Nursing home and other healthcare provider advocates are not pleased with a new New Jersey law that preserves employment for four months for workers whose facilities change ownership. Its unintended consequences could include facilities closing, less access to care and fewer jobs, opponents say.

As of last Wednesday (Nov. 16), non-governmental healthcare entities must offer eligible workers continued employment for at least four months following a change in control without any reduction in their wages and benefits. That includes paid time off, healthcare, retirement, and education benefits.

The Health Care Association of New Jersey and LeadingAge New Jersey & Delaware opposed Senate Bill 315.

“This law imposes unprecedented restrictions on the sale or transfer of healthcare facilities …,” Kathy Fiery, vice president of assisted living for the HCANJ told McKnight’s Tuesday.

“We opposed the law because it restricts a purchaser’s normal managerial discretion that may be needed to remedy poor financial conditions that may have necessitated the sale.  Without that discretion, a potential buyer may choose to not purchase a facility, making it more likely that financially troubled facilities will close. In the end, this may result in patients losing access to care and workers unnecessarily losing jobs.”

After a change in control, the new ownership group has to offer employment to eligible employees in writing and stay open for at least 10 business days from the date of the offer. If at the time of the change, or during the transition period, the number of jobs is fewer than the number of eligible workers, seniority and experience must form the basis of continued employment decisions.

New-owner obligations

Those workers who stay on for the transition period can be let go only for cause or as a part of downsizing. After the four months, the new owner has to give each retained-eligible employee a written performance evaluation and offer continued employment if their evaluation merits. The new owner also has to maintain each offer of employment and performance evaluation for at least three years from the date of the offer or the evaluation.

A main sticking point is the implication that open-ended employment would be mandated in most cases after the four-month post-sale period, said Meagan Glaser, vice president of LeadingAge New Jersey & Delaware. 

“It is our understanding that as currently written, the requirements related to retaining or rehiring existing staff would not be limited to a transition period, but instead would require their retention or rehiring indefinitely if cause does not exist or if a reduction in workforce is not warranted,” she told McKnight’s. 

This sets a dangerous precedent for future private transactions in other industries as well. This policy change already occurred in the hotel industry during the lame-duck session. We are also not aware of any other state that has laws placing restrictions on the sale of a private or non-profit entity.”

The law allows for a private right of action for employees affected by violations of its language. They could be awarded with immediate reinstatement and if the issue is unpaid wages, could win 200% liquidated damages.