Nursing home employees and their unions are praising a new law offering benefits and salary protections immediately after a facility is sold. But the measure is meeting with stiff resistance from at least one nursing home advocacy group and the business community.

The new New Jersey law requires companies that acquire nursing homes and other healthcare facilities to preserve employee salary and benefits levels for a minimum of four months. Early versions of the bill required a six-month period.

New Jersey Gov. Phil Murphy (D) signed the bill into law Thursday. It goes into effect 90 days afterward.

The law allows layoffs within the first four months of a transaction, but only if the new owner downsizes the total number of jobs, and eliminates workers with the least amount of seniority and experience first. At the end of the four-month transition period, the owner must evaluate each employee in writing and retain anyone whose performance review is satisfactory.

“Ensuring continuity of employment for existing workers will not only benefit employees of a health care entity, but ensure continuity of care for the many patients who have come to rely on the critical services provided by the health care professionals they know and trust,” Murphy said after signing S.315 Thursday.

Union leaders who lobbied heavily for the bill said some employees have had bad outcomes before this bill as they watched their wages and benefits trimmed or eliminated after properties changed hands.

Dangerous precedent?

The law’s supporters said it will help alleviate some of the adverse issues workers face in what has become a very volatile buying and selling environment in the nursing home sector. 

State Sen. Richard Codey (D-Essex), a prime sponsor, said workers deserve protection and to “be insulated from any structural change that might come from the consolidation of healthcare entities.”

Meanwhile, nursing home and hospital executives argued the bill would interfere with their business and ultimately lead to job losses if new owners can’t make money. They even were briefly successful in convincing lawmakers to kill an earlier version of the bill before persuading lawmakers to scale back on the initial “protection period” of six months.

A large long-term care group expressed concerns about the potential far-reaching impact of the bill on the larger healthcare community.

“While LeadingAge New Jersey & Delaware deeply respects and supports all healthcare workers, this new law will have unintended consequences that negatively impact the entire healthcare system by imposing unprecedented restrictions on the sale or transfer of a facility,” LeadingAge New Jersey and Delaware Vice President Meagan Glaser told McKnight’s.

Glaser said the new law “will unnecessarily restrict normal managerial discretion that may be needed to remedy poor financial conditions that may have necessitated the sale or transfer and thus putting the facility in jeopardy of closing, or unable to improve its operations.” 

In the end, the residents may lose access to care or be otherwise impacted, she added.

She claimed the law could set “a dangerous precedent for future private transactions in other industries as well, noting how a policy change already occurred in the hotel industry during the lame-duck session.”

The business community, bolstered by the New Jersey Business and Industry Association, also expressed disappointment.

“While the intent of this bill is to protect workers who already have protections, it once again strikes no balance for the concerns of the business and healthcare community and may, in fact, result in unintended consequences, like the closure of facilities,” association President and CEO Michele Siekerka said in a prepared statement. “With the continued consolidation in the healthcare industry, this law will likely have a negative effect on the market, forcing certain facilities to close. This may be particularly problematic in our urban areas, where healthcare facilities have struggled to remain open.”