The New Jersey Pension/Health Benefits Reform and its Impact on Public Employers

The New Jersey Legislature recently passed a series of bills, collectively known as the “Pension/Health Benefits Reform Legislation,” which will significantly impact public employers and employees alike. The Pension/Health Benefits Reform Legislation was introduced to address the rising cost of taxpayer funded pension and healthcare benefit costs. Our firm’s labor attorneys have reviewed the legislation and have prepared this summary to keep our clients and colleagues informed of the new developments. Please take note that these changes will take affect on or about May 21, 2010.

While we provide our summary of this legislation herein, we caution that many aspects of these bills are likely to be subject to various interpretations and/or litigation; the bills may also require regulations to further clarify their intent.

Senate Bill 2/Assembly Bill 2461 makes several changes that impact local government and school full-time public employees’ participation in the various pension programs. This legislation, which impacts only new employees (those hired on or after May 21, 2010, the effective date of this legislation):

  • Limits enrollment in PERS and TPAF to:
    • State employees working 35 hours per week.
    • Local government and school employees working 32 hours per week.
    • Employees working less than these hours prior to the law going into effect would continue in PERS or TPAF as long as they remain continuously employed.
  • Part-time employees (as defined above) that no longer qualify for PERS and TPAF will be eligible for participation in the Defined Contribution Retirement Plan.
    • Increases compensation requirement to $5,000 (currently $1,500) to join the Defined Contribution Retirement Program.
  • Changes pension calculations to highest 5 years for PERS and TPAF (currently 3 years).
  • Changes pension calculation to highest 3 years for PFRS and SPRS (currently 1 year).
  • Designates one job for one pension for PERS and TPAF
    • The position with the highest compensation would be used.
    • Legislation would not affect an active employee who is enrolled in retirement system, has more than one job with more than one employer and continues to hold those positions without a break in service on the effective date of the bill.

Senate Bill 3/Assembly Bill 2460 makes several changes to public employees’ health benefit coverage. This legislation impacts all employees in the SHBP, the SEHBP, as well as all County and municipal employees, and requires:

  • For Union Employees: All such employees (actives and new hires), after the bill’s effective date and after the expiration of any applicable binding collective negotiations agreement, shall pay 1.5% of their base salary towards the cost of health care coverage. This 1.5% contribution is in addition to any other health care contribution required by an applicable collective negotiations agreement.
  • For Non-Union County and Municipal Employees: All such employees (actives and new hires), beginning on or about May 21, 2010, shall pay 1.5% of their base salary towards the cost of health care coverage. This 1.5% contribution is required to be made in addition to any other health care contribution already required of employees.
  • For Non-Union State Employees: All such employees (actives and new hires), after the bill’s effective date, shall continue to pay 1.5% of base salary toward the cost of health care coverage, and in addition, shall pay an amount consistent with the terms of any collective negotiations agreement deemed applicable to the employees by the State Health Benefits Commission.
  • For Non-Union Employees of an Independent State authority, board, commission, corporation, agency or organization: All such employees (actives and new hires), after the bill’s effective date, shall continue to pay 1.5% of base salary toward the cost of health care coverage, and in addition, shall pay an amount consistent with the terms of any collective negotiations agreement that the employer deems applicable to the employees.
  • New Employees must pay at least 1.5% of their base pension toward health benefits when they retire.
  • Requires that all changes made to SHBP and SEHBP for State employees also be applied to employees of local governments that are in the SHBP or SEHBP.
  • Changes enrollment requirements for SHBP:
    • For new employees, they must be:
      • A full-time appointed or elected officer of the State or local government working more than 35 hours per week;
      • A full-time employee of the state; or
      • A full-time employee of a local or school government working more than 25 hours per week (governing body can make the minimum hour requirement higher than 25 hours)
      • A full-time employee of a local or school government working more than 25 hours per week (governing body can make the minimum hour requirement higher than 25 hours)
    • For active employees (on effective date of legislation), the employee must be:
      • An appointed or elected officer;
      • An employee of the state; or
      • An employee of a local or state government on the effective date of the legislation and working continuously
  • Current financial incentive to waive SHBP coverage would be limited to 25% of the cost or $5,000, whichever is less.

Senate Bill 4/Assembly Bill 2459 makes changes with respect to local government and school full-time employees’ ability to accrue vacation and sick leave. This legislation, which impacts only new employees (those hired on or after May 21, 2010, the effective date of this legislation):

  • Limits sick leave payout to $15,000.
  • Limits carry forward of vacation leave for only one successive year.
  • Eliminates accidental and ordinary disability retirement for those enrolled in TPAF and PERS. These new employees will be eligible for disability insurance coverage under the Defined Contribution Retirement Program.

