Doctors shaking hands at meeting.
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A new law is touting job protections for New Jersey healthcare workers when facility ownership changes hands. But state long-term care organizations say the “unprecedented restrictions” contained in the law actually may lead to unnecessary job losses.

SB 315, which went into effect last week, now requires contracts for the sale of certain healthcare entities — including assisted living communities — to preserve employee wages and benefits and to honor collective bargaining agreements.

The law requires new employers to offer eligible employees — those employed 90 days before any ownership change — continued employment for at least four months. Employers also cannot reduce wages and benefits in that time, including paid time off, healthcare, retirement and education benefits. The requirements do not extend to managers or executives.

Those rules apply to sales, transfers and other arrangements that change the control of a healthcare entity, including consolidations, mergers and reorganizations. 

In addition to assisted living residences and programs and comprehensive personal care homes, the law covers all nongovernmental healthcare entities, including hospitals, rehabilitation centers, extended care facilities, nursing homes, residential healthcare facilities and other healthcare settings. It also covers home health agencies.

Kathy Fiery, vice president of assisted living for the Health Care Association of New Jersey, said that the new law imposes “unprecedented restrictions” on the sale or transfer of healthcare facilities, including assisted living communities.

“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,” Fiery told McKnight’s Senior Living. “Without that discretion, a potential buyer may choose to not purchase a facility, making it more likely that financially troubled facilities will close.”

Meagan Glaser, vice president of LeadingAge New Jersey & Delaware, called the law “far-reaching” and agreed that it will have “unintended consequences” that negatively affect the entire healthcare system by imposing those “unprecedented restrictions” on the sale or transfer of a facility.

In the end, Fiery and Glaser agreed, this may result in residents losing access to care and workers unnecessarily losing jobs.

“This sets a dangerous precedent for future private transactions in other industries as well,” Glaser said. “Anyone under a manager level — unionized or not — small business to our largest employers, those who receive government payments to those that do not, private and nonprofit, would be subject to this legislation.”

Once ownership of a facility changes hands, employment offers must be extended to eligible employees for a four-month transition period. Employees who accept those offers may only be discharged for cause or as part of a reduction in force during the transition period. After the transition period, employees must receive a written performance evaluation and an offer of continued employment if their employment has been “satisfactory.” 

Glaser said the employment requirements, as written, would not be limited to a transition period, but instead would require the retention or rehiring of employees “indefinitely” if cause does not exist, or if a reduction in workforce is not warranted.

New Jersey Gov. Phil Murphy (D) said the law ensures continuity of employment for existing workers and continuity of care for residents.

“With this law, we will eliminate the uncertainty many healthcare workers face during transfers of ownership by implementing the wage, benefit and employment protections these dedicated employees deserve,” Murphy said when signing the bill in August.