Deadline for New Jersey’s Annual Pay-to-Play Disclosure is Approaching: Is Your Company Ready to File?

Does your company do business with New Jersey government entities? Does your company make political contributions to New Jersey political recipients? Does your company have a political action committee/continuing political committee that is active in New Jersey? Do your officers, directors, partners or their spouses make political contributions to New Jersey recipients? If you answered “yes” to any of these questions, you are most likely required to file an Annual Pay-to-Play Disclosure Form for calendar year 2018.

The New Jersey Election Law Enforcement Commission (“ELEC”) requires each business entity that received payments of $50,000 or more (in the aggregate) as a result of government contracts during the 2018 calendar year to electronically file a Business Entity Annual Statement (“Form BE”) with ELEC no later than Monday, April 1, 2019. (Although the Form BE must be filed in most years by March 30, the deadline has been extended this year because March 30 falls on a Saturday this year.)

The obligation to file arises whenever payments from New Jersey government entities reach the $50,000 threshold. This includes contracts with the State of New Jersey Executive and Legislative branches, counties, municipalities, boards of education, fire districts, and independent authorities, regardless of method of award.

Whether the $50,000 filing threshold is reached depends on payments received by the business entity during 2018. Therefore, the obligation to file may vary from year to year—a business entity that was not required to file in previous years may still be obligated to file for calendar year 2018.

Last, detailed contract and contribution information must be disclosed whenever the business entity or a covered individual made a “reportable” contribution during 2018. A contribution is “reportable” when it exceeds $300 per reporting period. In light of these requirements, it is necessary to review personal political contributions made by a business entity’s partners, officers, and directors (and certain members of their families). Additionally, because of varying election cycles, it may be necessary to review contributions made over the course of several years to determine whether any 2018 contributions are reportable.

Companies that fail to file on time or that file inaccurately may be subject to monetary penalties. To ensure a timely and accurate filing, companies that have yet to begin preparing Form BE should not delay.

Bias in the Boardroom, What to Say When You Hear the Unexpected

As a Human Capital Consultant, Diversity and Inclusion Leader and Executive Coach for more than 20 years, I’ve sat in boardrooms with Fortune 1000 executives, boards of directors and leadership teams from across various industries and backgrounds. While the topic and tone of these discussions vary from company to company, leader to leader and meeting to meeting, there seems to be one overriding theme that is growing in relevance and priority. It is a topic which is near and dear to my heart: diversity, equity and inclusion in the workplace. While most leaders recognize its importance, many are still grappling with how best to promote and advance it within their organizations – and in some cases – how to talk about it. This topic is without a doubt one of the most critical, sensitive and urgent topics in business today.

So why is it that despite being well into the second decade of the 21st century, and years after the passing of gender and racial equality legislation in the United States, leaders are still struggling with diversity, equity and inclusion in the workplace? With underrepresented groups growing in size and influence, why are we not seeing improved and sustained diversity results, especially at senior levels? Why do some people shut down, roll their eyes, or run in the opposite direction when this topic is broached at leadership meetings? As someone who prides herself in her ability to problem-solve, I continue to be both perplexed and curious about this issue. These leaders are smart people. They know their business. They get the competitive landscape. They appreciate the opportunities they have been given. They understand the needs of their customers. They care about their employees. They want to improve shareholder value. So why then are they unable to solve this issue?

Allow me to introduce you to bias. Bias is a small four-letter word that packs a mean punch, and none of us are immune to it. Bias as we define it, occurs when two groups of people act identically but are treated differently. It’s a prejudice, conscious or unconscious, in favor of or against one thing, person, or group compared with another, usually in a way considered to be unfair. Bias creeps up when we least expect it, and it does not discriminate. Here are just three of the most dangerous biased statements I have seen and heard from within and across the boardroom. I’m writing to share my experience, validate what you may be thinking, and equip you with the right things to say when you face bias in your workplace.

  1. “Women will always put their families before the company.”
    o What you are likely thinking: Let’s be real here. Show me a working parent, female or male, who does not prioritize their family, and I will show you someone you likely won’t want to hire or bring onto your board.
    o How you might want to respond: “Knowing how to manage priorities is a key attribute of any good leader. What matters most are the results they deliver and how the leader priorities and leverages their network to support them in managing both as a parent and as a professional.” Then, throw in a fact. This is one of my many favorites but do feel free to find one that resonates with you. “Did you know that if women get a chance to work to their full potential (e.g. have an equal role to men across all roles) they’ll add $28 trillion to the global GDP by 2025? I don’t know about you, but I think our company should capitalize on this.”
  2. “Hiring diverse talent will compromise our quality.”
    o What you are likely thinking: Who says this? This is ludicrous. What a racist and naïve remark. Have you ever worked with people of different ethnicities and backgrounds? Do any exist in your social or professional circles?
    o How you might want to respond: Bite your tongue, smile, make direct eye contact and start with a question. “What makes you say this?” After you’ve carefully listened and acknowledged the response, take a moment to inform. “Thanks for your perspective. The published research shows that increased levels of diversity and inclusion dramatically improve bottom line results by as much as 35%, leads to more innovative ideas and increases not only levels of employee and customer satisfaction but also shareholder results. Focusing on diversity sounds like an incredible strategy for increasing our competitive advantage. Are you interested in seeing the research?”
  3. “Millennials are lazy and expect everything handed to them.”
    o What you are likely thinking: Was this person ever young? Does she/he have kids? Do they even know what a millennial is? Do they have millennials in their network?
    o How you might want to respond: “Yes, I have heard this before. I often smile at this analogy since I can only imagine what other generations have said about us when we were up and coming and look at us know. Did you know that millennials will represent more than 70% of the U.S. professional workforce by 2025; that they are starting businesses at faster rates than any generation before them, and that their tech skills far surpass that of any other generation? Considering the competitive landscape, I believe they are a force to be reckoned with and we can learn a lot from them.”
    These are just some of the many biases I’ve experienced in the boardroom. If we are to change things for the better and really improve diversity and inclusion results, we must first examine our own biases. Consider the facts, share our views, and look for opportunities to not only mitigate bias but also practice conscious inclusion.

