Video: Impact of New Jersey’s Creating New “Preference” For Rehiring Permanently Disabled Employees

In this video, Greg Lois discusses the new “rehiring preference” for permanently disabled employees added to New Jersey’s Workers’ Compensation Law on September 30, 2021 .  This video is from a live webinar provided to clients on October 25, 2021.

Topics discussed:

  • Who the New Law Applies To;
  • Employers EXEMPT from the Law;
  • The Impact on Employers;
  • Live Q & A on topic.

New Statute Creating “Hiring Preference”

On September 30, 2021, Governor Phil Murphy signed into law Assembly Bill A2617, which provides as follows:

Following a work-related injury, an employer shall provide a hiring preference to an employee who has reached maximum medical improvement (MMI) and is unable to return to the position at which the employee was previously employed for any existing, unfilled position offered by the employer for which the employee can perform the essential functions of the position.

Who The New Law Applies to

The law creating preference only applies to employers with more than 50 (fifty) employees.

Read on for all the exemptions (below). 

Who Is Exempted From the New Law

1) The Preference Does Not Apply to Employers with Less Than Fifty (50) Employees.

Employers with less than 50 employees are exempted b the clear terms of the new law.

2) The Preference Does Not Apply to Contractors Subject to Prevailing Wage Law

The law states that it “shall not include a contractor as defined in section 3 of P.L.1999, c.238 (C.34:11-56.50).” The referenced law,  N.J.S.A. 34:11-56.50, defines “contractor” as

a person, partnership, association, joint stock company, trust, corporation, or other legal business entity or successor thereof who enters into a contract which is subject to the provisions of the “New Jersey Prevailing Wage Act,” P.L.1963, c.150 (C.34:11-56.25 et seq.), and includes any subcontractor or lower tier subcontractor of a contractor as defined herein.

The New Jersey Prevailing Wage Act (N.J.S.A. 34:11-56.25 et seq.) establishes a prevailing wage level for workers engaged in public works. It applies to public projects which are defined as follows: 

3) The Preference Does Not apply to Athletes Employed by Professional Sports Teams.

The law states that employers of athletes of professional sports teams are exempted from the preference. 

Why This Is Important

1) This is the first and only time that the New Jersey Workers’ Compensation law has tried to create a “Preference” for hiring or employability.

There are no other provisions in the New Jersey Workers’ Compensation law that attempt to create a preference for disabled employees.

2) This is REDUNDANT as the Laws Already Address This Situation 

This is redundant because the New Jersey Law Against Discrimination already addresses this exact situation. It is also redundant because the “Second Injury” Provisions were intended to resolve this issue.

The Second Injury Provisions of the New Jersey Act were created to combat this exact situation: where an employer is hesitant to hire an already-disabled or impaired employee. The Second Injury portions of the Act created a Fund to compensate employees who eventually became totally disabled as a result of a new (second) injury arising out of the later employment. 

3) The New Statute appears to lack enforcement power.

There is nothing in the new law that explains how the Division of Workers’ Compensation is to assess allegations of discrimination or enforce violations of this statute. This means that the Division is free to create regulations relevant top enforcing this new law and of course case law will develop. However, there is nothing in the law as passed which indicates what the penalty or other negative impact violation of this law will have on New Jersey employers.

What Enforcement Power Does the Division Currently Possess?

The Division of Workers’ Compensation already has specific enforcement powers conferred directly by statute. These include:

  • Penalty for not paying temporary disability timely (N.J.S.A. 34:15-28.1)(25% of the amount then due plus attorneys’ fees and costs).
  • Penalty for not filing a First Report of Injury (FROI) (N.J.S.A. 3:15-100) ($10-$50 penalty).
  • Penalty for failing to carry insurance (N.J.S.A. 34:15-79) (up to $5,000 for ten days of noncompliance, up to $5,000 for each ten days thereafter). 
  • Penalty for discrimination against an employee for claiming workers’ compensation (N.J.S.A. 34:15-39.1)($100.00 nor more than $1,000.00 or imprisonment for not more than 60 days or both.)

Penalty Provision likely to Be Invoked

The New Jersey Worker’s Compensation Act includes some “catch all” penalties that a Judge of Compensation can use to penalize behavior at odds with the Act. This provision is found in that law at N.J.S.A. 34:15-39.2:

34:15-39.2. Additional penalty; summary recovery. As an alternative to any other sanctions herein or otherwise provided by law, the Commissioner of Labor and Industry may impose a penalty not exceeding $1,000.00 for any violation of this act. He may proceed in a summary manner for the recovery of such penalty, for the use of the State in any court of competent jurisdiction.

