STATE OF NEW JERSEY. SENATE, No th LEGISLATURE. Sponsored by: Senator ROBERT M. GORDON District 38 (Bergen and Passaic)

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1 SENATE, No. 0 STATE OF NEW JERSEY th LEGISLATURE INTRODUCED JULY, 0 Sponsored by: Senator ROBERT M. GORDON District (Bergen and Passaic) SYNOPSIS Requires good cause for termination of certain employees. CURRENT VERSION OF TEXT As introduced.

2 S0 GORDON AN ACT concerning the termination of employment and supplementing P.L., c.0 (C.:A- et seq.). BE IT ENACTED by the Senate and General Assembly of the State of New Jersey:. As used in this act: Employee means an individual who works for hire, including an individual employed in a supervisory, managerial, or confidential position. Employee shall not include: () an independent contractor; or () an apprentice participating in an apprenticeship program registered by the Office of Apprenticeship of the U.S. Department of Labor and meeting the standards established by the office, or registered by a State apprenticeship agency recognized by the office. Employer means any person, corporation, partnership, individual proprietorship, joint venture, firm, company or other similar legal entity that has employed an average of 0 or more employees per working day over a period of 0 calendar weeks in the two year period next preceding a termination or an employer s filing of a complaint pursuant to this act. Employer shall not include: () a parent, spouse, child, or other member of the employer s immediate family or of the immediate family of an individual owning a controlling interest in the employer s business; or () the State or any of its instrumentalities or any political subdivision thereof. Fringe benefit means any vacation leave, sick leave, medical insurance plan, disability insurance plan, life insurance plan, pension benefit plan, or any other benefit of economic value, to the extent that the leave, plan, or benefit is paid for by the employer. Pay means hourly wages or periodic salary, including tips, regularly paid and nondiscretionary commissions and bonuses, and regularly paid overtime. Pay shall not mean fringe benefits. Termination means: () a dismissal, including that resulting from the elimination of a position, of an employee by an employer; () a layoff or suspension of an employee by an employer for more than two consecutive months; or () a quitting of employment or a retirement by an employee induced by an act or omission of the employer, after notice to the employer of the act or omission without appropriate relief by the employer, so intolerable that under the circumstances a reasonable individual would quit or retire.. a. Nothing in this act shall preclude higher standards of benefit to employees than those set out in this act being agreed upon

3 S0 GORDON through collective bargaining, an express oral or written agreement relating to employment that does not violate this act, or other forms of negotiations or agreement or arbitration award. b. Where there exists any higher standard of benefit to employees which has been agreed upon by through collective bargaining, an express oral or written agreement relating to employment that does not violate this act, or other forms of negotiation or agreement, other than those set out in this act, the employer shall continue to pay or apply the higher standard of benefit as if it were provided for under this act. c. The provisions of this act shall apply only to an employee who has completed a probationary period of employment, if applicable, and has worked for the employer for at least 0 hours during the weeks next preceding the termination. The week period for purposes of this act shall not include any week during which the employee was absent because of layoffs or furloughs of 0 days or less; military service; holidays; paid or unpaid vacations; authorized leaves in accordance with any law, contract, agreement, or disability; or labor disputes. Where a business or part of it is sold, leased, transferred or otherwise disposed of, the period of employment of an employee with a previous employer shall be deemed to constitute a single period of continuous employment with the successor employer. d. Except as provided in this act, this act shall displace and extinguish all common law rights and claims of a terminated employee against the employer, its officers, directors, and employees, which are based on the termination or on acts taken or statements made that are reasonably necessary to initiate or effect the termination if the employee s termination requires good cause pursuant to this act or is subject to notice, severance pay, or redundancy allowance. Neither the employer nor the employee shall be entitled to a civil trial over the nature of the termination or the employee s entitlement to severance pay, redundancy allowance, or notice. An employee whose termination is not subject to this act shall retain all common law rights and claims. e. No employee or prospective employee shall waive any rights extended pursuant to this act, except as provided in subsections a. and b. of this section. No employer shall require any employee or prospective employee to waive any rights extended pursuant to this act.. A new employee may be required to serve a probationary period of employment, which shall not exceed one year in length. The employer or employee may terminate the employment at any time during the probationary period for any reason. If an employer does not establish a specific probationary period or provide that there is no probationary period prior to or at the time of hire, there shall be a probationary period of one year from the date of hire.

