CLIENT ALERT: December 2007

Employer Alert

The purpose of this e-mail alert is to let you know that there is legislation for paid family leave pending in the New Jersey Legislature which could impact you, as an employer, including employers with fewer than 50 employees. The proposed bill is an amendment to the Temporary Disability Insurance statute.

IF PASSED, THE FAMILY LEAVE BILL WILL REQUIRE ALL EMPLOYERS TO ALLOW THEIR EMPLOYEES UP TO TEN (10) WEEKS OF PAID LEAVE TO CARE FOR AN ILL FAMILY MEMBER OR A NEW BABY. Presently, the Federal Family and Medical Leave Act (FMLA), and the State Family Leave Act (FLA), allow workers up to twelve (12) weeks per year to care for a family member. Both of these Acts, however, apply only to employers with fifty (50) or more workers and, in both cases, the leave is unpaid. New Jersey also allows women who leave work for the birth of a child to collect disability for up to ten (10) weeks. The money for the proposed family leave will come from the state�s temporary disability insurance fund. All employers are subject to the Temporary Disability Benefits Law regardless of the number of their employees.

The proposed family leave would be wholly funded by a tax on wages of about $1 per week collected from all workers so you the employer would not incur out of pocket expenses to subsidize the employee�s leave. Notwithstanding, the legislation could impact your business economically. For example, your business could be without key employees for 10 weeks. This in turn could cause a loss of productivity. It may be difficult to find qualified temporary replacement workers. If so, you may have to make other employees work longer hours and pay them overtime. It is also possible that some jobs would simply not get done thereby damaging your relationship with customers.

THE PENDING LEGISLATION DOES NOT PROVIDE JOB PROTECTION TO EMPLOYEES WHO EXERCISE THEIR RIGHT TO TAKE LEAVE UNDER ALL CIRCUMSTANCES. IT MERELY CREATES A MECHANISM FOR PAYMENT TO THOSE WHILE THEY ARE ON SUCH LEAVE. If you, the employer, have 50 or more employees and are subject to the FMLA and the FLA, you retain the right to let the employee go during the leave period if you can demonstrate, among other circumstances, that the employee would have lost his/her job anyway due to a reduction in force or the legitimate operation of a bona fide system of layoff and recall. Such employers cannot terminate employees in retaliation for exercising their right to take leave, even though they may not be in a protected class. If, however, you are an employer with fewer than 50 employees, neither the FLA nor the FMLA applies, and there is no job protection language in the proposed bill requiring you to save the employee�s job. Notwithstanding, it is not at all clear that you would be protected from liability in a retaliatory or wrongful discharge action. It may be argued that such a discharge violates the clear public policy set forth in the proposed bill in favor of allowing even employees of small businesses to take leave to care for a sick family member. Should the measure pass, the best course for employers, big or small, would be to demonstrate business necessity if it is necessary to fill the job permanently. Also, clearly state in your employee handbook that jobs left vacant due to family leave are not guaranteed or �saved� for the employee.

There are built in anti-fraud measures. Applicants need a doctor�s note attesting to the family member�s needs and employers can require an approved candidate for leave to first use paid sick or other leave at full pay and to use up to two weeks vacation time.

Opponents of the Bill feel this legislation interferes with the employer�s right to manage his or her business and imposes a one-size-fits-all mandate on every workplace as if all businesses have the same staffing needs. This Bill would deprive you, the employer, of the flexibility you currently enjoy to meet employee needs in a way that makes sense for your business such as combining sick leave, vacation, time off, and flexible scheduling to accommodate employees who need time off.

Proponents of the Bill argue this pro-family bill would reduce employee turnover, decrease absenteeism, increase work morale and productivity, and create an incentive for workers to stay or come to New Jersey to work. New Jersey would be only the second state in the nation to have paid family leave. Some business groups fighting the measure say it will disrupt the operations of businesses and put them at a competitive disadvantage compared with peers in other states.

The measure remains before the Assembly Labor Committee. Governor Corzine supports the Bill requiring paid leave up to 10 weeks but recently stated he is willing to support a compromise of six weeks paid leave. Another possible compromise being discussed is a provision which would exempt employers with fewer than fifty (50) employees.

If you have any questions about the proposed Family Leave Bill, or any employment and labor issue or concern, please call Thomas Ryan, Esq. (tryan@lcrlaw.com) or Linda Day, Esq. (lday@lcrlaw.com) at (973) 729-1880.