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Subcontracting Restrictions and Changes in Health Insurance Plans and Employee Contributions Likely Coming Very Soon

By on March 20, 2020 in Legislation with 0 Comments

On March 19, 2020, the Senate approved two significant bills stemming from Senator Sweeney’s deal with the New Jersey Education Association (“NJEA”).  One bill requires alterations in health insurance plans and modifications to employee contributions to the cost of health coverage.  The other bill places restrictions on the ability of certain employers, including a school district,  to subcontract work of employees in a collective bargaining unit.  While not enacted yet, both pieces of legislation appear to be on the fast track to approval.  If enacted, they will take effect immediately.

Key components of the bill altering health insurance and employee contributions are:         

  1. Establishment of New Jersey Educators Health Plan (“NJEHP”) by the School Employees’ Health Benefit Program (“SEHBP”) for the 2020-21 plan year and creation of an equivalent plan by non-SEHBP districts;
  2. Placement of all employees commencing employment on or after July 1, 2020 in the NJEHP or its equivalent plan;
  3. Requirement to hold a special enrollment period prior to July 1, 2020 for employees to select plans;
  4. Implementation of new contribution levels for employees placed in or selecting the NJEHP or its equivalent plan, and said contributions to be a percentage of base salary in accordance with certain salary tiers;
  5. Establishment of a less costly Garden State Health Plan (“GSHP”) by the SEHBP for the plan year beginning July 1, 2021 and the requirement that non-SEHBP districts create an equivalent plan;
  6. Implementation of a contribution level for employees selecting the GSHP which is one-half (½) the applicable base salary percentage for employees in the NJEHP but not less than 1 ½ % of base salary; and
  7. Use of any actual savings to reduce the tax levy in districts spending above adequacy.

Also passing the Senate on March 19, 2020 is a bill that places severe restrictions on subcontracting and imposes significant remedies for violation. Among the employers affected by the bill are a local or regional school district, educational service commission and county special service school district (“School District”).  The bill does the following things:

  1. Prohibits an employer from entering into a subcontracting agreement during the term of a collective bargaining agreement;
  2. Prohibits an employer from entering into a subcontracting agreement after the expiration of the current collective bargaining agreement unless:  (1) the employer provides written notice to the union at least 90 days before requesting bids or soliciting proposals; and (2) the employer has offered the union the opportunity to meet and consult to discuss the decision to subcontract and to engage in negotiations over the impact of subcontracting;
  3. Each employee replaced or displaced by the subcontracting retains all previously acquired seniority and shall have recall rights whenever the subcontracting terminates;
  4. Violation of the requirements is an unfair practice which may result in a charge filed by any employee or the union;
  5. If the employee or union prevails on the charge, the employee’s remedy includes, but is not limited to, reinstatement, back pay, back benefits, back emoluments, tenure and seniority credit, attorney’s fees, and any other relief the Public Employment Relations Commission (“PERC”) deems appropriate;
  6. Except for actions of the employer expressly required by the bill, all aspects or actions relating to or resulting from a school district’s decision to subcontract, including whether or not severance pay is provided, are mandatory subjects of negotiations.  The employer retains the right to subcontract should no successor agreement exist; and
  7. Subcontracting does not include a contract entered under the Uniform Shared Service and Consolidation Act or a contract to provide services to nonpublic schools through State or federal funds.

Both bills demand attention. If enacted, they will have an impact on negotiations, budgeting and insurance benefit planning.

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Robert Muccilli

About the Author

About the Author:

Robert A. Muccilli, Esq. is Co-Chair of Capehart Scatchard’s School Law Group and a Shareholder in the Labor and Employment Group. For over 25 years, he has focused his practice in the areas of school law, and labor and employment. He has represented school districts with respect to a variety of education law issues involving students, teachers, school construction and special education issues including questions pertaining to inclusion, least restrictive environment, discipline, behavior management, transition, evaluation, discrete trial instruction, medically fragile students, dyslexia, Down Syndrome, Aspergers Syndrome, and equal access to activities and services for disabled individuals. He has also been recognized as one of South Jersey’s Top Attorneys as published by SJ Magazine. Mr. Muccilli is admitted to practice law in New Jersey, the United States District Court for the District of New Jersey and Washington, DC.

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