Update brought to you through a joint effort from Michael Gattoni, Chris McHattie and Colin Page (https://www.cmpemploymentlaw.com)
With the new year progressing, it’s important to take a look at the new laws that have been passed over the last year that will affect employers in 2019 and beyond. As always, employers should review their policies and practices to ensure ongoing legal compliance and to limit potential exposure and would be well-advised to make the appropriate adjustments now, while there is time to plan, and not just react. To assist in that effort, here is a summary of several of the new laws and what to look out for in 2019.
Minimum Wage: As of January 1, 2019, New Jersey’s minimum wage is $8.85. However, the bill signed by Governor Murphy would raise today’s rate from $8.85 to $10 by July 1, and then increase $1/hour annually until reaching $15 in 2024 for most, but not all workers. Farmworkers’ wages will climb to $12.50 over five years. Small business and seasonal employees would reach $15 an hour in 2026. Tipped workers, who currently have a minimum hourly wage of $2.13, would see it climb to $5.13 an hour by 2024.
Earned Sick Leave: Effective October 29, 2018, the New Jersey Earned Sick Leave Law requires employers of all sizes must now provide full-time, part-time, and temporary employees with up to 40 hours of earned sick leave per year so they can care for themselves or a family member. If you haven’t already done it, revise or establish a Sick leave policy that complies with the Earned Sick Leave Law.
New Jersey Equal Pay Act: This new law enables not only women, but all minorities covered under New Jersey’s discrimination law, to assert claims that up to six years retroactively. Moreover, the NJEPA also prohibits employers from taking reprisals against employees for discussing their pay with fellow employees, provides for treble damages, and shifts the burden of proof by creating a presumption of illegal discrimination where an employee in a protected class is paid less than another similarly situated employee. If you haven’t already done it, review your pay and salary schedules and job titles to insure you’re in compliance.
Independent Contractors: The governor signed an executive order to create a task force to investigate misclassification of workers as independent contractors rather than employees. New Jersey has adopted the “ABC Test” for determining a worker’s status. To prove that a worker is an independent contractor, employers must satisfy three prongs: (1) the worker has been, and will continue to be, free from control over the performance of his or her work; (2) such work is either outside the usual course of the business or is performed outside of all of the places of business of the enterprise; and (3) the worker is customarily engaged in an independently established trade, profession or occupation. The issue of control bears the most weight when determining if a worker is an independent contractor. Also, be aware, the presumption of state investigators will be that if an individual is working for your company directly part-time or full-time, they are an employee. If you have independent contractors, especially any that are individuals, you should review your relationship and documentation.
Whistleblower Protection: Be aware of the New Jersey’s Conscientious Employee Protection Act. That Act prohibits retaliation against an employee who: (1) Blows the whistle, or who threatens to do so, with regard to improper, deceptive, harmful or illegal conduct by his or her employer, or conduct that relates to improper patient care by a health care provider; (2) Provides information to or testifies in a government agency hearing or investigation; or (3) Objects to or refuses to participate in any activity, policy or practice that the employee reasonably believes: (i) is a violation of law; (ii) is harmful or deceptive; or (iii) Relates to improper patient care by a health care provider. If you haven’t already done it, revise your Non-disclosure agreements to specifically except out protected activity.
Employee Rights to Ownership of Inventions: The Employee Rights to Ownership of Inventions bill took effect on April 1, 2018 and applies to any employment contracts entered into in New Jersey on or after that date. Any provision in a contract between an employer and an employee that requires the employee to assign his or her rights in an invention to the respective employer shall not be enforceable under New Jersey law with respect to inventions created by the employee on his or her own time, using his or her own equipment, providing the invention was: (1) developed by the employee entirely on his or her own personal time; (2) developed without using the employer’s resources; and (3) is unrelated to the employee’s job functions. If you haven’t already done it, revise your Employee and Independent Contractor IP Assignments to comply with this new law.
Law Against Discrimination: New Jersey legislatures recently approved a bill amending NJ’s Law Against Discrimination, prohibiting provisions in any employment contract that waive any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment. This means employers cannot require employees to waive their right to a jury trial or agree to shorten the statute of limitation. In addition, the law prohibits employers from including confidentiality clauses in settlements that prohibit employees from disclosing their harassment and discrimination claims. Further, under the bill, a person who enforces or attempts to enforce a provision deemed against public policy and unenforceable would be liable for the employee’s reasonable attorney fees and costs.
Things to Keep an Eye Out for in 2019
New Jersey’s Family Leave Insurance: A pending bill would increase the amount of paid employee leave under New Jersey’s Family Leave Insurance program from 6 weeks to 12 weeks, and would also expand intermittent leave. While the program would continue to be funded by employee contributions, the bill would require all businesses with 30 or more employees to restore employees to their prior job after leave, and would prohibit discrimination or retaliation against employees who take leave
Marijuana: On November 26, 2018, New Jersey’s recreational marijuana bill cleared committee. While the bill currently states that employers need not accommodate marijuana use, possession, or being under the influence in the workplace, it would prohibit some employers from refusing to employ or penalizing employees solely for failing a drug test. If this bill passes in its current form, it could impact pre-employment drug testing. Employers should have a formal written policy in their handbook addressing the unauthorized use of illegal and legal drugs in the workplace. It should spell out exactly what actions will be taken if someone is suspected of being under the influence.
Non-Competes: Currently, New Jersey law allows non-compete agreements, as long as they reasonably balance the employer’s legitimate business interests with undue hardship on the employee. For a non-compete agreement to be enforceable, New Jersey courts generally require that the agreement: (1) protect the legitimate interests of the employer; (2) does not impose an undue hardship on the employee; and (3) is not injurious to the public.
In late 2017, and again in January 2018, the New Jersey Senate and Assembly proposed two companion bills, S2872 and A1769, which would significantly restrict the enforceability of restrictive covenants. For example, each version of the bill establishes a 10-part test that a restrictive covenant would have to meet in order to be enforceable.
Each bill further states that restrictive covenants would not be enforceable under any circumstances for nine (9) categories of employees, including but not limited to employees who are considered “nonexempt” from overtime pay under the federal Fair Labor Standards Act (“FLSA”) (which would include all hourly employees), employees who were laid off or terminated without a determination of misconduct, employees under the age of 18, and seasonal or temporary employees.
Please let us know if you have any questions or need assistance or further information regarding your employment matters.