In January 2026, New Jersey enacted significant amendments to the New Jersey Family Leave Act (NJFLA), expanding coverage to smaller businesses, reducing the waiting periods for eligible employees to qualify for leave, and creating new job restoration rights. Of the expansion, the job reinstatement piece created significant confusion particularly with respect to employees who are collecting Temporary Disability Insurance (TDI) and Family Leave Insurance (FLI) benefits and their rights to job restoration, if any, when ineligible for NJFLA or Family Medical Leave Act (FMLA) unpaid leave.

Just two days before the effective date, however, the New Jersey Department of Labor & Workforce Development issued an announcement to address this confusion. Specifically, the July 15, 2026 announcement clarified that employers must provide eligible employees with up to 26 weeks of job protection while employees are collecting TDI benefits and up to 12 weeks of job protection while collecting FLI benefits. This clarification has created significant concern among business owners, particularly small business owners, who must now provide job-protected leave to those employees that are not yet eligible for NJFLA or FMLA unpaid leave, including newly hired employees.

Reduction of Eligibility Requirements Under the NJFLA

On May 26, 2026, the New Jersey Appellate Division held that the state’s Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (“CREAMMA”) provides New Jersey employees with a private right of action to enforce its anti-discrimination provisions. As a result, New Jersey employees may now seek redress from the courts arising from adverse employment decisions based on them testing positive for cannabis products.

Background

In Sanders v. Levari Group, LLC, a New Jersey employer refused to hire a job applicant after a pre-employment drug test indicated the applicant’s use of cannabis items within the past month. There, the applicant accepted a conditional offer of employment and underwent an initial drug test. After testing positive for cannabis, the employer requested that the applicant submit to a repeat test at her own expense. When the applicant refused, the employer rescinded its offer of employment. Arguing that she did not use cannabis during the interview or drug testing process, the applicant filed a complaint in the New Jersey Superior Court. The trial court granted the employer’s motion to dismiss, finding no private right of action existed under CREAMMA and that the Cannabis Regulatory Commission was the proper enforcement body in the matter.

On March 3, 2026, a federal judge in the District of New Jersey transferred an employment lawsuit to North Carolina, holding that the case should proceed in the state where the corporate decisions were made, rather than where the remote employee performed their work.

Background

In Papa v. IAT Insurance Group, Inc., a New Jersey resident worked remotely from her home as a senior instructional designer for a North Carolina-based insurance company. The remote employee filed suit against the company in the District Court of New Jersey, alleging that she was subject to discrimination and retaliation by her employer. The employer moved to transfer the case to the Eastern District of North Carolina, arguing that although the employee worked remotely from New Jersey and was present in New Jersey during many of the alleged discriminatory actions, the key employment decisions underlying her claims were made at the company’s headquarters in North Carolina.

As we enter into 2026, a number of state, local, and federal employment law changes are taking effect which impact employer compliance and expand employee rights. These developments create new obligations that employers should be aware of as they review workplace postings, leave policies, hiring practices, scheduling procedures, and anti-discrimination safeguards for the year ahead.

New Jersey

• Updated Family Leave Insurance Posting

On April 3rd, 2025, the New Jersey Department of Labor and Workforce Development proposed new rules, which are designed to clarify the application of the “ABC test.” The ABC test is a legal standard used to determine whether a worker is an independent contractor or an employee for purposes of various New Jersey laws, including the Unemployment Compensation Law, the Wage Payment Law, and the Earned Sick Leave Law.

On May 5th, 2025, the proposed rules were published, triggering a 60-day review and comment period. This proposal is significant for businesses and independent contractors as it seeks to codify the department’s very broad application of the statutory ABC test.

Prongs of the ABC Test

On June 1st, 2025, New Jersey’s Pay Transparency Act (the “Act”) goes into effect, requiring New Jersey employers to identify certain wage or salary information in both internal and external job postings. The Act is another effort in a series of steps taken by the state of New Jersey to promote pay equity.

Posting Requirements

The Act applies to employers, with ten (10) or more employees over twenty (20) calendar weeks, who conduct business or accept applications for employment in the state of New Jersey. To meet this threshold, the Act does not specify whether the employer must have ten (10) or more employees who actually work in the state or whether employers must also count remote employees. Since the Act is silent on this point, we recommend that employers with ten (10) or more total employees prepare for compliance.

On March 17, 2025, the New Jersey Supreme Court issued a unanimous decision finding that commissions are wages under the New Jersey Wage Payment Law (“WPL”) because they are “direct monetary compensation for labor or services rendered by an employee.” There are no exceptions – compensating an employee by paying a commission for a labor or service always constitutes a wage under the law.

The Underlying Dispute

Plaintiff, Rosalyn Musker (“Musker”), worked as a sales manager for the Defendant company, Sukhi, Inc. (“Suuchi”), which provided a proprietary software platform for apparel manufacturers and primarily generated revenue from subscriptions to its services. Musker earned a base salary of $80,000 and was entitled to receive commissions based on different tiers of sales that she reached in accordance with Suuchi’s Sales Commission Plan (the “SCP”), which included language intended to “cover all sales situations.”

As we are already a few weeks into the new year, now is a good time for employers to review their employee handbooks and policies to ensure compliance with the following changes in New Jersey employment law or best practices.

The Pay Transparency Act

Effective June 1, 2025, New Jersey employers with ten (10) or more employees over twenty (20) calendar weeks doing business or taking applications for employment in the State of New Jersey must disclose “the hourly wage or salary, or a range of the hourly wage or salary, and a listing of benefits and other compensation programs for which the employee would be eligible within the employee’s first 12 months of employment.” Notably, this requirement does not prohibit an employer from increasing the wages, benefits, and compensation identified in the job posting at the time of making an offer for employment to an applicant.