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Legal Alerts

2022 New Jersey Labor & Employment Year End Review

Newark, N.J. (January 25, 2023) - This alert discusses the major developments in New Jersey labor and employment law in 2022, including new legislation and key appellate decisions that will impact employers and employees in the Garden State.

Legislation

Employment-related legislative developments in 2022 were not extensive. They include the following:

  • Following a change in control (including sales, transfers, assignments, mergers, and reorganizations) of a healthcare entity employer, healthcare workers must be given the choice of keeping their jobs for at least four months without any reduction in their wages and benefits. During the four-month period, employees may not be terminated without cause. At the end of the four months, the employer must provide written performance evaluations and offer continued employment if the employees’ performance during that period was satisfactory.
  • New Jersey employers generally are prohibited from using tracking devices in vehicles operated by employees without providing written notice to employees. A “tracking device” includes electronic or mechanical devices that are designed or intended to be used for the sole purpose of tracking the movement of a vehicle, person, or device but shall not include devices used for the purpose of documenting employee expense reimbursement.”

In addition, previously postponed amendments to the New Jersey WARN Act will take effect on April 29, 2023 unless Governor Murphy acts to accelerate or veto the amendments. New Jersey employers will be required to give affected employees 90 days’ notice and severance pay of one week’s pay for every full year of employment. If an employer fails to give the required amount of notice, the required severance pay is increased by an additional four weeks of pay.

Minimum Wage Increase

Minimum wage increases took effect on January 1, 2023. For most employers, the minimum wage increased to $14.13 an hour (from a prior minimum of $13 an hour) due to legislation signed by Governor Phil Murphy in 2019. This legislation raises the wage to $15 an hour by 2024. While the law envisioned annual raises of $1 to meet the goal, it included a provision that permitted large increases due to the consumer price index. Due to the 8.7% inflation rate in 2022, the minimum wage rate will be 13 cents higher than anticipated and will continue to increase according to the rate of inflation provided by the consumer price index. That said, there are some exceptions:

  • Seasonal companies that operate in the summer or pay three-quarters of their wages during a continuous four-month period and small employers (five or less employees) will have to pay $12.93 an hour (up from $11.90 an hour). These employers will nonetheless have to increase their wages to $15 an hour by 2026.
  • Agricultural workers are to be paid $12.01 per hour (up from $11.05 an hour). These employees will have to be paid $15 an hour by 2027.
  • Direct care staff in long-term care facilities are to be paid $17.13 an hour, an increase of $1.13 an hour.

Tipped workers’ cash wages will have to increase to $5.27 an hour and employers will be entitled to claim a tip credit of $8.87 (up from $7.87).

Display of Official Posters of the Division on Civil Rights

The New Jersey Division on Civil Rights (DCR) adopted regulations for the “Display of Official Posters of the Division on Civil Rights,” which apply to posters created by DCR to inform individuals and covered entities of their rights and obligations under the NJLAD and the New Jersey Family Leave Act. Employers, housing providers, and places of public accommodation must display the posters “in places easily visible” to those who would be affected by violations of these laws.

The DCR also issued an updated set of posters that employers, housing providers, healthcare providers, and places of public accommodations must display. The new rules allow employers with internet and intranet sites used by their employees to satisfy their display obligations by posting the LAD and NJFLA posters on those sites in lieu of physical postings in the workplace.

Workplace Drug Testing Requirements

The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act prohibits an employer from taking adverse action against an employee based on a workplace drug test that does not include a “physical evaluation” conducted by a “Workplace Impairment Recognition Expert” (WIRE). In 2022, the New Jersey Cannabis Regulatory Commission (NJCRC) issued interim guidance stating that employers need not use a WIRE to conduct a physical evaluation because the WIRE certification standards have yet to be published. Therefore, employers are permitted to take an adverse action where there is (i) a scientifically reliable drug test that detects the presence of cannabinoid metabolites and (ii) “evidence-based documentation of physical signs or other evidence of impairment during an employee’s prescribed work hours.”

The NJCRC also released a template titled “Reasonable Suspicion Observed Behavior Report.” Employers may, but are not required to, use this form of report when determining whether to conduct reasonable-suspicion workplace drug testing.

Independent Contractor Status Requires More Than Corporate Form

New Jersey’s efforts to curb and remedy employee misclassification continued in 2022. The New Jersey Supreme Court held in East Bay Drywall, LLC v. Dep’t of Labor and Workforce Dev., 251 N.J. 477 (2022), that a contractor's establishment of a separate corporate structure will not by itself support independent contractor status under the state’s “ABC test” for unemployment purposes unless other criteria are met.

The three-factor “ABC” test set forth in the New Jersey Unemployment Compensation Law provides that services performed by an individual for remuneration are presumed to be “employment” unless:

(A) The individual is free from control or direction over the performance of his or her service, both under the contract between the parties and in practice; and

(B) The service is either (i) outside the usual course of business of the enterprise for which such service is performed or (ii) is performed outside all the places of business of the enterprise for which such service is performed; and

(C) The individual is customarily engaged in an independently established trade, occupation, profession, or business.

Although the test requires that independent contractors should have independently established businesses, the Supreme Court of New Jersey ruled that a worker was not an independent contractor (rather than an employee) simply because the worker had established his or her own company.

The court stated that the key question is “whether a worker can maintain a business independent of and apart from the employer.” Unless “a person has a business, trade, occupation, or profession” that will continue after the termination of the relationship with the enterprise for which services are performed, the purported contractor must be considered an employee.

Non-Disparagement Clauses Not Prohibited by NJLAD

The New Jersey Law Against Discrimination (NJLAD) prohibits non-disclosure and confidentiality agreements that would prevent an individual from describing the details of a violation of the NJLAD. According to a 2022 ruling of the Appellate Division, this prohibition does not prohibit non-disparagement agreements between an employer and an employee.

In Savage v. Township of Neptune, 472 N.J. Super. 291 (App. Div. May 31, 2022), the Appellate Division determined that the NJLAD’s restriction on non-disclosure provisions “was only intended to prevent employers from compelling employees to enter into agreements to conceal the details of their LAD claims.” There may be some overlap between statements covered by non-disparagement agreements and by non-disclosure agreements, but non-disparagements agreements are permissible because they prohibit “general disparaging language” that is not directly related to the details of disputes encompassed by the NJLAD.

For more information on these developments, contact the authors of this alert. Visit our Labor & Employment Practice page for additional alerts in this area.

Authors:

Michael D. Thompson, Partner

Brent A. Bouma, Partner

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