Category Archives: Unlikely Lessons in Legal History

02.20.23
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Lost Your Bill of Rights? Here’s a New One for New Jersey Temp Workers

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.

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

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06.17.19
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After Robert R Died, the State Agency Kept Sending Him Assessments. Then I Did This…

Graveyard independent contrractor misclassificationThis is a true story — and it was the most fun I ever had as a lawyer.

I was representing the administrator of an estate. The deceased, Robert R, had required round-the-clock care before his demise, and his family retained several home heath care nurses. The family treated them as independent contractors. When one nurse was no longer needed, she filed for unemployment.

The state agency decided she was an employee, not a contractor. The agency sent a bill to the family for not paying into the state unemployment fund. The assessments covered all of Robert R’s nurses, not just the one who filed for unemployment. The agency also assumed that Robert R continued to retain nurses, and it issued new assessments each quarter.

But then Robert R died. At that point, he no longer needed nurses.

That’s where I come in. Shortly after Robert R’s death, I wrote a polite letter to the agency, informing it that Robert R had passed. I attached the death certificate and told the agency there were no more nurses, so please do not send any new assessments.

But the next quarter, the state agency sent a new quarterly assessment.

I sent another letter. I attached a second copy of the death certificate and again informed the agency that Robert R had died and no longer had any nurses, so please stop sending new assessments.

The next quarter, the state agency sent another new quarterly assessment.

Exasperated, I then sent this.

THL letter - why we are not paying these assessments

The agency stopped sending assessments, and I never heard from them again.

© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

Need training on avoiding independent contractor misclassification claims? Hey, I do that!  

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11.29.18
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Village People’s Construction Worker Character Wins! Court Expands OSHA Liability for General Contractors

Village People from Wikipedia 1978

The Village People (1978), from Wikipedia

According to the Official Website of the Village People, the group’s original lineup included Disco King, Construction Worker, Cowboy, Leatherman, Indian, and two “Nondescripts.” They were later joined by Cop, G.I., and Biker. Keeping with the times, as we know the Village People do, the costume formerly known as Indian has been rebranded as Native American. (True!)

But Cop or No Cop, Biker or No Biker, there has always been a Construction Worker since the band’s founding in 1977.

A recent court case involving construction workers tests whether a general contractor in control of a worksite (we’ll call him “Macho Man,” after the 1978 hit) has a legal duty to protect another contractor’s employee (we’ll call him “Hot Cop,” after a different 1978 V.P. tune), when none of Macho Man’s own employees are at risk.

The issue arose during a library construction project in Austin, Texas. One subcontractor refused to allow its employees to work near a 12-foot high wall of dirt that had not been properly sloped or reinforced. A citation was issued to the general contractor for allowing the unsafe condition, but it was undisputed that none of the general contractors’ own employees were endangered by the wall of dirt.

“Why does that matter?” you might be asking.

Although the condition was a violation of the Occupational Health and Safety Act (OSHA), the Fifth Circuit Court of Appeals had taken the position since 1981 (when the V.P. released the album, Renaissance) that “OSHA regulations protect only an employer’s own employees.”

The Court’s ruling earlier this week abandoned that rule, instead finding that a general contractor could be cited under OSHA for allowing an unsafe condition that affected only the employees of another contractor.

In response to the Court’s ruling, the Village People have reportedly abandoned plans to introduce a nebishy Health Inspector character on their next tour.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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09.17.18
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NLRB Proposes New Definition of Joint Employer; 60-Day Comment Period Starts Now

NLRB logoWhen seeking musical inspiration for a post on the NLRB’s joint employment standard, look no further than the Barenaked Ladies’ 1994 album, Maybe You Should Drive. Like an on-again, off-again relationship, the Board keeps changing its joint employment standard. Between 2015 and today, the test has been, at various times:

  • Direct control (pre-Browning-Ferris, 1984-2015),
  • Indirect control (Browning-Ferris, 2015-Dec. 2017),
  • Direct control (Hy-Brand overrules Browning-Ferris, Dec. 2017-Feb. 2018), and
  • Indirect control (Board vacates Hy-Brand, restoring Browning-Ferris, Feb 2018-present).

But with this newest change coming in the form of a proposed regulation, the proposed change can be expected, once it’s enacted, to remain in effect long term.

Cue the Barenaked Ladies, in “Everything Old Is New Again” (1994):

Everything old is new again, everything under the sun.

Now that I’m back with you again,

We hug and we kiss, we sit and make lists,

We drink and I bandage your wrists.

The proposed new standard would make it much more difficult to establish that a business is a joint employer.

The new test will help franchisors, who need to protect their brand and marks, but do not exercise day-to-day control over hiring and scheduling of a franchise owner’s employees. The new test will help businesses that subcontract labor and that want to ensure certain tasks are performed but do not exercise day-to-day control over how the work is performed or over how subcontractor hires, schedules, and supervises its employees.

In a Notice of Proposed Rulemaking released late last week, the NLRB proposes a new regulation to interpret the National Labor Relations Act. New 29 CFR §103.40,which would define joint employer.

Under the proposed regulation, an employer may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction. A putative joint employer must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.

There’s a lot packed into that definition:

  • The proposed joint employer must share or codetermine the workers’ terms and conditions of  employment;
  • These terms have to be essential terms of employment, such as hiring, firing, discipline, supervision, and direction;
  • It is not enough to have the right to control these terms; the proposed joint employer must actually exercise this control;
  • The control must be direct, substantial, and immediate; and
  • It is not sufficient to exert control that is limited and routine.

