What Companies Using Temps In New Jersey Need to Know

According to the National Constitution Center, there were 14 original copies of the Bill of Rights, with one sent to each of the 13 states and another kept by the federal government. The Center also reports, however, that four of the states — Georgia, Maryland, New York, and Pennsylvania — lost their copies. North Carolina’s was stolen by a Union soldier during the Civil War but recovered in 2002 through an FBI sting. (“Hey buddy, I’m lookin’ to buy a Bill of Rights. Ya know anyone?”)

New Jersey kept its copy, but also just added some new stuff. Sort of.

This month, New Jersey passed the Temporary Workers Bill of Rights. It’s less sweeping than the original 1791 Bill of Rights, but it co-opts the important sounding name to get everyone’s attention and to show constituents that the lawmakers are doing really important things that warrant re-election, financial support, the undying love of chatbots, etc.

New Jersey lawmakers love the “Bill of Rights” tag, by the way, having also recently passed a Siblings’ Bill of Rights, a Property Taxpayers’ Bill of Rights, and a Nursing Home Residents’ Bill of Rights.

The Temporary Workers’ Bill of Rights imposes new burdens on staffing agencies and the companies using temp workers. This post will focus on the obligations imposed by the companies using the temp workers.

Does the Bill apply to your industry?

The Bill applies to temp workers assigned by a temp staffing firm to work in any of the following industries, using Bureau of Labor Statistics (BLS) designations:

• 33-90000 Other Protective Service Workers
• 35-0000 Food Preparation and Serving Related Occupations
• 37-0000 Building and Grounds Cleaning and Maintenance Occupations
• 39-0000 Personal Care and Service Occupations
• 47-2060 Construction Laborers
• 47-30000 Helpers, Construction Trades
• 49-0000 Installation, Maintenance, and Repair Occupations
• 51-0000 Production Occupations
• 53-0000 Transportation and Material Moving Occupations

If you’re not in one of these industries, stop reading and get on with your day.

What obligations does the Bill impose on the users of temp labor?

1. Equal Pay. This sounds fair but may be problematic in practice. Temp workers must be paid “not less than the average rate of pay and average cost of benefits, or the cash equivalent thereof” of the user’s similarly situated employees.

I see two immediate problems here.

First, one of the benefits of using a staffing agency is the ability to pay the temps less until they prove themselves and earn an offer of direct hire. No longer. Now you’ll have to pay the same amount as you pay your regular workers, plus the markup.

Second, how is the staffing agency going to know the wages paid to your similarly situated regular workers and the value of the benefits package you provide them? Presumably you’ll have to tell the staffing agency.

But the staffing agency is not your confidant or fiduciary. It has multiple clients, probably including your competitors. Do you really want the staffing agency to know what your cost of insurance is, or what you pay your regular workers, or the full suite of benefits you offer? The staffing agency will have to adjust what it charges you — and your competitors — based on what each of its clients pay their similarly situated worker. That sounds like a pretty useful set of data for anyone wanting to know what competitors are doing.

You can (and should) designate this information as confidential when disclosing it to a staffing agency, and you should make sure your staffing agency agreement includes an obligation to protect confidential information. But is the information really that safe from prying eyes? If a competitor or temp worker is involved in litigation, couldn’t this information be subject to subpoena? Once you reveal this information, you lose a good bit of control over it.

2. Freedom to direct hire. Under the new law, temp workers must be free to accept offers of direct hire. Staffing agencies cannot restrict the workers’ ability to accept offers of direct hire. The agency can impose a “placement fee” on its client (you), but the amount is limited by statute.

The amount of the placement fee cannot exceed “the equivalent of the total daily commission rate the temporary help service firm would have received over a 60-day period, reduced by the equivalent of the daily commission rate the temporary help service firm would have received for each day the temporary laborer has performed work for the temporary help service firm in the preceding 12 months.”

For purposes of contracting, any provisions prohibiting direct hire for limited periods of time need to be removed. Instead, staffing contracts (in NJ, for these job classifications) should permit direct hire but may charge a permitted placement fee.

3. Reimbursement of tax obligations. The user of services is required to reimburse the temp agency for wages and “related payroll taxes.” Presumably this is already basked into the markup, but now it’s required.

4. Joint and several liability. The law imposes joint liability for any violations of the equal pay or direct hire provisions. Consider what that means for equal pay. You might have to disclose to the temp agency what you pay your similarly situated employees, but you don’t control the temp agency’s payroll practices. If they mess up and pay the temp worker less than the law requires, the law says you’ll be jointly liable.

Who said anything about fair?

Be sure your staffing agency agreement includes robust indemnity provisions. The agreement should also create a contractual obligation for the temp agency to pay workers all amounts they are due under the law so that, if the agency fails to do so, you can point to a breach of contract when seeking indemnity. Indemnity claims based purely on the law could be subject to challenge since the law also says there is joint liability.

Conclusions

This Temporary Workers’ Bill of Rights applies only to certain industries in New Jersey but, for users of temps in these industries, the law creates important new obligations.

For violations, the law allows for a private right of action and carries a six-year statute of limitations.

If you use temp labor in New Jersey in one of the covered industries, be sure you understand the new requirements. This would be a good time to go back and revisit your staffing agency agreements. They may need some tidying up.

Also consider requiring temp workers to sign individual arbitration agreements as a condition of being placed at your worksite. This strategy can help insulate you from a class action filed against both the temp agency and your company. Class actions against both entities are a particular concern, given the joint liability section of the new law.

© 2023 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.