Recent Developments in New Jersey Employment Law: What Employers Need to Know

Recent Developments in New Jersey Employment Law: What Employers Need to Know

New Jersey continues to be one of the most active states in the country when it comes to expanding workplace protections and enforcing compliance obligations for employers. In the past year, a number of significant legislative and regulatory developments have altered the employment landscape, increasing both the complexity and potential liability for businesses operating in the state. Employers—regardless of size—must take careful note of these changes, update internal policies, and seek legal guidance where necessary to avoid costly disputes or penalties.

Expansion of the New Jersey WARN Act

The most impactful change in recent months concerns the amendments to the New Jersey Millville Dallas Airmotive Plant Job Loss Notification Act (commonly referred to as the NJ WARN Act). Effective April 10, 2023, these amendments substantially increased employer obligations in connection with mass layoffs, plant closings, and transfers of operations.

Under the revised statute, employers with 100 or more employees must now provide 90 days’ advance notice of a covered event, up from the prior 60-day requirement. More significantly, the amended law mandates severance pay of one week per year of service to affected employees. This obligation is automatic and not contingent upon the employer’s compliance with the notice requirement. If an employer fails to provide the full 90 days’ notice, it must pay an additional four weeks of severance pay per affected employee.

The definition of a “mass layoff” under the revised law is broader than under federal WARN standards, covering any reduction of 50 or more employees, even if those layoffs occur at different locations within the state. The law applies to part-time employees in calculating thresholds, further widening its scope.

Employers contemplating any type of reduction in force or restructuring must now treat WARN compliance as a critical component of risk management. Failing to do so can result in statutory damages, private litigation, and enforcement actions by the New Jersey Department of Labor.

Limitations on Non-Disclosure and Non-Disparagement Provisions

In connection with the state’s continued efforts to protect victims of workplace discrimination and harassment, courts have reaffirmed the reach of N.J.S.A. 10:5-12.8, which voids any employment contract or settlement agreement provision that seeks to waive the employee’s right to discuss claims of discrimination, harassment, or retaliation.

The law prohibits employers from including confidentiality clauses in settlement agreements that would prevent employees from speaking about the facts underlying a claim under the New Jersey Law Against Discrimination (NJLAD). Similarly, non-disparagement clauses must be narrowly tailored and cannot be used to silence employees regarding unlawful workplace conduct.

In light of this, employers should no longer use standard settlement templates containing broad confidentiality or non-disparagement language. Any agreement resolving a discrimination-related dispute should be reviewed for compliance with these statutory restrictions. Courts have already voided such provisions in several recent enforcement actions and private disputes.

Increased Enforcement of Misclassification and Wage Theft

The New Jersey Department of Labor has stepped up enforcement efforts against wage theft and worker misclassification. Pursuant to the Wage Theft Act, N.J.S.A. 34:11-56a25, employers found to have misclassified workers as independent contractors, or who have failed to properly pay minimum wage or overtime, are subject to treble damages and fines. Moreover, employers who retaliate against workers for filing wage complaints face additional penalties and potential criminal exposure.

Recent court decisions and administrative actions confirm that the DOL is applying the strict “ABC Test” to determine whether a worker is truly an independent contractor. To satisfy this test, the employer must prove:

A. The worker is free from control or direction in performing the service,B. The service is outside the usual course of business or performed outside all places of business, andC. The worker is customarily engaged in an independently established trade, occupation, or business.

Failure to meet any one of the three prongs results in the worker being classified as an employee. Employers using freelance labor, gig workers, or any independent contractors in roles closely tied to their core operations must reassess those classifications immediately.

Ban on Salary History Inquiries and Expanded Pay Equity Laws

The prohibition on salary history inquiries remains in full effect under N.J.S.A. 34:6B-20. Employers are barred from asking applicants about their past wage or salary information, either orally or in writing. Violations can result in civil penalties, which increase for repeat offenses.

Additionally, the Diane B. Allen Equal Pay Act remains a powerful enforcement tool. The law prohibits employers from paying employees in a “protected class” less than others performing “substantially similar work,” unless the differential is based on legitimate, job-related factors such as education, experience, or productivity. The law applies to all protected categories under the NJLAD, not just gender. Violations can trigger back pay awards and treble damages.

Employers should conduct internal pay audits to ensure compliance and consider documenting the rationale for all compensation decisions.

Paid Leave Compliance: Earned Sick Leave and Temporary Disability

New Jersey’s Earned Sick Leave Law remains one of the broadest in the country. All employers must provide employees with up to 40 hours of paid sick time per year, accruing at a rate of one hour for every 30 hours worked. Time may be used for personal or family illness, preventive care, school closures, or domestic violence matters.

Separate and apart from the employer-provided paid sick leave, employees may also be eligible for Temporary Disability Insurance and Family Leave Insurance under New Jersey’s state-run benefits programs, which provide wage replacement for medical leave or family caregiving. Employers must provide notice of these benefits and ensure coordination with internal leave policies and the federal Family and Medical Leave Act (FMLA), where applicable.

Recent audits and enforcement actions confirm that the Department of Labor is actively investigating employer compliance with both earned sick leave accrual and usage rights. Employers must maintain accurate records and ensure that managers understand employee rights under these overlapping laws.

The Practical Impact on Employers

The practical impact of these developments is significant. Employers must not only revise handbooks and template agreements but also implement clear internal protocols for layoffs, hiring, discipline, compensation, and leave management. In litigation, these laws often form the basis for claims that are difficult to dismiss and carry the risk of statutory damages, attorney’s fees, and public scrutiny.

More importantly, many of these changes create liability without any need to show intent. Strict liability wage claims, severance obligations under WARN, and voided non-disclosure clauses can expose businesses to lawsuits even where the employer believed it was acting properly.

This makes early compliance and documentation essential. Employers should schedule periodic reviews with counsel to evaluate their employment practices, retrain supervisors, and correct any deficiencies before they become litigation issues.

Conclusion

New Jersey employment law continues to evolve in ways that expand employee protections and create new obligations for employers. These changes are not optional; they are enforceable, and the state has made clear that it intends to pursue violations aggressively. Employers must act now to protect their businesses from liability.

For more information about your legal obligations as a New Jersey employer or to schedule a compliance review, please contact the Law Offices of Peter J. Lamont at www.pjlesq.com, call 201-904-2211, or email info@pjlesq.com.

Contact us today to discuss your business or legal matter. Put our 20+ years of legal experience to work for you.

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For detailed insights and legal assistance on topics discussed in this post, including litigation, contact the Law Offices of Peter J. Lamont at our Bergen County Office. We're here to answer your questions and provide legal advice. Contact us at (201) 904-2211 or email us at  info@pjlesq.com.

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About Peter J. Lamont, Esq.

Peter J. Lamont is a nationally recognized attorney with significant experience in business, contract, litigation, and real estate law. With over two decades of legal practice, he has represented a wide array of businesses, including large international corporations. Peter is known for his practical legal and business advice, prioritizing efficient and cost-effective solutions for his clients.

Peter has an Avvo 10.0 Rating and has been acknowledged as one of America's Most Honored Lawyers since 2011. 201 Magazine and Lawyers of Distinction have also recognized him for being one of the top business and litigation attorneys in New Jersey. His commitment to his clients and the legal community is further evidenced by his active role as a speaker, lecturer, and published author in various legal and business publications.

As the founder of the Law Offices of Peter J. Lamont, Peter brings his Wall Street experience and client-focused approach to New Jersey, offering personalized legal services that align with each client's unique needs and goals​.

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