4 S0 GORDON a. An employer shall not terminate the employment of an employee without good cause. An employer shall have good cause to terminate the employment of an employee when the employee s termination is the result of the employee: () engaging in a pattern of improper or disorderly conduct; () not working in an efficient manner, or working belatedly and negligently, or in violation of the standards of quality of the establishment; () repeated violation of reasonable rules or policies established for the operation of the establishment, provided a written copy of the rules or policies has been provided to the employee, provided that any standards, rules or policies are consistently enforced and not applied to a particular employee in a disparate manner without justification; or () for serious misconduct pursuant to paragraph () of subsection b. of this section. An employer shall not have good cause to terminate an employee pursuant to this subsection unless the employer has given the employee instructions as to how the employee should perform the employee s duties and has given a written warning to adhere to the employer s instructions. b. An employer shall not terminate an employee without having given at least two weeks notice in writing to the employee, except that: () an employer may terminate an employee without notice if the employer pays the employee an amount equal to the pay which the employee would have been entitled for work that would have been performed during the period of notice prescribed under this section, and continues to make whatever benefit contributions would be required in order to maintain the fringe benefits to which the employee would have been entitled for work that would have been performed during the period of notice prescribed under this section; and () an employer shall be entitled to terminate without notice or payment of any severance any employee who is guilty of serious misconduct which is directly related to the employment relationship and has a detrimental effect on the employer s business, and in which situation the employer cannot reasonably be expected to take any course other than to terminate the employment of the employee. c. () An employee who is terminated without good cause shall be entitled to severance pay in the amount equal to at least one month s pay for each year of employment, up to a maximum total payment equal to 0 months pay. In determining the number of years of employment for severance pay under this section, the number of years shall be computed to the next highest multiple of one, but not less than one, if not already a multiple thereof, and shall include any period of probationary employment. Any severance pay shall be in addition to any payment in lieu of notice.

5 S0 GORDON For any employee paid on a contingency or commission basis, the amount of one month s pay shall be calculated by dividing the employee s annual earnings by. () Any severance payment made pursuant to this subsection may be paid as a lump sum or in installments for a period not to exceed three years.. a. An employer shall have good cause to terminate the employment of an employee when the employee s termination is part of a reduction in the workforce that is the direct result of: () the modernization, automation, or mechanization by the employer of all or part of the business; () the discontinuance, sale or other disposition by the employer to carry on all or part of the business; () the reorganization of the business by the employer to improve efficiency; () the relocation of the business by the employer; () the bankruptcy of the employer; or () a reduced operation in the employer s business made necessary by economic conditions. b. An employee terminated for redundancy pursuant to subsection a. of this section shall be entitled to at least one month s notice in writing, except that an employer may terminate an employee without notice if the employer pays the employee an amount equal to the pay which the employee would have been entitled for work that would have been performed during the period of notice prescribed under this section, and continues to make whatever benefit contributions would be required in order to maintain the fringe benefits to which the employee would have been entitled for work that would have been performed during the period of notice prescribed under this section. c. () An employee who is terminated for redundancy shall be entitled to a redundancy allowance in the amount equal to at least two weeks pay for each year of employment, up to a maximum total payment equal to 0 months pay. In determining the number of years of employment for redundancy allowance under this section, the number of years shall be computed to the next highest multiple of one, but not less than one, if not already a multiple thereof, and shall include any period of probationary employment. Any redundancy allowance shall be in addition to any payment in lieu of notice pursuant to subsection b. of this section. For any employee paid on a contingency or commission basis, the amount of one month s pay shall be calculated by dividing the employee s annual earnings by. () Any redundancy allowance made pursuant to this subsection may be paid as a lump sum or in installments for a period not to exceed three years.

