On January 16, 2018, Democratic candidate Phil Murphy was sworn in as the 56th governor of the State of New Jersey, replacing Republican former governor Chris Christie. As reflected in the Report of the Labor and Workforce Development Transition Advisory Committee, Governor Murphy’s administration is poised to advance legislation that will have a significant impact on employers doing business in New Jersey. From raising the minimum wage to $15 per hour to curbing employee misclassification abuse, employers large and small can expect new legislation impacting the employer-employee relationship. In fact, in just his first six months in office, Governor Murphy has already signed into law one of the most expansive pay equity laws in the nation as well as a law that provides paid sick leave for New Jersey employees.

We have outlines several significant bills that have been introduced thus far in New Jersey’s 2018–2019 legislative session. Many of these bills failed to pass under the Christie administration but stand a much better chance of success under Governor Murphy.

(1) Credit Report Inquiries and Discrimination

Senate Bill 545, if enacted, would prohibit New Jersey employers from seeking or requiring a credit report (i.e., a statement that contains information about the employee’s “credit history, credit score, credit account balances, payment history, savings or checking account balances, or savings or checking account numbers”) from any employee or applicant, unless the employer is required to do so by law or “reasonably believes that an employee has engaged in a specific activity that is financial in nature and constitutes a violation of law.” The bill would also make it unlawful for an employer to “discharge, demote, suspend, retaliate, refuse to hire, or otherwise discriminate against a current or prospective employee with regard to promotion, compensation, or the terms, conditions or privileges of employment, based on information in a credit report on the employee.”

Importantly, the bill does not prohibit an employer from making a credit inquiry if credit history is an established bona fide occupational qualification of a particular position or employment classification. The bill provides that a credit history shall be considered a bona fide occupational qualification for an employee being evaluated for a position that:

1. is managerial and involves “setting the financial direction or control of the business”;

2. involves access to customers’, employees’, or employers’ personal belongings, financial assets, or financial information other than information customarily provided in a retail transaction;

3. involves “a fiduciary responsibility to the employer, including, but not limited to, the authority to issue payments, transfer money or enter into contracts or involves leases of real property”;

4. provides an expense account for travel; or

5. is as “a law enforcement officer for a law enforcement agency in this State, or is as governmental or non-governmental security personnel, including security personnel in homeland security agencies.”

Finally, the bill prohibits an employer from requiring a prospective employee to waive or limit any protection granted under the bill as a condition of applying for or receiving an offer of employment, and from retaliating or discriminating against an employee because he or she filed a complaint, testified, assisted, or participated in an investigation, proceeding, or action concerning a violation of the bill, or otherwise opposed a violation of the bill.

The New Jersey Senate approved the bill on March 26, 2018. The bill is currently under consideration by the New Jersey General Assembly.

(2) Inquiries Regarding Salary History

Senate Bill 559, if enacted, would amend the New Jersey Law Against Discrimination (NJLAD) to prohibit an employer from:

1. “screening a job applicant based on the applicant’s wage or salary history, including by requiring the applicant’s prior wages, salaries or benefits satisfy any minimum or maximum criteria, or relying on the applicant’s salary in determining a salary amount for the applicant at any stage in the hiring process, including finalizing the employment contract;

2. inquiring, in writing or otherwise, about the salary history of a job applicant, including, but not limited to, the applicant’s compensation and benefits, except that the employer may seek the history if the prospective employee voluntarily, without employer coercion, provides the employer with a written authorization; and

3. taking reprisals against any employee for disclosing to any other employee or former employee of the employer information regarding the job title, occupational category, rate of compensation, the gender, race, ethnicity, military status, or national origin of the employee or any other employee or former employee of the employer.”

The New Jersey Senate approved the bill on March 26, 2018. The bill is currently under consideration by the New Jersey General Assembly. The bill is in line with salary history ban laws adopted by other states.

(3) Tax Credits for Employers That Allow Telecommuting

Senate Bill 672, if enacted, would provide a tax credit against the corporation business and gross income taxes for employers that allow an employee residing in New Jersey to work from home, or “telecommute,” during the three-year period from January 1, 2017, through January 1, 2020. The bill defines “telecommuting” as “an off-site arrangement that permits an employee to work in the employee’s residence for all or part of the workweek.”

The amount of the credit would be equal to one percent of the salary or wages paid by the employer during the taxable year to the employee, multiplied by the percentage of the services that make up the employee’s normal workweek that are performed at the employee’s home. The bill excludes from its coverage employees who telecommuted during the calendar year preceding the enactment of the bill.

