New Jersey Call Center Jobs Act
On Jan. 21, 2020 Gov. Phil Murphy signed the “New Jersey Call Center Jobs Act” into law, which created staffing level requirements for call center businesses operating in New Jersey. Businesses that do not meet the staffing requirements set forward in the Act are required to notify the Commissioner of the New Jersey Department of Labor and Workforce Development (DOLWD). Failure to promptly notify the Commissioner could result in financial penalties. The law is intended to protect call center jobs in New Jersey by barring businesses that fall below the required staffing level from receiving financial assistance from the state. On April 5, 2021 the DOLWD’s new rule adoptions for the “New Jersey Call Center Jobs Act” went into effect. This Fast Facts explains these new rules.
What requirements are set forward in the New Jersey Call Center Jobs Act?
The Act puts forward two primary notification requirements for Call Center businesses operating in New Jersey:
- Call centers must notify the DOLWD Commissioner when they fall below the minimum staffing level put forward in the Act, set at a level capable of handling at least 65% of customer volume of telephone calls, emails, or other electronic communication.
- Call centers planning to move 20% or more of their total operating volume, when measured against the previous 12-month average volume of those operations, to one or more foreign countries must notify the DOLWD Commissioner at least 90 days prior to the shift.
How do I calculate the 65% minimum staffing level?
The staffing level that businesses must abide by is calculated semi-annually using the periods Jan. 1 – June 30 and July 1 – Dec. 31. Businesses are required to compare their staffing level in the then-current six-month period to the preceding six-month period.
To calculate the 65% minimum staffing level:
- Calculate the total hours worked for each of the six months in the preceding six-month period
- Order those months from least to greatest in terms of hours worked
- Remove the month with the fewest hours worked and the month with the most hours worked
- Add the remaining months and divide by four to get your average monthly staffing level
- Multiply the result by 0.65 to get 65% of the staffing level required to meet customer volume
Does this apply to all call center businesses?
No. This only applies to call center businesses with a physical operation or shared work location in New Jersey.
Additionally, the act specifically defines an “employer” as:
- a business entity that for the purpose of staffing a call center employs 50 or more full-time employees in New Jersey for each working day during each of 20 or more calendar workweeks in the then-current or immediately preceding calendar year; or
- a business entity that for the purpose of staffing a call center employs 50 or more employees in New Jersey for each working day during each of 20 or more calendar workweeks in the then-current or immediately preceding calendar year who in the aggregate work at least 1,500 hours each workweek, excluding overtime.
Full-time is defined as working an average of 30 or more hours per week.
NOTE: Employees who principally perform work other than staffing a call center are not counted toward the employee threshold, even if they are someone who has been assigned to call center work temporarily during a period of unanticipated high customer volume.
What if my business uses independent contractors?
The Act requires use of the criteria identified in the Unemployment Compensation Law at N.J.S.A. 43:21-19(i)(6)(A), (B), and (C), commonly referred to as the “ABC test,” and the case law interpreting and applying the ABC test to potential employment relationships to determine whether an individual is an employee or an independent contractor.
An independent contractor would not be counted as an employee when determining if the rules in this Act apply to your business.
However, since the required staffing level is calculated in hours worked, rather than number of employees, the hours worked by independent contractors likely count toward the required staffing level.
What happens if I fall below the 65% level?
A business that falls below the 65% minimum staffing level must notify the DOLWD Commissioner within five business days following the then-current six-month period.
The Act directs the DOLWD Commissioner to maintain a public list of all businesses that are non-compliant with the 65% minimum staffing level requirement. Businesses are to remain on that list for no more than 36 months.
What if my volume changes and I don’t need as many employees? Can the 65% ever change or is it fixed in time?
While the law does not explicitly address this scenario, the 65% can, and likely will, fluctuate over time. The law requires the 65% measurement to be calculated semiannually so that an employer is only ever required to maintain 65% of the average staffing level from the preceding six-month period. Therefore, staffing levels are allowed to fluctuate over time. However, since an employer must maintain 65% of the preceding six-month period’s average staffing level, this law effectively limits allowable staffing contractions to 35% in each six-month period.
Suppose- you started the current six-month period with 1,000 hours worked per month on average in the preceding six-month period. That means you cannot fall below 650 hours worked per month on average for the current six-month period. Due to lower volume, you find that you only need 800 hours worked per month. This would be allowed. Additionally, if your average hours worked for the current six-month period wind up being 800 hours per month, then in the subsequent six-month period you will not be allowed to fall below 65% of 800 hours, which is 520 hours per month. In this way, your staffing level could decrease over time.
