New Jersey's Paid Family Leave Bill And Recent LAD Amendment - What's The 411?

Thursday, May 1, 2008 - 00:00

The year 2008 has already been a busy year for employment law developments in New Jersey. On January 13, 2008 Governor Corzine signed a bill, effective immediately, that expanded protection for the religious practices of employees under New Jersey's Law Against Discrimination (the "LAD").1 Then, on May 2, 2008, the governor signed into law the New Jersey Paid Family Leave Bill (A873 and S786), which extends workers' entitlement to Temporary Disability Insurance ("TDI") by providing for up to six weeks of paid family leave.The bill will go into effect after June 30, 2009.

The Paid Family Leave Law

This controversial legislative initiative has been circulating in Trenton for the last few years and has caused a firestorm of debate. Supporters hail the bill as a vote for working families, as it provides financial assistance to workers who need time off to care for an infant, elderly parent or seriously ill family member. They contend paid family leave is a "win-win" for employers, since it will aid in retaining a stable workplace by allowing employees needed time off without the employer having to pay because the program will be funded by worker contributions to the State's TDI program.2

Opponents stress that the Paid Family Leave Bill will increase costs for employees as it will be subsidized by a new payroll tax on workers. They also speculate that the bill increases the cost of doing business, including increased overtime expenses required by co-workers having to cover the duties of employees on leave. They cite additional costs to administer the program due to required posting, notice, and reporting procedures, as well as business challenges if skilled replacement labor is not readily available. For all these reasons, opponents contend that paid family leave will deter new business from entering the State and drive existing employers - and employees - out.

But the elephant in the room is whether the Paid Family Leave Act provides employees with a new avenue to sue their employers. As discussed in further detail below, the legislature clearly indicated that the sole purpose of the Act is to allow employees an opportunity to self-fund paid time off to care for infants or seriously ill family members - not to provide employees with new claims against their employers.

Who Is Covered - And Who Pays?

This bill applies to employers of all sizes, in contrast to the New Jersey Family Leave Act ("NJFLA") and federal Family and Medical Leave Act ("FMLA"), which apply to employers with 50 or more employees. Importantly, the bill does not purport to extend the protections afforded to employees under the FMLA or NJFLA. For example, it does not guarantee reinstatement to employees who qualify for paid family leave. Nor does the bill provide for 12 weeks of leave as allowed under the NJFLA and FMLA. Rather, it provides employees with up to six weeks of paid leave during a 12-month period to care for newborns, newly adopted children or seriously ill family members. While the leave is "paid," the leave is financed by workers through a mandatory payroll tax. The State projects that approximately 38,000 workers annually will take advantage of the paid leave.3 On the basis of this estimate, which derives from the experience under a similar California paid leave law, the Office of Legislative Services ("OLS") estimates that leave for these 38,000 workers can be adequately funded if each worker contributes about $.50 to $1.00 weekly. The OLS estimates that each New Jersey worker will pay a maximum of $25 a year in 2009 and $33 a year in 2010.4 These contributions will enable workers to receive two-thirds of their wages, up to $524 a week, for six weeks of family leave.

To qualify for paid family leave, employees must first exhaust available maternity and disability leave. Employers may also require workers to use any paid sick leave, vacation time and other leave at full pay for up to two weeks before using paid family leave time.

The bill also provides for intermittent leave for employees who need leave to care for seriously ill family members. Unless an emergency arises, employees are required to provide at least 15 days' prior notice of their need for leave and document the need for leave with a health care provider's certification detailing the nature of any serious health condition. Leave provided for birth or adoption must, on the other hand, be taken in a single continuous period of time, unless the employer agrees otherwise. A notice of 30 days is typically required, and a failure of notice penalizes the leave-taker by a two-week reduction in benefits. The leave may be taken at any time within a year after the date of the birth or adoption.