In order to be entitled to the tax credit, the employer and the employee must have a written contract agreed to after the enactment of the bill that outlines the terms of their telecommuting relationship. The bill is currently under consideration by the New Jersey Senate Economic Growth Committee.

(4) The Healthy Workplace Act

Senate Bill 710, if enacted, would make it an unlawful employment practice for an employer to permit or subject an employee to an abusive work environment or for an employer to retaliate against an employee because the employee brings or participates in an action, investigation, or proceeding related to the abusive work environment.

The bill defines an “abusive work environment” as a workplace in which an employee is subjected to abusive conduct severe enough to cause physical or psychological harm. “Abusive conduct” is broadly defined as workplace conduct of an employer or employee that a reasonable person would find hostile, including:

1. threatening, intimidating, or humiliating verbal or physical conduct;

2. “the gratuitous sabotage or undermining of an employee’s work performance”;

3. “attempts to exploit an employee’s known psychological or physical vulnerability”; or

4. “repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets.”

The bill also provides that an aggrieved employee may, within one year, institute a private right of action in court, and that a court shall have the power to, among other things, issue an injunction to restrain further violations of the act, reinstate the employee, or remove any offending party from the work environment of the employee. Notably, punitive damages would not be allowed if the violation does not include an “adverse employment action,” which is defined under the bill as “termination of employment, a constructive discharge, a demotion, an unfavorable reassignment, a refusal to promote, or a disciplinary action resulting in monetary loss.”

Additionally, if the alleged violation is based solely on abusive conduct by coworkers (and not supervisors or managers) and the employee was not subjected to an adverse employment action, an employer may assert the affirmative defense that it promulgated an effective policy to prohibit and deter the abusive conduct and that the employee failed to take advantage of appropriate preventative or corrective opportunities provided by the employer.

The bill is currently under consideration by the New Jersey Senate Labor Committee.

(5) Expansion of Workers’ Compensation Coverage to Employer Parking Lots

Senate Bill 818, if enacted, would expand coverage under the New Jersey Workers’ Compensation Act for injuries that occur in parking areas that are either provided by or designated by the employer as parking areas for employee use. Currently, the Act excludes from its coverage injuries that occur during an employee’s travel to or from his or her place of employment from or to the site of any parking area provided by an employer for employee use that is separate from the employee’s place of employment. Therefore, any injury occurring when an employee is traveling between the separate parking area and his or her place of employment is not covered as a “compensable injury” under the Act.

Under the bill, however, “employment” is deemed to commence when an employee arrives at the parking area prior to reporting for work and terminates when an employee leaves the parking area at the end of a work period. For parking areas that are separate from the employee’s place of employment, the bill provides that an employee will be deemed to be in the “course of employment” while the employee travels directly to or from the parking area and his or her place of employment. Accordingly, under the bill, any injuries that occur during such travel will be considered a “compensable injury” under the bill.

The bill is currently under consideration by the New Jersey Senate Labor Committee.

(6) Raising the Minimum Wage to $15 per Hour

Senate Bills 864 and 1142, if enacted, would increase the minimum wage from the current rate of $8.60 per hour to $10.10 per hour, and would make further $1.25 per hour each year over a four-year period, ultimately raising the minimum wage to $15.00 per hour by 2021. The bills also incorporates into the law the provision of the New Jersey State Constitution that whenever the federal minimum wage exceeds the state minimum wage, the federal minimum wage will be adopted as the state minimum wage. Both bills are currently under consideration by the New Jersey Senate Labor Committee.

(7) “Crime Victims” as a Protected Class Under the NJLAD

Senate Bill 1201, if enacted, would amend the NJLAD to include “crime victims” as a protected class. The bill defines a “crime victim” as:

1. “a person who suffers personal, physical or psychological injury or death or incurs loss of or injury to personal or real property as a result of a crime committed by an adult, or an act of delinquency that would constitute a crime if committed by an adult, against that person”;

2. “the spouse, parent, legal guardian, grandparent, child, sibling, domestic partner or civil union partner of the decedent in the case of a criminal homicide or act of juvenile delinquency that would constitute a criminal homicide if committed by an adult”; or

3. a victim of domestic violence.

The bill is currently under consideration by the New Jersey Senate Law and Public Safety Committee.