6 S0 GORDON d. In the event of the bankruptcy of an employer, redundancy payments to terminated employees shall take priority over other claims.. The Commissioner of Labor and Workforce Development, after consultation with the State Treasurer, shall adopt rules and regulations pursuant to the Administrative Procedure Act, P.L., c. (C.:B- et seq.), to effectuate the purposes of this act, and to regulate the method of paying severance pay, redundancy allowances, and payments in lieu of notice pursuant to this act.. a. An employee whose employment is terminated may file a complaint and demand for arbitration pursuant to the provisions of this act with the New Jersey State Board of Mediation, established in, but not of, the Department of Labor and Workforce Development pursuant to P.L., c.0 (C.:A- et seq.), not later than days after the effective date of the termination, the date of the breach for any payment under this act, or the date the employee learns or should have learned of the facts forming the basis of the claim, whichever is later. The time for filing shall be suspended during any period for which the employee is pursuing the employer s internal procedures for a remedy and has not been notified in writing by the employer that the internal procedures have concluded. Nothing in this section shall be construed as requiring an employee to pursue an employer s internal procedures as a condition for filing a complaint under this act. b. Except in cases of voluntary resignation by an employee, an employer shall mail or deliver to the terminated employee, within business days after a termination, a written statement of the reasons for the termination and a copy of this act or a summary of this act approved by the board. c. An employer may file a complaint and demand for arbitration under this act with the board to determine whether there is good cause for termination of a named employee. The employer shall mail or deliver to the employee a written statement, no later than days prior to filing, of the employer s intention to file and the factors alleged to constitute good cause for a termination. d. The board shall promptly mail or deliver to the respondent a copy of the complaint and demand for arbitration. The respondent shall file an answer with the board and mail a copy of the answer to the complainant no later than days after receipt of a complaint. The answer of a respondent employer shall include a copy of the statement of the reasons for the termination furnished to the employee. e. When a complaint is filed, a complainant employee or employer shall pay a filing fee to the board in an amount as determined by the board. The board may waive or defer payment of

7 S0 GORDON the filing fee upon a showing of the complainant employee s indigence.. Except as otherwise provided in this act, P.L.00, c. (C.A:B- et al.) shall apply to proceedings under this act as if the parties had agreed to arbitrate under this act. The New Jersey State Board of Mediation shall adopt procedural rules to regulate arbitration under this act. The Administrative Procedure Act, P.L., c. (C.:B- et seq.) and other statutes of this State applicable to the procedures of State agencies do not apply to arbitration under this act.. a. No later than 0 days after the close of an arbitration hearing or at a later time agreeable to the parties, the arbitrator shall mail or deliver to the parties a written award sustaining or dismissing the complaint, in whole or in part, and specifying appropriate remedies, if any. b. An arbitrator may make one or more of the following awards for a termination in violation of this act: () reinstatement to the position of employment the employee held when employment was terminated or, if that is impractical, to a comparable position; () full or partial back pay and reimbursement for lost fringe benefits, with interest; () if reinstatement is not awarded, a lump sum severance payment or redundancy allowance at the employee s rate of pay in effect before the termination, for a period not exceeding 0 months after the date of the award, together with the value of fringe benefits lost during that period, and taking into account equitable considerations, including, but not limited to, the employee s length of service with the employer and the reasons for the termination; () an amount equal to the pay to which the employee would have been entitled for work that would have been performed during the period of notice before termination, if the employer failed to provide notice or failed to provide payment for termination without notice; and () reasonable attorney s and arbitrator s fees and costs. c. An arbitrator may make either or both of the following awards for a violation of severance pay or redundancy allowance under this act: () full or partial payment of severance pay or redundancy allowance, with interest; and () reasonable attorney s and arbitrator s fees and costs. d. An arbitrator may not make an award except as provided in subsections b. and c. of this section. The arbitrator may not award damages for pain and suffering, emotional distress, defamation, fraud, or other injury under the common law; punitive damages; compensatory damages; or any other monetary award, unless it is

