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August 16, 2023
New Jersey enacted the Service Worker Retention Law on July 24, 2023 to increase job protections for non-managerial and non-professional service workers when their employer changes ownership. Specifically, pursuant to the new law, when a business changes ownership, the new owner must continue to employ, and may not reduce the hours of, the former owner’s “service workers” for 60 days or until the employee’s existing contract ends – whichever comes first. During the 60-day window, the new owner may terminate a service worker’s employment only for just cause (though “just cause” is not defined in the statute). The law becomes effective on October 24, 2023.
What is a service worker?
The law defines a service worker as “an individual employed or assigned … on a full or part-time basis for at least 60 days and who is not a managerial or professional employee or regularly scheduled to work less than 16 hours per week.”
The following workers are covered by the Service Worker Retention Law:
Which employers are affected?
The Service Worker Retention Law covers the following employers:
Exceptions to the 60-day Continued Employment Requirement
New owners may not have to offer existing service workers an additional 60 days of employment where all of the following conditions are met:
A new owner also is exempt from the new law if it agrees to be bound by the collective bargaining agreement that governs the service workers, as long as the collective bargaining agreement includes terms and conditions for discharging or laying off employees.
Notice Requirements and Information Exchange
Employers must give affected employees written notice of a change in ownership at least 15 days before the change occurs. Written notice must be posted in a conspicuous location at any affected jobsite.
The former owner must share information about the service workers with the new owner and information about the new owner with the service workers.
Penalties for Violating the Service Worker Retention Law
Service workers who have been fired in violation of the law may bring an action in court against the new owner. A fine of up to $2,500 may be imposed for a first violation. Fines up to $5,000 are mandated for second and subsequent violations. The court also may order restitution and injunctive relief when it deems appropriate.
Employer Takeaways
Acquiring another company can be exciting, but before you “clean house,” seek counsel to ensure compliance with the Service Worker Retention Law, among others.
*Special thanks to Brooke Palma, our Office Administrator, for her contributions to this article.
The author of this article, Patricia Tsipras, is a member of the Bar of Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in New Jersey, Pennsylvania, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
