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NJBIA testified on Monday against legislation that could land business owners in jail for making personnel decisions regarding retention of employees after a change in ownership or service vendor contracts, calling the bill an unwarranted mandate that would stifle an employer’s ability to make operational decisions.

The bill, A-4682, requires a vast range of full- and part-time service employees to be retained for three months, including subcontractors and vendors, whenever a business changes ownership or service contracts.

The proposed mandate, which imposes 10 to 90 days of jail time on employers who do not comply, was narrowly released by a 3-2 vote of  the Assembly State and Local Government Committee.

“This legislation so broadly defines service employees and covered locations to impact a significant number of businesses in our state, negatively impacting large swaths of our economy,” NJBIA Vice President of Government Affairs Alexis Bailey said in prepared testimony. “It applies not only to the sale of a business that employs service workers, but also a change in service vendor contract ownership.

“Employers have a right to determine who they hire and retain as they see fit in order to make necessary operational decisions and employee retention and seniority systems in private businesses should not be dictated by statute,” Bailey said.

Facilities and employers impacted by this law would include multi-family residential buildings with more than 50 units, commercial or office buildings over 100,000 square feet, schools, cultural centers such as museums, convention centers, arenas, performance halls, industrial sites, pharmaceutical labs, airports, train stations, hospitals, nursing care facilities, senior care centers and other healthcare provider locations, state courts and warehouse and distribution centers.

“Employers should have the choice to hire whom they see fit based on financial need, job performance, experience or other factors in order to make sound business decisions,” Bailey said. “Mandated employee retention may force businesses to maintain inadequate service for three months if they change service contracts due to unsatisfactory work. This can have health and safety implications for businesses and the public that purchase their products or services.

“Additionally, this legislation may not pass legal muster as the bill would make successor employers bound to contract agreements that they did not agree to by requiring them to assume the employees of a former vendor during the 90-day period,” Bailey said.

Bailey said the legislation follows the recent enactment of a series of similar troubling laws in 2021 and 2022 mandating the retention of hotel workers and healthcare employees.

The current bill is the most far-reaching employee retention bill to date because it impacts many types of employers and goes beyond mandating retention of employees after the sale of a business to also include a change of vendors for a minor service contract, she said.

“Legislation such as this usurps managerial decision-making, increasing the regulatory burden of doing business and harming our overall competitiveness in New Jersey,” Bailey said.