What if I am moving part or all of my operation state? What about another country?
The Act does not say anything specific about moving to another state. However, if your business is moving part of your operations to another state such that you fall below the 65% staffing level requirement, then you would likely have to notify the DOLWD Commissioner. If all of your operations are moved to another state, this Act likely would not impact your business.
As noted above, if you plan to move 20% or more of your operating volume, when compared to the previous 12-month period’s operating volume, to another country, 90-day notice is required. Again, if you are fully moving operations to another country, this Act likely would not impact your business.
How does the DOLWD Commissioner determine how long to put a business on the list for?
The DOLWD Commissioner is directed to use the following four criteria:
- Whether the employer voluntarily provided the required notification, versus having been determined, following an investigation, to have violated the notification requirement;
- The past history of previous violations by the employer;
- The good faith of the employer; and
- Any other factors the Commissioner deems to be appropriate in determining the sanction imposed.
Notably, an employer cannot be placed on the list unless the DOLWD Commissioner first notifies the employer that they will be placed on the list, the period of time they will be on the list, and an opportunity to request a formal hearing pursuant to N.J.A.C. 12:71-5.1.
What if I don’t notify the DOLWD Commissioner?
Businesses that do not comply with the notification requirement could face financial penalties. The DOLWD Commissioner has the authority to assess a financial penalty for each day of non-compliance, not to exceed $7,500 per day.
If you are found to have fallen below the 65% threshold without notifying the DOLWD Commissioner, you will then be notified of the violation, that you will be placed on the list, and the amount of the financial penalty to be assessed.
However, given that the Act directs the Commissioner to consider whether or not notification was provided, businesses that do not comply with the notification requirement will almost certainly remain on the list for longer periods of time.
How do I request a hearing related to being placed on the list or assessed a financial penalty?
Hearings must be requested within 10 business days from the receipt of notice related to being placed on the list or being assessed a penalty.
All requests for a hearing shall be in writing and shall be directed to the following address:
NJ Department of Labor and Workforce Development
Division of Wage and Hour Compliance
PO Box 389
Trenton, NJ 08625-0389
The Division of Wage and Hour Compliance will review your request in order to determine whether the dispute can be resolved at an informal settlement conference. If the review indicates that an informal settlement conference is warranted, such conference shall be scheduled. If a settlement cannot be reached, the case shall be forwarded to the Office of Administrative law for a formal hearing.
NOTE: If the request is not filed within 10 business days, then the determination of placement on the list or assessment of a financial penalty shall be deemed the final administrative action.
Why does it matter if I am on the list?
As long as a business is on the list, it is barred from receiving direct or indirect financial assistance from the state through the following means:
- Guaranteed loans
- Tax benefits
- Any other financial support
Exception: The employer’s inclusion on the list shall not prevent the employer from receiving any grant to provide training or other employment assistance to individuals who are members of specific groups selected as being in particular need of training or other employment assistance, including, but not limited to, employees of the employer whose employment is being affected due to the transfer or relocation of the employer’s facility or operating unit, veterans, minority groups, and women.
How does the DOLWD Commissioner determine the financial penalty for failing to notify?
The DOLWD Commissioner is given =five criteria to consider:
- The seriousness of the violation;
- The past history of previous violations by the employer;
- The good faith of the employer;
- The size of the employer’s business; and
- Any other factors that the Commissioner deems to be appropriate in determining the penalty assessed.
Notably, the DOLWD Commissioner cannot levy a penalty without first providing the business with a notification of the violation, the amount of the penalty, and an opportunity to request a formal hearing pursuant to N.J.A.C. 12:71-5.1.
Are there any other components of the law affecting call center businesses?
Yes. The act includes a provision whereby businesses, with a location in New Jersey and at least two employees that are New Jersey residents, are given preference by state departments or agencies for contracts for call center services. The preference given when evaluating “price and other factors” is directed to be:
- An amount or price not to exceed 10% ; or
- A point allocation not to exceed 10% .
This information should not be construed as constituting specific legal advice. It is intended to provide general information about this subject and general compliance strategies. For specific legal advice, NJBIA strongly recommends members consult with their attorney.