The Bill Provides For Immunity From Wrongful Termination Claims

Initial drafts of the bill required employers to reinstate workers who availed themselves of the TDI paid family leave. After vehement opposition to this provision - especially by the State's smaller employers, which are not covered by the NJFLA or the federal FMLA - lawmakers revised the bill. As a result, companies employing fewer than 50 employees are immunized from wrongful termination suits where they fail to rehire or restore employees who have taken advantage of their right to paid family leave. Specifically, Section 10.d provides that nothing in the bill "shall be construed to grant an employee any entitlement to be restored by the employer to employment held by the employee prior to taking family temporary disability leave or any right to take action against an employer who refuses to restore the employee to employment after the leave." The bill goes on to expressly provide that "if an employee receives benefits for family temporary disability leave pursuant to [the bill] and that employer fails or refuses to restore the employee to employment after the period of family temporary disability leave, that failure or refusal shall not be a wrongful discharge in violation of a clear mandate of public policy, and the employee shall not have a cause of action against that employer, in tort, or for breach of an implied provision of the employment agreement, or under common law, for that failure or refusal." (emphasis added).5

However, companies employing 50 or more employees are still subject to the reinstatement obligations pursuant to the NJFLA and the FMLA, as the bill provides that nothing in the proposed legislation "shall be construed to increase, reduce or otherwise modify" rights afforded under those existing laws.

Status Of Paid Family Leave In Other States

If Governor Corzine signs the proposed law, New Jersey will be the third State to grant employees paid family leave benefits. The other states are Washington and California. The Washington law will permit five weeks of paid family leave when it goes into effect in October 2009. The California law, which provided a template for drafting New Jersey's Paid Family Leave Bill, was enacted in 2004. California's law also provides for up to six weeks of paid leave and is similarly funded through employee payroll deductions. It is worth mentioning that New York may soon follow in the footsteps of New Jersey. A similar bill permitting 12 weeks of paid leave and up to $170 a week in wages passed the New York Assembly last summer.6

Update On Religious Accommodation

The recent LAD amendment bars employers from requiring an employee to violate or forego a "sincerely held religious practice or religious observance" as a term or condition of hire, retention, promotion, advancement, or transfer. "Religious practices or observances" include "the observance of any particular day or days or any portion thereof as a Sabbath or other holy day in accordance with the requirements of the religion or religious belief." That means, for example, that employers must now honor an employee's request not to work if an employee legitimately requests time off to observe a holy day or Sabbath. However, the law exempts employers from compliance where "after engaging in a bona fide effort, the employer demonstrates that it is unable to reasonably accommodate the employee's religious observance or practice without undue hardship on the conduct of the employer's business." The amendment does not define "bona fide effort," but it defines "undue hardship" as "an accommodation requiring unreasonable expense or difficulty, unreasonable interference with the safe or efficient operation of the workplace or a violation of a bona fide seniority system or a violation of any provision of a bona fide collective bargaining agreement." An accommodation that results "in the inability of an employee to perform the essential functions of the position in which he or she is employed" is not required. Factors such as the size of the employer, or the cost of hiring additional employees, are properly considered when determining if an "undue hardship" exists.

Notably, the amendment does not obligate the employer to pay extra wages or benefits for working particular hours if the employee was assigned those hours as a religious accommodation. Further, an employee must make up for work time missed pursuant to the new legislation "by an equivalent amount of time and work at some other mutually convenient time." In the alternative, the time may be charged against paid leave, other than sick leave. If the time is not made up or charged against other paid leave, the employer may treat the time off as unpaid leave.

Since this amendment is now effective, employers should update their employee handbooks and educate human resources personnel and managers on this new obligation.

1 N.J.S.A. 10:5-1, et seq.

2 See http://www.njtimetocare.rutgers.edu/faq.htm.

3 http://abclocal.go.com/wpvi/story?section=news/ politics&id=6065955

4 See http://www.njleg.state.nj.us/2008/Bills/ A1000/873_E1.HTM

5 http://www.njleg.state.nj.us/2008/Bills/A1000/ 873_R1.HTM

6 http://www.recordonline.com/apps/pbcs.dll/article?AID=/20080412/BIZ/804120322/

Lynne Anne Anderson is a Member and Vice Chair of the Employment and Labor Practice Group of Sills Cummis & Gross P.C. Jiri Janko is an Associate of the Group. They are resident in the Firm's Newark, NJ office. The views and opinions expressed in this are those of the authors and do not necessarily reflect those of Sills Cummis & Gross P.C.

Please email the authors at landerson@sillscummis.com or jjanko@sillscummis.com with questions about this article.