KEY TAKEAWAYS

• On July 31, 2023, a new law in New Jersey took effect that changed PEO reporting requirements regarding separation of employment. But due to incorrect language on the Department of Labor’s website, some PEOs in New Jersey were led to believe they were being held responsible for reporting separations.

• The incorrect language has since been removed from the DOL’s website/FAQ section and enforcement has shifted to the client companies.

• PEOs in New Jersey are urged to keep a close eye on this issue and to reach out for assistance in the event they have questions or concerns.

Professional Employer Organizations — commonly known as PEOs — are co-employers with their client companies/worksite employers. The New Jersey Workers’ Compensation system has routinely found that PEOs and their worksite employers are dual employers for workers’ compensation purposes.  PEOs focus on HR related tasks such as payroll, Workers’ Compensation and other employee benefits, while the worksite employer handles day-to-day operations and oversight of employees. PEOs act as the W2 employer of record with the Department of Labor and Workforce Development

On July 31, 2023, a law in New Jersey took effect that requires notification by an employer “immediately and simultaneously” when an employee is separated. The law also requires employers to provide information sufficient to enable the Department of Labor to make a benefit determination immediately upon the separation of an employee from employment. Because the necessary information regarding separation resides with the worksite employer and may not, or cannot, be transferred immediately or simultaneously to a PEO, the responsibility to report to the Department and the liability associated with non-compliance should lie with the worksite employer/client company. (SEE PREVIOUS ALERT HERE)

On August 21, 2025, New Jersey Gov. Phil Murphy signed (A5506/S.3773) into law.  That law amends another statute (P.L. 2022, c.120) that requires employers to notify the New Jersey Department of Labor “immediately and simultaneously” when an employee is separated from their employer. This legislation provides important protections for PEOs by moving liability and penalties from a PEO to a client company for failure to provide timely notice.

Nonetheless, due to incorrect language that has appeared on the Department of Labor website, there has been some confusion amongst PEOs that they were being held responsible for reporting separations.

That incorrect language has since been removed from the FAQ section of the DOL website, clarifying that enforcement has shifted to the client companies.

We urge PEOs in New Jersey to keep a close eye on this issue and we urge them to reach out to Goldberg Segalla for assistance should they have any questions or concerns. If you have questions about how (A5506/S.3773) may impact your business, please contact:

• Ian G. Zolty
• Or another member of the firm’s Workers’ Compensation or Professional Employer Organization teams