(8) The New Jersey Schedules That Work Act

Senate Bill 109, entitled the “New Jersey Schedules That Work Act,” if enacted, would dramatically impede the ability of New Jersey employers to set the schedules of their workers and would put an administrative burden on human resource professionals. The bill would expressly permit employees to apply to their employer “to request a change in the terms and conditions of employment as they relate to the following:

1. the number of hours the employee is required to work or be on call;

2. the times when the employee is required to work or be on call for work;

3. the location where an employee is required to work”;

4. the amount of notification an employee receives when given a work schedule for assignments; and

5. minimizing fluctuating hours an employee is required to work on a daily, weekly, or monthly basis.

The bill would then require an employer (defined under the bill as any employer with 15 or more employees) to participate in a timely, good faith interactive process with the employee who requested a change in his or her employment schedule to discuss potential scheduling changes that would meet the employee’s needs. The bill provides that the interactive process must end with the employer either granting or denying the employee’s request. 

In the case of an employee request for a change in the terms and conditions of employment due to his or her serious health condition, responsibilities as a caregiver, or enrollment in a career-related educational or training program, the bill would require the employer to grant the request unless the employer had a “bona fide business reason” for denying the request, such as a significant detrimental effect on costs to the employer or a substantial negative effect on business performance. 

In addition, the bill includes specific payment and notice requirements for employees in the retail, food service, and cleaning industries.

Finally, the bill would make it an unlawful employment practice for any employer to interfere with, restrain, or deny the exercise or the attempt to exercise any right of an employee as set forth in the bill, or to discharge, threaten to discharge, demote, suspend, reduce work hours of, or take any other adverse employment action against any employee in retaliation for exercising the rights of an employee under this act or opposing any practice made unlawful by this act.

The bill is currently under consideration by the New Jersey Senate Labor Committee.

(9) Employee Waiver of Rights or Remedies Relating to Discrimination Claims

Senate Bill 121, if enacted, would prohibit an employer from entering in any agreement with an employee that has “the purpose or effect of concealing details” relating to an employee’s claim of discrimination, retaliation, or harassment, including claims that have been submitted to arbitration. In addition, the bill would bar any provision in an employment contract that requires employees to prospectively waive any rights or remedies under the NJLAD or any other statute or case law. Finally, the bill prohibits an employer from taking any retaliatory action against an employee (including, but not limited to, refusing to hire, discharging, suspending, or demoting the employee) because the employee refused to enter into an agreement that contains a provision barred under the bill. The bill would take effect immediately and apply to all contracts and agreements entered into, modified, renewed, or amended on or after the effective date.

On June 7, 2018, the bill passed in the New Jersey Senate by a vote of 34–1. It will advance to Governor Murphy pending approval by the New Jersey General Assembly.

(10) Increase of Minimum Wage for Tipped Workers

Senate Bill 424, if enacted, would increase the minimum hourly wage for employees who customarily receive gratuities or tips. Currently, employees who receive gratuities or tips are typically paid $2.13 per hour, the federal minimum amount for tipped workers.

Under the new bill, this amount would change to a minimum of $5.93 (69 percent of the minimum wage). The remainder of the employee’s compensation could be comprised of tips or gratuities, as long as the employee earned “at least the current minimum wage required by State and federal law ($7.25 per hour).” Under the bill, an employer could claim a credit for gratuities and tips in an amount not to exceed 31 percent of the minimum hourly wage rate required by law.

The bill is currently under consideration by the New Jersey Senate Labor Committee. 

(11) The New Jersey Jobs Protection Act

Senate Bill 528, referred to as the “New Jersey Jobs Protection Act,” if enacted, would require all New Jersey employers to utilize the federal E-Verify system to check the employment eligibility of each new hire within 90 days of the employee’s hire date. E-Verify is an Internet-based system operated jointly by the Department of Homeland Security and the Social Security Administration that provides an automated link to federal databases to help employers determine employment eligibility of new hires and the validity of their Social Security numbers. E-Verify is currently available to employers free of charge.

The bill also establishes a graduated penalty system against any employer who knowingly employs unauthorized workers as follows:

1. $10,000 fine for each unauthorized worker and three years of monitored probation for an employer’s first offense

2. $20,000 fine for each unauthorized worker and five years of monitored probation for an employer’s second offense

3. $30,000 fine for each unauthorized worker for an employer’s third offense

Importantly, the bill provides that evidence that the employee’s eligibility to work was confirmed through the E-Verify system creates a rebuttable presumption that the employer did not intentionally or knowingly hire an unauthorized worker. The bill is currently under consideration by the New Jersey Senate Labor Committee.