Restaurant Law Center v. Aaron Binder (Treasurer of NJ) and Kevin Jarvis (Commissioner of NJ DOL and Workforce Development)

On August 20, 2026, the Restaurant Law Center (RLC), together with the National Retail Federation, the American Hotel & Lodging Association, and the International Franchise Association, filed a lawsuit in the U.S. District Court for the District of New Jersey challenging the New Jersey Employer Healthcare Assistance Contribution Act (the “Act,” also commonly referred to as the “Fair Share” law).

Summary of the Act:

The Act requires employers in New Jersey with 50 or more employees enrolled in the state’s Medicaid program to pay an annual fee for each employee and each of the employee’s dependents who receive Medicaid benefits.

The fees are calculated per employer as follows:

• 50 to 250 employees: $325 for each employee and each of their dependents who receive state Medicaid benefits;
• 250 to 500 employees: $525 for each employee and each of their dependents who receive state Medicaid benefits;
• 500 or more employees: $725 for each employee and each of their dependents who receive state Medicaid benefits.

The Act contains several exemptions, including:

• No fee assessment for employees and dependents who are covered by Medicaid due to a developmental disability, an intellectual disability, or a permanent physical disability;
• Beginning on July 1, 2027, the following employees who receive coverage through New Jersey’s Medicaid program are also excluded:
• Employees employed by the employer for less than 90 days at the time the fee is determined;
• Employees who work part-time, on a per diem basis, or who are temporary employees; or
• Seasonal employees.

If the Act remains in effect, the first round of assessments will be issued by March 1, 2027, based on Medicaid enrollment as of December 31, 2026, with payment due by April 15, 2027.

Challenges in RLC’s lawsuit:

Our lawsuit argues that the Act is unlawful for several reasons:

• ERISA Preemption: The Act interferes with federally regulated employer-sponsored health plans by effectively pressuring employers to alter plan design, eligibility requirements, and coverage decisions. Our Complaint asserts that these issues are governed by federal law under ERISA and cannot be dictated by the state.

• Due Process Violations: The Act requires employers to pay assessments based on information the state does not meaningfully disclose, while placing the burden on employers to challenge those assessments. Employers are not provided with sufficient information to verify whether an assessment is accurate.

• Conflict with Federal Law: The Act puts employers in an impossible position by effectively requiring them to seek information from employees and their family members that may implicate federal privacy and anti-discrimination protections.

The lawsuit seeks a declaration that the Act is invalid and injunctive relief preventing New Jersey from enforcing it.

Challenge necessary to avoid dangerous precedent from “Fair Share” law(s):

RLC challenged New Jersey’s penalty because it undermines the uniform federal framework governing employee benefits under ERISA and risks encouraging other states to adopt similar laws if New Jersey successfully implements its “Fair Share” law. States have attempted similar so-called “Fair Share” laws before, but courts have struck them down or legislatures have later repealed or substantially modified them. Maryland’s law was struck down by the Fourth Circuit as preempted by ERISA, and Massachusetts implemented, then later repealed, a different employer assessment.