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Gov. Phil Murphy on Monday signed legislation that requires businesses to retain the service employees of a previous owner – or even those after a minor service contract vendor change – for 60 days, under a law that NJBIA calls an overreach that removes an employer’s ability to make operational decisions.

The law, which takes effect in 90 days, will create a significant logistical burden for service vendors and interfere with private contracts, NJBIA President & CEO Michele Siekerka said in a statement after the bill signing was announced by the governor’s office.

“This new law will make it impractical and overly burdensome for an employer to change service contracts, stifling competition, efficiency as well as consumer health and safety,” Siekerka said. “We believe our businesses deserve the freedom to make operational decisions for the betterment, and sometimes survival, of their business. This law effectively takes that right away.”

This law so broadly defines service employees and covered locations it captures a significant number of businesses in our state, negatively impacting large swaths of our economy, Siekerka said.

The law impacts large office complexes to residential buildings and healthcare facilities to performance halls. Airports, warehouses, schools and more will be subject to this hiring and retention mandate. Additionally, service employees include, but are not limited to, security, janitorial, maintenance and grounds maintenance workers, among others.

Although NJBIA succeeded in securing legislative amendments that removed criminal penalties and reduced the timeframe for employee retention from the original 90 days to 60 days, the association remained opposed to the bill because of the provision impacting a business’s ability to change service contract vendors when needed for legitimate business reasons.

“To put the situational impacts in layman’s terms, if Company A contracts with ABC Cleaning Service to clean their facility and ends that contract to hire XYZ Cleaning Service instead, the XYZ Cleaning Service will be mandated to assume ABC Cleaning Service’s employees for 60 days,” Siekerka said.

“As evident by this example, successor employers will be mandated to hire another vendor’s employees regardless of whether the original vendor had other work assignments for those employees, if the successor employer had their own employees to bring on to the job whose employment status may now be at risk, or if the covered location contracting for service work was dissatisfied with the job being done by the previous vendor’s employees,” Siekerka said.