The Pension/Health Benefits Reform legislation implements several important changes to the rules governing public employee pensions and health benefits which will take affect on or about May 21, 2010. We recommend contacting labor counsel prior to implementing these changes.

For additional information, please contact Brian W. Kronick or Douglas E. Solomon.

The New Jersey Pension/Health Benefits Reform and its Impact on Public Employers

Publication: GB LAW

View the article

The New Jersey Legislature recently passed a series of bills, collectively known as the “Pension/Health Benefits Reform Legislation,” which will significantly impact public employers and employees alike.  The Pension/Health Benefits Reform Legislation was introduced to address the rising cost of taxpayer funded pension and healthcare benefit costs.  Our firm’s labor attorneys have reviewed the legislation and have prepared this summary to keep our clients and colleagues informed of the new developments. Please take note that these changes will take affect on or about May 21, 2010.

Game Changer: Citizens United Alters the Constitutional and Regulatory Landscape

Publication: GB LAW

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On January 21, 2010, in Citizens United vs. FEC, the U.S. Supreme Court changed the Constitutional landscape for campaign finance reform. In a 5-4 decision, the Court overruled two prior decisions in holding unconstitutional under the First Amendment the 63-year-old Taft-Hartley prohibition on independent express advocacy expenditures by corporations in federal elections and the 2002 McCain-Feingold prohibition against broadcast electioneering communications by…

Game Changer: Citizens United Alters the Constitutional and Regulatory Landscape

On January 21, 2010, in Citizens United vs. FEC, the U.S. Supreme Court changed the Constitutional landscape for campaign finance reform. In a 5-4 decision, the Court overruled two prior decisions in holding unconstitutional under the First Amendment the 63-year-old Taft-Hartley prohibition on independent express advocacy expenditures by corporations in federal elections and the 2002 McCain-Feingold prohibition against broadcast electioneering communications by corporations in the closing days of a federal election. Separately, by an 8-1 majority, the decision upheld disclaimer and disclosure requirements for independent expenditures.

The ultimate ramifications may not be seen for years, but the immediate impact is clear: corporations (and, likely, unions) have been freed to spend unlimited sums on independent election advocacy ads in the upcoming 2010 federal elections. The decision does not, however, have an immediate effect on the long-standing ban on corporate contributions in federal elections: currently, corporations may not make contributions in federal elections. Corporations also continue to be free to form voluntary political action committees (“PACs”).

The Majority Opinion – Corporations are no Longer Disfavored Speakers

For nearly two decades prior to the Citizens United decision, the Supreme Court treated corporations differently from other speakers (and spenders). Their “disfavored” status was upheld as a safeguard against “the corrosive and distorting effects of immense aggregations of [corporate] wealth” on the political process. The Court majority, in an opinion by Justice Kennedy, has now rejected this prior rationale and concluded that “independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” Further, because, by definition, an independent expenditure is “political speech presented to the electorate that is not coordinated with a candidate,” there is no basis for stifling that speech based solely on the identity of the speaker. As a result, quid pro quo corruption or its appearance is now the only government interest the Court has identified as sufficient for supporting campaign finance limitations under the First Amendment.

Post-Citizens United, corporations may not be denied the right to speak in elections based solely on their identity as corporations. The opinion states: “[t]he First Amendment does not permit Congress to make these categorical distinctions based on the corporate identity of the speaker and the content of the political speech.” The majority further explains that “[t]he First Amendment confirms the freedom to think for ourselves.” Thus, where the government identifies certain preferred speakers, it commits a constitutional wrong “[b]y taking the right to speak from some and giving it to others.” To remain effective, the First Amendment must stand “against attempts to disfavor certain subjects or viewpoints or to distinguish among different speakers, which may be a means to control content.”

The Dissent – Corporations are not Members of the Political Community

The dissent, authored by Justice Stevens, maintains that the First Amendment did not contemplate that protections for individual speech would extend to corporations. “Although they make enormous contributions to our society, corporations are not actually members of it.” The dissent expresses the fear that a surge in election spending by corporations, “who are not natural persons, much less members of our political community,” will obtain the undue influence over candidates and officeholders that Congress has attempted to curb ever since passage of the Tillman Act in 1907.

Looking Forward

It remains to be seen whether a corporation’s new right to make independent expenditures will be exercised liberally or sparingly in this election season. Corporations will first need to assess whether the making of such expenditures advances their business interest. Regardless whether they choose to make such expenditures, corporations should also consider whether internal procedures and policies provide sufficient safeguards against inadvertently making corporate expenditures in “coordination” with a candidate – since such actions remain subject to the federal prohibition against corporate contributions.