8 S0 GORDON established by a preponderance of the evidence, that the employer engaged in actual fraud or actual malice in the termination of the employee. In making a monetary award under this section, the arbitrator shall reduce the award by the amount of any monetary award to the employee in another form for the same conduct of the employer. e. If an arbitrator dismisses an employee s complaint and finds it frivolous, unreasonable, or without foundation, the arbitrator may award reasonable attorney s fees, arbitrator s fees, and costs to the prevailing employer. f. An arbitrator may sustain an employer s complaint and make an award declaring that there is good cause for the termination of a named employee. If the arbitrator dismisses the employer s complaint, the arbitrator may award reasonable attorney s fees and costs to the prevailing employee.. a. An individual receiving severance pay shall be disqualified for unemployment and temporary disability benefits under the unemployment compensation law, R.S.:- et seq. and the "Temporary Disability Benefits Law," P.L., c.0 (C.:- et al.) for any week with respect to which the individual is receiving or has received full severance pay or redundancy allowance. A lump sum payment in lieu of periodic severance payments or redundancy allowances shall disqualify the individual for the number of weeks determined by dividing the total lump sum payment by the individual s weekly wage. For purposes of a lump sum severance payment or redundancy allowance, the number of weeks of disqualification determined pursuant to this subsection shall be computed to the next lower multiple of one, but not less than one, if not already a multiple thereof. b. Any week or weeks of disqualification for benefits shall reduce the maximum total benefits of the individual during the benefit year by an amount equal to the individual s weekly benefit rate times the number of weeks of disqualification pursuant to subsection a. of this section. c. Nothing in this section shall be construed so as to preclude an individual, who is otherwise eligible, from receiving any State or federal extension of unemployment compensation.. Every employer shall post a copy of this act or a summary approved by the Department of Labor and Workforce Development in a prominent place in the work area. An employer who fails to post a copy of this act or a summary of this act shall be issued by the department a written warning for the first violation, and shall be fined up to $0 for a second violation and up to $,000 for the third and each subsequent violation. A penalty imposed by the department pursuant to this section shall be collected and enforced

9 S0 GORDON by summary proceedings pursuant to the provisions of the Penalty Enforcement Act of, P.L., c. (C.A:- et seq.).. This act shall take effect on the first day of the sixth month next following enactment, except the New Jersey State Board of Mediation and Commissioner of Labor and Workforce Development may take any anticipatory administrative action in advance as shall be necessary for the implementation of this act. This act shall only apply to a termination that occurs on or after the effective date of this act, and shall not apply to a termination at the expiration of an express oral or written agreement of employment for a specified duration, which is valid, subsisting, and in effect on the effective date of this act. STATEMENT This bill provides that employers may not terminate the employment of employees without good cause. Pursuant to the bill, employers have good cause to terminate the employment of employees when the employee s termination is the result of the employee: () engaging in a pattern of improper or disorderly conduct; () not working in an efficient manner, or working belatedly and negligently, or in violation of the standards of quality of the establishment; or () repeated violation of reasonable rules or policies established for the operation of the establishment, provided a written copy of the rules or policies has been provided to the employee, provided that any standards, rules or policies are consistently enforced and not applied to a particular employee in a disparate manner without justification. The bill provides that employers do not have good cause to terminate employees unless the employer has given the employee instructions as to how the employee should perform the employee s duties and has given a written warning to adhere to the employer s instructions. The bill prohibits employers from terminating employees without having given at least two weeks notice in writing to the employee, except that an employer may terminate an employee without notice if the employer pays the employee an amount equal to the pay and benefits which the employee would have been entitled for work that would have been performed during the period of notice. The bill provides that employers are entitled to terminate without notice or payment of any severance any employee who is guilty of serious misconduct which is directly related to the employment relationship and has a detrimental effect on the employer s business, and in which situation the employer cannot reasonably be

10 S0 GORDON expected to take any course other than to terminate the employment of the employee. The bill provides that employees who are terminated without good cause are entitled to severance pay in the amount equal to at least one month s pay for each year of employment, up to a maximum total payment equal to 0 months pay. The bill provides that employers have good cause to terminate the employment of an employee when the employee s termination is a redundancy that is part of a reduction in the workforce that is the direct result of: () the modernization, automation, or mechanization by the employer of all or part of the business; () the discontinuance, sale or other disposition by the employer to carry on all or part of the business; () the reorganization of the business by the employer to improve efficiency; () the relocation of the business by the employer; () the bankruptcy of the employer; or () a reduced operation in the employer s business made necessary by economic conditions. Employees terminated for redundancy under the bill are entitled to at least one month s notice in writing, except that an employer may terminate an employee without notice if the employer pays the employee an amount equal to the pay and benefits which the employee would have been entitled for work that would have been performed during the period of notice. Employees who are terminated for redundancy are entitled to a redundancy allowance in the amount equal to at least two weeks pay for each year of employment, up to a maximum total payment equal to 0 months pay. Nothing in the bill precludes higher standards of benefit to employees than those set out in the bill being agreed upon through collective bargaining, an express oral or written agreement relating to employment that does not violate the bill, or other forms of negotiations or agreement or arbitration award. The bill requires the employer to continue to pay or apply the higher standard of benefit as if it were provided for under the bill. The provisions of the bill apply only to employees who have completed a probationary period of employment and have worked for the employer for at least 0 hours during the weeks next preceding the termination. The bill provides that new employees may be required to serve a probationary period of employment, not to exceed one year in length. The employer or employee may terminate the employment at any time during the probationary period for any reason. If an employer does not establish a specific probationary period or provide that there is no probationary period prior to or at the time of

