man putting money into his shirt pocket
Gov. Phil Murphy
Gov. Phil Murphy

Companies that acquire nursing homes and other healthcare facilities will be required to preserve employee wages and benefits for at least four months during ownership transition under legislation signed into law last week in New Jersey.

“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,” Gov. Phil Murphy (D) said Thursday in a press release

The law will take effect in 90 days.

Meagan Glaser, vice president of LeadingAge New Jersey & Delaware, told the McKnight’s Business Daily that the legislation affects not only skilled nursing facilities but other healthcare entities such as hospitals, home health agencies and healthcare service firms. It is unclear whether the law applies to senior living communities as well.

“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,” she said.

Employees retained as a result of the new law may not be let go during the four-month transition period, unless the new employer cuts the total number of positions at the facility, in which case the employer must prioritize workers based on seniority and experience, according to the governor’s office. At the end of the transition period, the new employer must evaluate each employee in writing and keep all workers whose performance was deemed satisfactory.

The law applies to sales, transfers, mergers, acquisitions and other arrangements that change the control of a healthcare entity. Although its goal is to protect workers, Glaser said that the new law may have unintended consequences “by imposing unprecedented restrictions on the sale or transfer of a facility.”

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

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