Five years ago, New Jersey’s legislature amended the law covering family leave insurance to expand its benefits and provide a private cause of action for retaliation for using those benefits. This amendment was significant because it arguably established a claim for failure to reinstate an employee under a statute that does not provide any protected leave. This created an issue because not all employees covered by this law are entitled to protected leave. New Jersey Courts have not yet grappled with how this statute would interact with the New Jersey Family Leave Act’s inapplicability to small employers. This article explores the differences between the parameters of these leave and benefits laws, explores a case that addressed this issue, and discusses how small employers and their lawyers can prepare to defend against a new and possibly unintended retaliation claim.

New Jersey Leave, Benefits, and Amendments

In New Jersey, there are two laws that address protected leave and benefits to care for sick or injured family/loved ones or to bond with a new child. In the simplest terms, the New Jersey Family Leave Act (NJFLA) provides up to 12 weeks of protected leave and New Jersey Family Leave Insurance (NJFLI) provides up to 12 weeks of cash benefits. A critical difference between the two laws is that the NJFLA only applies to employers with 30 or more employees while the NJFLI covers most employers and employees regardless of size. This difference in coverage creates a situation where employees of small companies can be entitled to cash benefits under the NJFLI, but not any protected leave.

This did not cause an issue until these laws were amended in 2019. On Feb. 19, 2019, Gov. Phil Murphy signed into law a bill that amended both the NJFLA and NJFLI. The amendment doubled the number of weeks a covered employee could claim NJFLI benefits (from six to 12), prohibited employers from requiring employees to exhaust their PTO prior to taking NJFLI benefits, and added an anti-retaliation provision.

The anti-retaliation provision, codified at N.J.S.A. 43:21-55.2, states:

“An employer shall not discharge, harass, threaten, or otherwise discriminate or retaliate against an employee with respect to the compensation, terms, conditions, or privileges of employment on the basis that the employee requested or took any temporary disability benefits pursuant to P.L.1948, c. 110 (C.43:21-25 et al.), or family temporary disability leave benefits pursuant to P.L.2008, c. 17 (C.43:21-39.1 et al.), including retaliation by refusing to restore the employee following a period of leave.”

On its face, this provision creates a claim for failure to reinstate an employee under a law that does not provide any protected leave. Keeping in mind the coverage discrepancy between the NJFLA and NJFLI, this law may now create a retaliation claim for failure to reinstate for an employee who was not covered by the NJFLA. In an attempt to address this issue, the statute goes on to say, “nothing in this section … shall be construed as increasing, reducing or otherwise modifying any entitlement provided to a worker by the provisions of the ‘Family Leave Act,’ P.L.1989, c. 261 (C.34:11B-1 et seq.) to be restored to employment by the employer after a period of family temporary disability leave.” N.J.S.A. 43:21-55.2(a).

However, practically speaking, nothing would prevent a plaintiff who is not covered by the NJFLA from bringing a failure to reinstate claim under the NJFLI as if they had protected leave

The Problematic Claim and What It Means 

This issue manifested in a 2021 discrimination and retaliation case. A male employee who took unprotected leave following the birth of his child alleged his employer refused to reinstate him because he took benefits under the NJFLI. He also alleged discrimination under the New Jersey Law Against Discrimination because his manager and co-workers made comments about his decision to take a leave to care for his child. This case squarely brought the presented issue to a head—could a plaintiff state a claim for failure to reinstate under the NJFLI when he was not entitled to any protected leave under the NJFLA.

The employer moved to dismiss the NJFLI claim, arguing the statute explicitly prohibited using the NJFLI to create a protected leave when the employee was not covered by the NJFLA. In support of the motion, the employer highlighted to the legislative history of the amendment, which affirmed that “the bill prohibits employer retaliation against an employee for taking or requesting TDI or FLI benefits, except that employers with fewer than 30 employees are not required to reinstate an employee after a period of FLI leave.” Legislative History of N.J.S.A. 43:21-55.2.

This question was ultimately not decided by the court, as the plaintiff voluntarily dismissed the NJFLI claim, and there is no record of another court addressing this issue. As a result, this claim can be replicated and there is no precedent to resolve the discrepancy.

Preparing and Responding to an NJFLI Retaliation Claim

The unsettled nature of this claim is troubling to small employers, because if the NJFLI were to allow a cause of action for retaliation based on “failure to reinstate” following election of benefits, then every instance where an employer lawfully declined to reinstate an employee could give rise to a retaliation claim under the NJFLI. This provision would effectively create protected leave when the NJFLA specifically exempts small employers from that obligation and the NJFLI amendment explicitly intended to avoid that outcome.

When a court ultimately decides a case like this, it should consider the intent of the legislature in creating the retaliation provision and require more than just a decision to not reinstate an employee and the election of benefits under the NJFLI to sustain the claim. Until that happens, small employers who are not covered by the NJFLA should prepare to defend against a NJFLI retaliation claim when declining to reinstate employees who have taken NJFLI benefits. Best practices in that situation would include:

• Having policies concerning discretionary leave that explicitly explain the right to deny reinstatement.
• Carefully considering whether to authorize an unprotected leave based on the likelihood of reinstatement.
• Notifying the employee prior to the leave that the employer may not be able to reinstate them.
• Notifying the employee during their leave if the employer needs to fill the employee’s position and give them an opportunity to return.
• Clearly documenting the reasons the employer terminates them during their leave.
• Appropriately considering whether the employer can reinstate an employee when they are ready to return.

While there are strong arguments against recognizing a failure to reinstate claim under the NJFLI, employers must be prepared to defend against such a claim where an employee is not reinstated following an unprotected leave. Employers should consult with legal counsel to ensure they stand the strongest chance to survive this challenging and potentially unexpected cause of action.

Reprinted with permission from the March 12, 2024 issue of the New Jersey Law Journal© 2024 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.