11 S0 GORDON hire, there shall be a probationary period of one year from the date of hire. The bill requires the Commissioner of Labor and Workforce Development, after consultation with the State Treasurer, to adopt rules and regulations pursuant to the Administrative Procedure Act, P.L., c. (C.:B- et seq.) to regulate the method of paying severance pay, redundancy allowances and payments in lieu of notice. Under the bill, an employee whose employment is terminated may file a complaint and demand for arbitration with the New Jersey State Board of Mediation, established in, but not of, the Department of Labor and Workforce Development pursuant to P.L., c.0 (C.:A- et seq.), not later than days after the effective date of the termination, the date of the breach for any payment under the bill, or the date the employee learns or should have learned of the facts forming the basis of the claim, whichever is later. The time for filing is suspended during any period for which the employee is pursuing the employer s internal procedures for a remedy and has not been notified in writing by the employer that the internal procedures have concluded. Except in cases of voluntary resignation by an employee, an employer must mail or deliver to the terminated employee, within business days after a termination, a written statement of the reasons for the termination. Under the bill, an employer may file a complaint and demand for arbitration with the board to determine whether there is good cause for termination of a named employee. The employer must mail or deliver to the employee a written statement, no later than days prior to filing, of the employer s intention to file and the factors alleged to constitute good cause for a termination. Arbitration proceedings under the bill, except as otherwise provided, are subject to the current State arbitration law, and the New Jersey State Board of Mediation is required to adopt procedural rules to regulate arbitration under the arbitration law. The bill provides that no later than 0 days after the close of an arbitration hearing or at a later time agreeable to the parties, the arbitrator must mail or deliver to the parties a written award sustaining or dismissing the complaint, in whole or in part, and specifying appropriate remedies, if any. An arbitrator may make one or more of the following awards for a termination in violation of the bill: () reinstatement to the position of employment the employee held when employment was terminated or, if that is impractical, to a comparable position; () full or partial back pay and reimbursement for lost fringe benefits, with interest; () if reinstatement is not awarded, a lump sum severance payment or redundancy allowance at the employee s rate of pay in

12 S0 GORDON effect before the termination, for a period not exceeding 0 months after the date of the award, together with the value of fringe benefits lost during that period, and taking into account equitable considerations, including, but not limited to, the employee s length of service with the employer and the reasons for the termination; () an amount equal to the pay to which the employee would have been entitled for work that would have been performed during the period of notice before termination, if the employer failed to provide notice or failed to provide payment for termination without notice; and () reasonable attorney s and arbitrator s fees and costs. An arbitrator may make either or both of the following awards for a violation of severance pay or redundancy allowance under the bill: () full or partial payment of severance pay or redundancy allowance, with interest; and () reasonable attorney s and arbitrator s fees and costs. The bill provides that an arbitrator may only make an award as expressly provided in the bill. The arbitrator may not award damages for pain and suffering, emotional distress, defamation, fraud, or other injury under the common law; punitive damages; compensatory damages; or any other monetary award, unless it is established by a preponderance of the evidence, that the employer engaged in actual fraud or actual malice in the termination of the employee. In making a monetary award, the arbitrator must reduce the award by the amount of any monetary award to the employee in another form for the same conduct of the employer. If an arbitrator dismisses an employee s complaint and finds it frivolous, unreasonable, or without foundation, or sustains an employer s complaint and makes an award declaring that there is good cause for the termination of a named employee, the arbitrator may award reasonable attorney s fees, arbitrator s fees, and costs to the prevailing employer. Under the bill, an individual receiving severance pay is disqualified for unemployment and temporary disability benefits under chapter of Title of the Revised Statutes for any week with respect to which the individual is receiving or has received full severance pay or redundancy allowance. Any week or weeks of disqualification for benefits reduces the maximum total benefits of the individual during the benefit year by an amount equal to the individual s weekly benefit rate times the number of weeks of disqualification.