A corporation may also choose to provide financial support for issue advocacy expenditures made by other entities, specifically 501(c)(6) trade associations and 501(c)(4) social welfare organizations. Currently, such donations may be made without disclosure pursuant to Federal Election Commission or Internal Revenue Service requirements.

Challenges and changes to state campaign finance restrictions may be on the horizon. For example, the reasoning of the decision may cast doubt on the constitutionality of federal and state bans against campaign contributions by corporations, or more restrictive contribution limits for corporations, such as is the case under New York State law. New Jersey’s ban on political contributions from certain regulated industries, such as banks, insurance companies, phone companies, cable companies, railways, utility companies and casinos, may be similarly vulnerable to challenge. On the other hand, the Court made clear that the holding did not reach current limitations on direct contributions.

Legislative proposals to moderate the effect of the Citizens United decision are proliferating. Some proposals are keyed to enhancing the voice of candidates in anticipation that corporate advertising may come to be predominant. These reforms would include liberal public financing for candidates and making broadcast time more readily available for candidate appearances and advertising. Accountability to shareholders, increased public disclosure, and broadened standards for what constitutes “coordination” between corporations and candidates are other themes awaiting development.

More attention will likely be given to the “pay-to-play” rationale for imposing additional political activity restrictions on entities that lobby or seek government contracts or other benefits. Pay-to-play-based regulations will be examined both for their vulnerability to a speaker-identity-based challenge under Citizens United and for their viability as an alternative means for imposing expenditure limitations on some speakers.

No doubt we cannot anticipate all the consequences of the Citizens United decision. But whether the holding is viewed as liberating, dire, or benign, we should also make room to expect the unexpected. For example, have you heard about the corporation that is now running for U.S. Congress in the State of Maryland?

For additional information, please contact Laurence D. Laufer.

Social Media: Legal Risks and Practical Remedies

Whether your employees are blogging reviews on Google, posting endorsement videos on YouTube, getting your company on wiki sites, or branding your company on social networking sites like Facebook, Twitter, and LinkedIn, social media is clearly the wave of the future. Online media and marketing tools provide a variety of benefits to organizations including collecting industry-based knowledge, widespread sales and branding capabilities, and accessing boundless platforms to publicize a company’s name and reputation. However, these benefits come with their fair share of legal risks. A comprehensive social media policy that guides employees on the company’s expectations of their online behavior, especially when that conduct occurs in the name of the organization, is the best protection to the inappropriate cyberspace conduct.

Most often, companies are faced with situations where its employees engage in activities on social media sites that reflect negatively on the organization. This can occur pre-hire, post-hire, and even after termination. For example, during the application/interview phase, many organizations use social networking sites to investigate the applicant’s background. As a result, information that is not job-related (i.e., political affiliations, disabilities, social relationships, etc.) is leaking into the hiring process and fueling discrimination lawsuits. During employment, employees are posting confidential information on the web, harassing and discriminating against each other, and posting improper reviews, endorsements and defamation against competitors, getting companies into trouble. After employment ends, companies are facing the task of severing employee “connections” to customers on the company’s Facebook and LinkedIn pages, and stopping negative comments and bad publicity generated by terminated employees. In each of these situations, a comprehensive social media policy could have addressed the issue directly, before it became a problem and protected the organization from liability.

A company will generally be responsible for the actions of management level employees acting within the scope of their employment. Under various state and federal laws, however, a company can protect itself from the liability created by rogue managers with a good program of both policy implementation and training. In the context of social media, a good policy will communicate expectations to the employees and will address the following:

  1. The Proper Use of Business-Related Social Media: The policy should address how and when the company wants its employees to use social media to support, market and brand the organization. The policy should also inform employees whether they can affiliate themselves with the company on social networking sites (i.e., Facebook, Twitter, and LinkedIn). If your organization does allow employees to have a profile online associated with the company, the policy should contain guidelines regarding the permissible contents of that profile.
  2. Confidentiality: The policy should inform employees what is considered confidential at the company (i.e., client names, projects, price lists, vendors, competitors, etc.) and be told that posting confidential materials on social media sites is a disciplinary/terminable offense. While the company may be held responsible for the actions of its employees where client/competitor confidentiality is breached, a good policy will, at the very least, demonstrate that the company took precautions to prevent such breaches from occurring. This can help limit a company’s liability.
  3. Respect for Copyright, Fair Use and Financial Disclosure Laws: The policy should inform employees that it is improper to use social media to publish protected materials and intellectual property of another company or person.
  4. Transparency/Disclaimers: The policy should instruct employees to always identify themselves and be honest in their posts about who they are and what they do. When an employee publishes content to a blog or website outside of your company, but it touches or concerns work in any way, she must state that, “the postings being offered are her own and do not represent the company’s opinions, positions or strategies.” In this way, the company is insulating itself from the rogue opinions of employees that could potentially expose the company to liability.
  5. Language: The policy should restrict the language that employees use on social networking sites and specify that the company will not tolerate profanity, inappropriate speech, or badmouthing of other employees. The company should also communicate its expectation that employees should always be loyal to the company when communicating online.
  6. Content Approval: The policy should require that anything posted on the company’s website or on “fan” pages by employees should first be approved by a certain department or executive (i.e., Company President, CMO, Public Relations Director, etc.).
  7. Disciplinary process: The policy should indicate that violations of the above principles could lead to discipline and/or termination. The policy should also explain what is meant by discipline [i.e., verbal warning, written warning, suspension, termination]. **In New Jersey, if you have any policies that you distribute to employees, you must also have an “at-will” employment disclaimer stating that the policy does not create a contract of employment and that employee may be terminated at any time, for any reason.

Clearly, companies do not want to lock themselves out of the benefits of social media by forbidding employees from using the internet to the company’s advantage. However, be smart. By implementing and distributing a policy containing the aforementioned provisions, your company can take the actions necessary to protect itself from liability in the future.

For additional information, please contact Dena B. Calo.

Social Media: Legal Risks and Practical Remedies

Publication: GB LAW

View the article

Whether your employees are blogging reviews on Google, posting endorsement videos on YouTube, getting your company on wiki sites, or branding your company on social networking sites like Facebook, Twitter, and LinkedIn, social media is clearly the wave of the future.  Online media and marketing tools provide a variety of benefits to organizations including collecting industry-based knowledge, widespread sales and branding capabilities, and accessing boundless platforms to publicize a company’s name and reputation.  However, these benefits come with their fair share of legal risks.  A comprehensive social media policy…

John C. Petrella to Speak at New Jersey Business and Industry Association Seminar on Complying with Complex State and Federal Labor and Employment Laws

Partner John C. Petrella will speak at a New Jersey Business and Industry Association seminar entitled, “HR 101: An Employment Law and HR Primer” on Friday, March 26th.  Mr. Petrella will provide an overview of the many employment and labor laws affecting companies and their relationship with employees.  He also will address how to establish employment policies, handle employee disputes and how to comply with complex labor laws.  Other speakers will include Peter J. Pizzi, Esq. of Connell Foley LLP, Kathleen Connelly, Esq. of Lindabury, McCormick, Estrabrook & Cooper PC, and JoAnn Trezza of Arrow Group Industries.

Mr. Petrella is the director of the firm’s Employment Law & Litigation Practice Group and is based in the Newark, New Jersey office.

Click here for more information or to register for the event.

Dena B. Calo Explains Benefits of Paycheck Fairness Act

The Glasshammer, an online community designed for women executives in financial services, law and business, writes on the Paycheck Fairness Act.  Counsel Dena B. Calo, director of the Genova Burns Human Resource and Labor Law Training, Audit and Compliance Services program, is interviewed regarding how the Paycheck Fairness Act would deter wage discrimination by strengthening penalties for equal pay violations and by prohibiting retaliation against workers who ask about employers’ wage practices or disclose their own wages.

Click here to view article.

New Jersey Law Journal Reports on Effects of Citizens United Decision on Corporate Political Advertising; Laurence Laufer Quoted

The New Jersey Law Journal reported today that despite the recent U.S. Supreme Court ruling in the Citizens United case allowing corporations to spend more freely in federal elections, corporations have been slow to move forward with new political advertising. The article quotes partner Laurence Laufer, director of the Genova Burns Corporate Political Activity Law Practice Group, who stated that the ruling had not yet spurred new political expenditures by corporations.

Click here to view article.

Brian W. Kronick to Present at New Jersey State League of Municipalities Professional Development Seminar on Federal Family and Medical Leave Act and New Jersey Family Leave Act

Partner Brian W. Kronick will speak at the New Jersey State League of Municipalities Professional Development Seminar entitled, “FMLA, FLA.” Mr. Kronick will address managing leaves in New Jersey and will provide an understanding regarding the administration of the Federal Family and Medical Leave Act, the New Jersey Family Leave Act, and New Jersey Family Leave Insurance. The seminar will be held on Tuesday, March 16, 2010, from 8:00 a.m. to 12:00 p.m. at the Crowne Plaza in Monroe Twp, NJ.

Click here for more information or to register for the event.

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