New Jersey employers face a major shift in leave and job-protection obligations beginning July 17, 2026. As one of his final actions in office, former Governor Phil Murphy signed legislation that significantly expands the New Jersey Family Leave Act (NJFLA) and strengthens job-restoration requirements tied to Temporary Disability Insurance (TDI) and Family Leave Insurance (FLI). The changes move far beyond a technical update and will affect many small and very small employers that were previously outside the law.
NJFLA coverage expands to smaller employers
Currently, NJFLA applies only to employers with 30 or more employees. That threshold will drop to 15 employees starting July 17, 2026, regardless of the employer’s location, provided at least one employee works in New Jersey. For many businesses, this will be the first time they are subject to state job-protected leave requirements.
This expansion places NJFLA squarely into workplaces that often lack formal HR departments, written leave policies, or experience managing reinstatement obligations. As a result, the risk of unintentional noncompliance increases significantly.
Employees qualify much sooner
Employee eligibility will also change dramatically. Under current law, an employee must work for 12 months and log at least 1,000 hours to qualify for NJFLA leave. Beginning in July 2026, eligibility will be triggered after just three months of employment and 250 hours worked during that period.
In practice, employees will qualify for job-protected leave almost immediately upon hire. Employers will need to rethink onboarding, staffing plans, and leave tracking much earlier in the employment relationship.
Paid benefits and job protection are now closely linked
Another major shift is the connection between paid leave benefits and job protection. While TDI and FLI currently provide income replacement, they do not explicitly guarantee reinstatement. The new law strengthens restoration rights for employees receiving TDI or FLI benefits, requiring employers to return employees to the same or an equivalent position and prohibiting retaliation.
This tighter integration means employers can no longer treat paid leave benefits and job-protected leave as separate systems. Missteps in coordination may now result in legal exposure.
Earned sick leave becomes part of a unified leave system
The amendments also coordinate New Jersey’s Earned Sick Leave law with TDI and FLI. Employees who qualify for multiple types of leave may choose which benefit to use and in what order, though they cannot receive more than one paid benefit at the same time. Importantly, the employee controls the sequencing, not the employer.
As a result, lawful leave “stacking” becomes easier, and protected absences may extend longer than many employers expect.
What employers should do
These changes represent a structural shift in New Jersey leave law. Employers should begin preparing well before July 2026 by reviewing headcount, updating handbooks and leave policies, coordinating payroll and HR tracking systems, and training managers on reinstatement obligations and leave sequencing.
For businesses that have historically treated leave programs as disconnected requirements, the new law raises both operational and compliance risks. Early planning will be essential to avoid costly mistakes and ensure business continuity as the expanded NJFLA framework takes effect.
Contact Sal Schibell, CPA, CFP®, MBA, MS Taxation – Tax Partner, to discuss how these changes may impact your business at (732) 539-7328 or salschibell@LRSCPA.com.
Disclaimer: This post is for informational purposes only and should not be considered professional advice.