New Jersey Adopts Law Affecting Service Employees During Changes in Ownership

​New Jersey Gov. Philip Murphy recently signed Assembly Bill 4682, establishing various employment protections for specific "service employees" during changes of ownership. This law will take effect on Oct. 22.

Under the law, a "service employee" is defined as an individual "employed or assigned to a covered location 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" in the following occupations:

• Care or maintenance of a building or property (e.g., work performed by a security guard, front desk worker, janitor, maintenance employee, building superintendent, grounds maintenance worker, stationary fireman, elevator operator, or window cleaner).
• Passenger-related security services, cargo-related and ramp services, in-terminal and passenger handling and cleaning services at an airport.
• Food preparation services at a primary or secondary school, or a tertiary educational institution.
  

The law makes clear that service employee "does not include any individual who performs work on any building, structural, electric, HVAC, or plumbing project, if the work requires a permit to be issued by a municipal building or construction department."

The law applies only to certain covered locations (publicly or privately owned), including:

• Multifamily residential building with more than 50 units.
• Commercial center or complex or an office building or complex occupying more than 100,000 square feet.
• Primary and secondary school, or tertiary educational institution;
• Cultural center or complex, such as a museum, convention center, arena or performance hall.
• Industrial site or pharmaceutical lab.
• Airport and train station.
• Certain hospitals.
• State courts.
• Distribution centers or other facilities whose primary purpose is the storage or distribution of general merchandise, refrigerated goods, or other products.
  

Moreover, the law also makes a change from 90 to 60 days with respect to:

• How long a successor employer must retain an affected service employee at a covered location.
• The definition of the transition period.
• The duration a successor employer must wait before discharging a retained service employee absent just cause.
  

 Fifteen days before a covered entity terminates any service contract, or contracts out services it previously performed, or sells or transfers any property where service employees are employed, it must:

• Obtain a list containing the name and job information of each employee on the service contract.
• Provide written notice to any collective bargaining representative of the affected service employees of the decision to terminate the service contract, enter into a new service contract, or sell or transfer the property.
• Ensure that a written notice to all affected service employees describing the pending termination of the service contract, entrance into a service contract, or sale or transfer of the property,  is conspicuously posted at any affected work site.
• Provide the affected service employees and their collective bargaining representative the name and address of any successor employer or the purchaser or transferee of the property.
  

Furthermore, the successor employer has certain obligations, too. Specifically, a successor employer must also give an affected service employee a written offer of employment and send a copy to the employee's collective bargaining representative, if any. A successor employer must retain an affected service employee at a covered location for 60 days or until its service contract is terminated, whichever is earlier.    

A successor employer may retain less than all of the affected service employees during the 60-day transition period only if the successor employer:

• Finds that fewer service employees are required to perform the work than the predecessor employer had employed.
• Retains service employees by seniority within each job classification.
• Maintains a preferential hiring list of those employees not retained.
• Hires any additional service employees from the list, in order of seniority, until all affected service employees have been offered employment.
  

Importantly, a successor employer may not discharge a service employee retained pursuant to this section without just cause during the 60-day transition period. The law does not, however, define what constitutes "just cause."

The law does provide an escape hatch for employers. If any successor employer, on or before the termination of the service contract, agrees to assume, and to be bound by, the collective bargaining agreement of the awarding authority or contractor, this law does not apply, so long as that collective bargaining agreement provides terms and conditions for the discharge or laying off of employees.

A court may impose a maximum fine of $2,500 for a first violation, and up to $5,000 for each subsequent violation. Each week in which a violation occurs is a separate offense.

This legislation is sure to impose a variety of logistical challenges for those employing service employees throughout New Jersey, so employers should review these changes before the October implementation date.  

Amber Spataro and David Ostern are attorneys with Littler in Newark, N.J. © 2023. All rights reserved. Reprinted with permission.