On August 18, 2022, in the wake of the uncertainty visited upon the healthcare industry by the pandemic, New Jersey Governor Phil Murphy signed into law new legislation protecting employees during the transfer in ownership of healthcare entities. The new law prohibits employers from terminating employees absorbed through a consolidation, merger, reorganization, etc., during a four-month transition period absent cause – including without limitation, downsizing.  An “employee” is defined as any hourly, non-exempt, and non-managerial worker. A “healthcare entity” is defined broadly to include healthcare facilities, staffing registries, and home care service agencies.

Healthcare entities are further required to take the following action:

• Post notifications to employees of their rights under the new law during the four-month transition period.
• Honor the provisions of any unexpired collective bargaining agreement in force at the time of the transfer in ownership and for up to such time as it expires or six months after the transfer, whichever is later.
• Retain all existing non-union employee wages and benefits for the duration of the transition period and for up to six months after the transfer in ownership.
• Offer available employment positions to eligible employees that previously held those positions based upon seniority, or until no additional positions are available.
• Conduct a written performance evaluation at the end of the four-month transition period of each employee retained and offer to keep that employee on board if his/her performance is deemed satisfactory.
• Retain and present upon request to any employee (or representative) written records of each offer of employment/evaluation for not less then three years from the date of the offer/evaluation.

A healthcare entity that runs afoul of the provisions of the new law risks significant potential liability. Indeed, the legislation provides a private cause of action to employees aggrieved by any of its provisions along with remedies that include, without limitation, payment of lost wages and benefits (including liquidated damages), injunctive relief (e.g., reinstatement), and reasonable attorneys’ fees. For this reason, the new law’s requirements will no doubt have a long term and significant impact on the consideration and terms of any future transfers in ownership of healthcare entities in New Jersey post-pandemic.