant of the challenges presented by social media and have policies in place to address its use by employees.

Unemployment Insurance Equitability

These bills (S-1121/A-2222) would change the unemployment insurance (UI) rates paid by employers with egregiously negative employment experience histories who are essentially subsidized by employers with more positive histories.  The Senate bill passed 36-0 in May.  The Assembly bill is ready for a full vote. 

Since March 2009, New Jersey's unemployment insurance compensation system has been insolvent.  As a result, New Jersey is now indebted to the federal government to the tune of more than $1 billion. 

The proposed law would raise the cap on UI contributions.  Currently, once an employer reaches a certain threshold of layoffs, he will pay a capped amount of UI contributions, regardless of how many individuals are laid off. These bills are good news for employers with good experience ratings, as it would lower their rates, while reducing their subsidizing of employers with extremely high layoff rates.

Gender Parity

This package of bills passed the Legislature and is awaiting action from the Governor.  A-2647/S-1930 would require employers with 50 or more employees to post a notice informing workers of their rights to equitable pay and protections against discrimination.  A-2648/S-1935 would prohibit employers from retaliating against workers who discuss their compensation, benefits, or occupational category with other workers, and would add a new category to the state's whistleblower protection statute.  A-2649/S-1932 imposes EEO-like reporting requirements on businesses contracting with any government entity.  A-2650/S-1933 eliminates the statute of limitations defense for employers who have allegedly engaged in compensation discrimination against employees.

Pay equity lawsuits are on the rise nationwide.  These bills would place new and increased burdens on New Jersey employers, which are largely duplicative of existing legislation.  In particular, the bill proposing elimination of the statute of limitations defense severely hampers employers' ability to defend against pay equity suits, simply because memories fade with time and decision-makers may no longer be available.  

Leave for Victims of Violence and Sexual Assault

As approved by the Assembly's Women and Children Committee, this bill would require employers to provide 20 days of leave per year for each worker who is the victim of domestic violence or sexual assault or who has an affected family member or household member to: 1) seek medical help or counseling; 2) take actions to improve safety; or 3) participate in legal proceedings.  As amended, the leave requirement would only apply to employers with at least 25 employees and must be taken within one year of a qualifying event.  The legislation would also allow employers to change benefits while an employee is on leave if the changes would have occurred had the employee not taken the leave.

If passed, the proposed law would add to existing federal and state leave laws.  However, employers may require employees exhaust any accrued paid leave provided by the employer or leave provided pursuant to New Jersey's Family Leave Act before pursuing leave time permitted under the proposed law. 

Misclassification of Trucking Industry Employees

These bills (A-1578/S-1450) would impose second degree criminal penalties (akin to aggravated assault, sexual assault, manslaughter, and vehicular manslaughter) on trucking industry employers who misclassify workers as independent contractors. 

The proposed law would create a presumption that owner-operators are employees and not independent contractors.  If passed into law, any entity that is primarily engaged in the business of, or contracts with, a drayage truck operator or small package operator for trucking services will be presumed to be an employee of the operator unless it can be demonstrated that:  (A) the operator has control and discretion over the performance of the service; (B) the service is either outside the employer's usual course of business or outside of all the places of business of the employer; and (C) the operator is customarily engaged in an independently established trade, occupation, profession or business.  Although owner-operators are currently specifically exempted from unemployment coverage, the proposed law would effectively eliminate the exemption. 

Labor organizations have been aggressively attempting to eliminate owner-operators as independent contractors on a national level for years.  The proposed law provides labor organizations with the ability to bring a class action against a company without actually representing anyone who works or contracts with the company. 

Call Center Outsourcing

These bills (A-2651/S-1920) would require employers moving call centers jobs overseas to provide 120 days' notice to the New Jersey DOL or risk a $10,000 per day fine.  Employers would also be required to remit any unused grant, loan, tax benefit, or other financial support back to the State.

Heavily backed by labor organizations, the bill has been presented as a step toward keeping middle class jobs in New Jersey.  Business groups have slammed the bill as anti-competitive and protectionist.  There is also concern that, if passed, the law would put New Jersey at a competitive disadvantage with other states.  Businesses with call centers have raised concerns that the remittance requirement could result in the return of funds used to train employees other than call center employees.

Employers' Bottom Line:

We are monitoring these bills and will keep you informed of any developments regarding the status of this legislation.  If you have any questions regarding the proposed legislation or other issues impacting employers in New Jersey, please contact the FordHarrison attorney with whom you usually work.