New Jersey Expands Family Leave Insurance and Related Laws

On February 19, 2019, Governor Murphy signed into law A3975, which significantly expands New Jersey’s paid family leave insurance program (“PFLL”) and temporary disability benefits law. By way of background, the PFLL has been in place since 2008 and currently provides eligible employees with benefits for up to six (6) weeks of qualifying family leave. A3975 significantly amends and expands the benefits provided under this law.

The law provides for the following:

  • As of June 30, 2019, the definition of a covered employer under the New Jersey Family Leave Act (“NJFLA”) will be expanded to include individuals or entities that employ thirty (30) or more employees (instead of the original threshold of fifty (50) employees) for each working day during each of twenty (20) or more calendar workweeks;
  • Effective July 1, 2020, the law doubles the benefit leave period originally provided to eligible employees under the PFLL from six (6) weeks to twelve (12) weeks in a twelve (12) month period;
  • Effective on July 1, 2020, the law increases the weekly benefit amount such that employees can now receive 85% of their weekly wage with the maximum possible benefit amount increasing to 70% of New Jersey’s average weekly wage. Based on this year’s data, the average weekly benefit will increase from $650 per week to $860 per week;
  • Also effective July 1, 2020, employees are permitted up to fifty-six (56) days of intermittent leave within a twelve (12) month period, which is increased from forty-two (42) days;
  • An expanded definition of who is a “family member” within the meaning of the law. A3975 now includes care for siblings, in-laws, grandparents, grandchildren, domestic partners, other blood relatives and any individual with whom the employee has a close association, which is the equivalent of a family relationship;
  • The provision of paid family leave benefits for employees taking leave under the NJ Safe Act due to domestic or sexual violence. Specifically, employees taking leave under the NJ Safe Act to seek medical attention, counseling or legal assistance for domestic or sexual violence, as well as participate in legal proceedings and safety planning, may elect to receive paid family leave benefits. An employee may also take leave under this provision of the law if he/she requires the leave to care for a covered family member; and
  • A broader definition of “family leave” to include care for foster children and children who are born via a gestational carrier.

In terms of allowing employees to return to work at the end of the period for which benefits are collected, it is important to remember that the PFLL is a benefits law and not the same as the NJFLA, which expressly allows eligible employees to take job-protected leave and guarantees an employee reinstatement to the exact position held prior to the leave. However, employees should be aware of the anti-retaliation provision in the PFLL, which provides that employees cannot be retaliated against for taking paid family leave benefits. Before denying reinstatement to an employee who is collecting PFLL, employers should consult with counsel.

Prognosis Looks Good for Healthcare M&A in 2019

After a robust 2018, healthcare M&A in the midmarket should continue to show strong signs of life in 2019.

This year, one of the real focus areas for M&A activity will be specialty services, including dermatology, ophthalmology, fertility, orthopedics, and gastroenterology. ASCs and multispecialty medical groups are also on the radar screen. Niche areas within healthcare are still highly fragmented and underpenetrated. Today, many operators own fewer than five locations and lack a dominant market position. This dynamic presents numerous opportunities for consolidation as well as organic growth.

Rising valuations in the healthcare space are now catching the attention of small practices. Many founding physicians in these specialty areas have built their practices to a reasonable size and are reaching a point in their careers where they want to exit. They are quickly realizing they can sell for a premium in the current market and, thus, may be receptive to potential acquirers.

Just recently, for instance, Orthopedic Associates, which has 12 providers and multiple locations across the greater Oklahoma City area, joined Mercy Clinic. In a second example, CEI Vision Partners, a portfolio company of private equity firm Revelstoke Capital Partners LLC, acquired Virginia Eye Consultants, an ophthalmology group comprised of 17 providers that service the Norfolk, Virginia Beach, and Chesapeake markets.

These are just a few of the many midmarket deals we can expect to see this year in specialty healthcare services. Given the availability of capital and the financially attractive characteristics of this market, expect to see a further increase in acquisition activity by both strategic and financial buyers.

Due diligence plays an important role to ensure investors get what they bargain for. Here are a few important variables to take into consideration:

BILLING PRACTICES
If a clinic’s billing practices are not in compliance with applicable laws and regulations, it can have a significant impact on the valuation of the business. An example might be a situation where a clinic is charging higher amounts for procedures than allowed. In addition to regulatory risk for the buyer, this practice could result in over-stated revenues and an artificially inflated valuation.

PHYSICIAN COMPENSATION
There are many small, owner-run practices in which the founding physicians draw exceedingly large salaries that are not consistent with market rates. So, it is incumbent on either a financial or strategic sponsor to draw up a more reasonable and formalized compensation package.

CASH TO ACCRUAL CONSIDERATIONS
Our experience with most practices is that internal financial statements are prepared on a cash basis of accounting. Therefore, it is critical to understand the cash to accrual adjustments; specifically, on the revenue side. In a growing practice, this can significantly impact earnings.

Sellers, for their part, need to conduct their own internal diligence to make themselves more attractive to buyers. It’s not uncommon for specialty practices to lack sophistication in terms of accounting and financial reporting. In general, these groups should convert to generally accepted accounting principles (GAAP) which will give their numbers more credibility among potential investors—and can ultimately lead to higher valuations.

The prognosis for M&A activity in specialty practices looks promising this year. But both buyers and sellers should properly prepare so they can be equally well-positioned to seize opportunities that can generate healthy returns.