How Employers Can Comply With this New Law

1) The New Law Does Not Require Creation of a New Job

First, it is important to note that an accommodated job does not need to be created or tailored to suit the disabled worker. The law specifically states as follows:

Nothing in this section requires an employer to create a new position to accommodate an employee who cannot return to the employee’s former position following a work-related injury despite reaching maximum medical improvement. . .

2) The New Law Does Not Require Removal of Employee from Existing or Filled Position

The law states that if the employer already has an employee performing work that could be performed by the disabled employee, the employer is not required to reassign that job tot he disabled employee. The law only applies to “open and unfilled” positions extant at the time of the disabled employees finding of Maximum Medical Improvement (MMI). The law states as follows:

Nothing in this section [] requires an employer to remove another employee from an existing and filled position that would be suitable for the injured employee.

3) The New Law Does Not Have a Reporting or Enforcement Provision

The law does not create a new burden on the employer to either report unfilled positions or ability to accommodate permanently-disabled workers. Nor does the new law have any enforcement provision. This does not mean that the Division will not come up with new regulations to allow for enforcement of this new mandate.

4) At the Time of MMI, Where the Employee is Still Attached to the Employer, the Employer Should Allow the Employee to Apply for Unfilled Roles

To remain in compliance with the new law, we recommend employers do the following where the injured worker has reached Maximum Medical Improvement:

[a] Determine if the employment is exempted from compliance with the new law (less than 50 employees, engaged in public contracting work, or professional sports team). If the employer is not exempted, then

[b] Determine if the employer has open unfilled roles ​​​​​​​that could be suitable for the employee, based on the employee’s unique permanent disability. 

[c] If the employer does have an open role that the disabled worker could reasonably be expected to fill, then the employer should make the employee aware of the opportunity to apply for the open, unfilled role. The injured employee would then be subject to the same qualification review, testing, and/or interview process that the employer has for that role.

[d] While the new law creates a “hiring preference” it does not define that term. 

5) The Law Does Not Address a Common Situation Where the Employee is No Longer Attached to the Employer At The Time of MMI.

Where a workplace injury is caused by an employee’s negligence, refusal to follow safety rules, disobedience, intoxication, or other reason, it is common for the employer to terminate the employee “for cause.” Of course, this does not impact the injured workers’ ability to collect workers’ compensation benefits (which are generally payable even where the employee’s own negligence, carelessness, refusal to follow safety rules caused their own injury). Obviously, an injured worker who has been separated for cause would not be eligible for “hiring preference” for another role within the employer. 

6) The Law is Silent on Chronicity: How Long The Preference Lasts

We are reading the new law to mean that the claimant is entitled to a “hiring preference” for any open roles that exist at the time they reach MMI, and not beyond that point and into the future. We are reading the law to assume that the hiring preference doe snot persist into the distant future, and that anytime the employer creates a new role which could accommodate the injured worker, that they must alert the work and provide them with a preference at that time. 

Best Practices: What Employers Need to Know

1) Defense Counsel Should Advise Clients of Risks Created by the New Law

Where the claimant has not yet reached MMI, the defense practitioner should advise the employer that this new law will impact them if:

[a] They have more than 50 employees; or

[b] The employer is not otherwise exempt (public works contractor; professional sports ball team).

2) Consider Separation Of Injured Workers As Early As Possible to Foreclose Hiring Preference

Initial inquiry should focus on whether the employer wants to retain this employee in the future, and advise them that if they do not want this employee back on their worksite, they should consider ​​​​​​​any valid reason for separation prior to MMI including the following any “for cause” reason (discussed above). The Act does not contain anything to suggest that an employe separated “for cause” would be due a preference for rehiring.

Yes, this law will likely have the perverse impact of actually encouraging separation from the employer. 

3) Coordination Between Human Resources and Workers’ Compensation Professionals

Where the employee has not been separated due to a “for cause” reason and has reached MMI, the employer must consider them for rehiring for any open position (at the time of MMI) that exists. Again, there is no need to create a permanent light duty position. When the Maximum Medical Improvement milestone is reached, the worker’s compensation professional should alert the employer’s human resources department so that the employee can be advised to apply for any open position for which they are capable of performing the duties and otherwise qualified.

About the Host, Gregory Lois

Gregory Lois represents employers, self-insured companies, third party administrators, and insurance carriers in workers’ compensation matters. Greg has served as lead attorney on more than 100 trials involving workplace discrimination, workers’ compensation, and civil claims.

Gregory Lois is the Managing Partner of Lois Law Firm LLC and the co-author of the LexisNexis “Practice Guide to Workers’ Compensation in New Jersey” published by Matthew Bender (2017 – 2019, ISBN: 9781522159360). In October 2019, Greg earned the designation “Certified Litigation Management Professional (CLMP)” at the Litigation Management Institute hosted at Loyola University Chicago School of Law.

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