M E M O R A N D U M

TO: Members of the Senate Labor Committee

FROM: Laura Gunn, Vice President, Katz Government Affairs, LLC.

RE: Opposition and Suggested Amendments to S-2389 (Singleton)

DATE: December 1, 2022

The Chamber of Commerce Southern New Jersey (CCSNJ) respectfully opposes and seeks amendments to S-2389 (Singleton), which would establish employment protections for certain service employees during changes of ownership.

We have shared these concerns and suggested amendments with the sponsor and look forward to continuing our dialogue with him, and we appreciate the Senate Labor Committee’s consideration of our views today.

To start, the CCSNJ believes the provisions of this bill may be in conflict with federal law. Under federal labor law, an employer who takes over an existing location where the employees are unionized has the right to (a) set its initial terms and conditions of employment and (b) hire individuals as they choose; they are also not required to hire everyone. And, depending on the type of business of the new employer, it may or may not become a statutory successor to the prior owner who had a union contract. This bill potentially interferes with those rights by (a) making the new employer a clear successor and automatically bound to bargain with the union where they might not have had to previously and (b) preventing the new employer from applying their own initial terms and conditions of employment so that, as a successor, they would need to bargain with the union before implementing any changes.

The CCSNJ is also concerned that S-2389 (Singleton) may significantly impact a company’s ability to sell its business to a new owner, as well as serve as a disincentive for out of state investment. Should these changes be implemented, it unfairly ties the hands of a new owner or successor, restricting them from making certain necessary organizational changes for 90 days after new leadership is in place. Additionally, this bill could potentially require individuals responsible for substandard safety, quality and productivity be retained by the successor employer and thus continue working at the facility. This requirement could – in certain industries, for example, healthcare or other public safety related employers - create situations in which the successor employer may be unable to fulfill its commitment to the health, safety and well-being of its own employees and the community at-large. As written, the bill does not allow the successor employer to consider an individual's skills, knowledge, work record,

performance, or any other relevant employment factors when evaluating the individual as a prospective employee, which should fundamentally be left to the discretion of the employer.

Lastly, the CCSNJ is concerned that some of the requirements placed on the awarding authority may create co-employment. Specifically, the requirements laid out in section 2.a.3 and section 2.a.4 are communications that should be made by the affected workers' employer not the awarding authority. We understand co-employment in New Jersey is determined through a 12-factor test (the “Pukowsky test”) when there is not a customary employment relationship. If the legislation is interpreted as no risk for co-employment because it does not satisfy any of these 12 factors, as the sponsor has indicated to us is his view, then we would respectfully request the bill be amended to make it clear that nothing in the law is intended to implicate any co-employment risks under the Pukowsky test.

For the reasons outlined above, we respectfully request the following amendments to S-2389 (Singleton):

• The inclusion of the following in section 2. a. “At least 15 days or, if not possible, as soon as practicable, before terminating any service contract”

• The inclusion of the following language: “Nothing in this law is intended to interfere with a successor employer’s rights under federal law.”

• Remove subsections c, d, e, and f from Section 2

• Amend the penalties to include only a fine not exceeding $2,000

• Remove section 4.

Thank you for allowing the CCSNJ to express our concerns with S-2389 (Singleton).