New NJ Family Leave Act Broadens Employee Access and Benefits, Complicates Employer Compliance

Takeaways

• Beginning on or about 07.17.26, New Jersey employers with at least 15 employees must provide employees with leave under the New Jersey Family Leave Act. Out-of-state employers with at least 15 employees also must provide leave to their New Jersey based employees.
• Benefits may potentially include job‑protected leave for employees receiving short-term disability or family leave insurance benefits, because employers may now be required to reinstate employees to the same or equivalent position. However, significant open questions remain as to whether this law creates any new leave rights or simply layers additional job protection on existing leave rights when an employee receives short-term disability or family leave insurance benefits.
• Employers face operational and compliance implications, including handbook updates, COBRA considerations, and challenges managing extended employee absences.

Related links

• Assembly Bill No. 3451

Article

New Jersey Gov. Murphy signed into law A3451/S2950 to greatly expand employer coverage and employee eligibility under the New Jersey Family Leave Act (NJFLA) on Jan. 18, 2026, as one of his last acts before leaving office. The law potentially converts receipt of Temporary Disability Insurance benefits (TDI) and Family Leave Insurance benefits (FLI) into job-protected leave. The law will go into effect on or about July 17, 2026, six months after its effective date.

Gov. Murphy stated in a press release that these changes will provide over 400,000 additional New Jersey employees the opportunity to take job-protected leave and receive TDI or FLI benefits.

What is the law’s impact on businesses and the employees who will be required to cover the work while other employees are on leave?

Current NJFLA

The NJFLA provides eligible employees up to 12 weeks of unpaid job-protected leave in a 24-month period to:

• Care for a family member with a serious health condition or who has been isolated or quarantined because of suspected exposure to a communicable disease during a state of emergency; 
• Bond with a child within one year of the child’s birth or placement for adoption or foster care; or 
• Provide required care or treatment for a child during a state of emergency if their school or place of care is closed due to an epidemic of a communicable disease or other public health emergency.

An employee is eligible to take NJFLA leave if:

• The employee works for an employer who employs at least 30 employees (regardless of whether all employees work in New Jersey); and 
• The employee is employed for at least 12 months and has worked at least 1,000 base hours during the preceding 12-month period.

Expansion of NJFLA Coverage, Eligibility

Effective on or about July 17, 2026, the law expands coverage to smaller employers with fewer employees. The law also lowers the number of months an employee must be employed and base hours worked to be eligible for NJFLA leave.

First, the amended law expands the definition of “employer” to include any corporation or individual that “employs 15 or more employees for each working day during each of 20 or more calendar workweeks in the then current or immediately preceding calendar year.” (The full definition of an employer is in the statute and includes more than individuals and corporations.)

Second, to be eligible for NJFLA leave, employees need only be employed for at least three months and worked not less than 250 base hours during the preceding 12-month period.

Amendments to TDI, FLI

The new law also significantly amends the TDI and FLI laws. Historically, TDI and FLI laws have provided partial wage replacement benefits when an employee is absent for work for certain qualifying reasons, not job-protected leave.

Previously, an employee may not be eligible for NJFLA leave but might be eligible for FLI benefits, leaving the employee without job-protected leave. The new law arguably provides employees who receive TDI or FLI benefits with job-protected leave.

Under FLI, all private sector employers are covered and employees need only work 20 weeks and meet certain earning requirements to be eligible for FLI benefits. In 2026, an employee must work 20 weeks and earn at least $310 weekly, or a combined total of $15,500 in a base year, to be eligible for FLI benefits. By lowering the number of employees to be a “covered employer” and reducing eligibility requirements for NJFLA leave, employees who are eligible for FLI benefits are more likely to be eligible for NJFLA leave, thus providing job-protected leave under the NJFLA while the employee receives FLI benefits.

The amendments to the TDI and FLI laws provide that an employee who receives TDI or FLI benefits will be “entitled to be restored by the employer to the position held by the employee when the leave commenced or to an equivalent position of like seniority, status, employment benefits, pay, and other terms and conditions of employment.” This language may convert receipt of TDI and FLI benefits into a form of job-protected leave. Because the failure to reinstate an employee to the same or equivalent position after their TDI or FLI benefits end is prohibited, the employee may essentially receive job protected leave. However, significant open questions remain as to whether this law creates any new leave rights or simply layers additional job protection on existing leave rights when an employee receives TDI or FLI benefits.

If an employer fails to reinstate an employee, the employee may institute a civil action in court seeking: (1) civil fine; (2) an injunction; (3) reinstatement; (4) compensation; and (5) payment of reasonable costs and attorney’s fees.

The law also clarified that employees have the option of using New Jersey Earned Sick Leave or receiving TDI or FLI benefits and control over the order of such use. Employees cannot receive more than one kind of paid leave simultaneously during any period of time. This could be interpreted to mean employees are no longer able to supplement TDI or FLI benefits with sick, vacation, or other paid time off to receive 100% of their pay.

Employer Impact, Considerations

The law may have been well intended, but there are serious implications for employers’ and employees’ consideration. Employers will need to update their handbooks, policies, and procedures. Additional employer considerations from a business perspective and a legal perspective include:

1. Are you a covered employer under the NFJLA? All employers with at least 15 employees, regardless of whether these employees are employed in New Jersey, will be a covered employer. Thus, a small, out-of-state business with 15 employees, one of whom is a remote employee in New Jersey, would be covered and the employee would be eligible for leave under NJFLA and, possibly, TDI and FLI benefits.
    
2. Are your employees eligible for NJFLA? An employee could be eligible for leave under NJFLA before they are eligible for FLI benefits (an employee must work 20 weeks plus satisfy minimum earning requirements) because of the lower employee eligibility requirements. 
    
3. Does receipt of TDI and FLI benefits provide job-protected leave? Employees are eligible for up to 26 weeks of TDI benefits and 12 weeks of FLI. If the amended TDI and FLI laws require employers to provide employees who receive benefits with job-protected leave, employees could be eligible for up to 38 weeks of job-protected leave in a 12-month period. NJFLA provides employees up to 12 weeks of family leave in a 24-month period. By contrast, employees could be eligible for FLI benefits every 12 months. Thus, an employee could exhaust their NJFLA leave but still be eligible for FLI benefits the following year, which could provide additional job-protected leave despite exhausting their NJFLA leave entitlement.
    
4. Will COBRA be triggered by the employee’s leave? If an employee is not eligible for leave under the Family and Medical Leave Act (FMLA) or has exhausted their FMLA leave entitlement, employers should consider reviewing their group health coverage plans to determine whether the employee’s leave triggers COBRA due to the employee’s reduction in hours. If TDI and FLI provide job-protected leave, employees could be on non-FMLA leave for an extended period. Although the FMLA generally treats employees as if they are actively working during the FMLA leave to avoid triggering COBRA, the case could be different when an employee is not working but collecting TDI or FLI benefits. 
    
5. How will you continue to operate during extended leaves? If TDI and FLI provide job-protected leave, employees could be out from work for up to 38 weeks every 12 months — almost 75% of the year. Given the TDI and FLI laws apply to all employers, every single employer will need contingency plans on continuation of operations due to extended absences. The burden will likely fall on coworkers who are working, especially for small employers. An employer may need to hire more employees or coworkers may need to pick up additional responsibilities and work longer hours, which may result in overtime, additional stress, poor morale, and operating inefficiencies.

Jackson Lewis attorneys can assist with any aspect of compliance and answer questions regarding the law’s provisions or applicability. For assistance, please contact your Jackson Lewis attorney.