“Limited and routine” control means directing another business’s employees as to what work to perform, or where and when to perform it. Under the new rule, that will not be enough to show joint employment. Control that is not “limited and routine” would include providing direction on how to do the work — in other words, supervision.

For those of you asking, “So what? Who cares?” (my parents, for example), here’s why the change matters.

Under the new rule, a business that retains another company to perform work but has no control over that company’s hiring, compensation, scheduling, or supervision:

  • Will no longer be obligated to collectively bargain with that other company’s unionized workers;
  • Will no longer be held jointly liable for that other company’s unfair labor practices; and
  • Will no longer be drawn into collective bargaining or unfair labor practice disputes with that other company’s employees.

It’s a big deal. Unions won’t like it since the new rule will reduce their influence, but the new rule is a common sense, pro-business proposal that will add predictability and certainty to economic and legal relationships.

So what’s next?

There is a now a 60-day period for comment. The Board will then have the opportunity to consider the comments and revise or reject the proposed rule.  The soonest the rule can be implemented is late 2018 but more likely early 2019.

Then, assuming the rule is implemented, we go back to the standard that existed before Browning-Ferris, but with a lot more clarity and permanence. Everything old is new again. But this time, the change should be long-term since it will be memorialized in a  federal regulation.

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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06.18.18
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Misled: Gov’t Study Claims Contingent Workforce is Shrinking. False.

Contingent workforce study resultsDespite what you might think from having attended myriad weddings, bar mitzvahs, or other parties, Kool & the Gang has songs other than “Celebration.” (I had to look this up to verify.) One such song is called “Misled.” It includes lyrics like, “She’s as heavy as a Chevy” and “So enticing, he’s sure to take a bite.”

The video hilariously begins with our hero washing his face in the sink – a surefire way, if there ever was one, to heighten suspense and draw the audience in.

Also to draw you in, the Bureau of Labor Statistics (BLS) headlined its just-released study on the contingent workforce by concluding that the number of contingent workers is declining compared to 2005. Whah?

Continue reading →

04.19.18
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Office Space (1999): Lessons for Avoiding Independent Contractor Misclassification

Office Space poster - independent contractor or employeeIf you haven’t seen Office Space in a few years, it’s time to refresh. The workers in the movie are all employees, but what if they weren’t?

Here are five signs that the Initech cubicle dwellers and others in the movie wouldn’t pass as independent contractors.

If you’ve never watched the movie, then this post might not be for you. There are no spoilers here, so feel free to read on anyway if you like. Then go watch.

Milton’s stapler. He really loves that red Swingline. Use of the company’s equipment is a sign you’re an employee, not an independent contractor.

Joanna’s flair. When the boss says you’ve got to wear at least 15 pieces of flair, that’s the sort of control indicative of an employment relationship.

Lumbergh’s 17 answering machine messages.  He’s trying very hard to direct Peter’s work. Direction and supervision are signs of control.

Peter’s frustrations, as told to the Bobs. Peter has to answer to seven layers of management? That’s seven layers too much supervision for an independent contractor. Contractors should be in business for themselves.

Storage Unit 2.  When Milton is directed to address the cockroach problem in Storage Unit 2, he knows that’s not in his job description. If management can assign additional duties, the worker is likely an employee, not a contractor.

Ah-yeah!

© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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02.19.18
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NLRB Smells Something Rotten, Seeks Input on Major Misclassification Decision

CA5ED89A-9590-4B8C-B8C6-88EEEED7168A

Screenshot from metro.co.uk

A flight from Dubai to Amsterdam made an emergency landing last week after a fight broke out over a passenger’s excessive flatulence. The two Dutchmen sitting next to the flatulator asked him to cut it out, but he wouldn’t (or couldn’t) stop spreading his perfumery around the cabin. A fist fight broke out and the pilot diverted the flying stinkship to Vienna, where several passengers were removed. Read more here.

Something smells rotten to the NLRB as well, four months after an Administrative Law Judge (ALJ) ruled that independent contractor misclassification, by itself, can be an unfair Continue reading →

02.12.18
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Python vs. Boa: Does the GrubHub Misclassification Ruling Really Matter? (Don’t Believe the Hype!)

Python vs boa - independentr contractor misclassification and grubhubPythons and boa constrictors usually do not fight each other. At least that’s what I learned in herpetology school. The reason they don’t fight each other is that there’s too much risk. The boa risks getting bitten by the python’s lethal fangs. The python risks being constricted to death because that’s how constrictors work.

For roughly the same reason, independent contractor vs. employee disputes rarely go to trial. There’s too much to lose. A company that relies on independent contractors for its business model cannot afford a ruling that all of its contractors are really employees. That’s why these cases almost always settle.

The GrubHub case, however, Continue reading →

02.01.18
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Like a Drunken Possum, NEW GIG Act Fails Again.

NEW GIG act possum

Screenshot from DailyDot.com, 12/3/2017

I feel bad for this little guy. This possum apparently broke into a Florida liquor store, knocked over a bottle of bourbon, and got sauced. Wildlife rescue picked him up and checked him into rehab (no, not that kind). Full coverage here at DailyDot.com.

I applaud the critter’s effort, though.

He probably feels a little like Senator John Thune (R-SD), who has repeatedly introduced a bill called the NEW GIG Act — designed to simplify tax law for independent contractor misclassification scufflaws. Every time he gets close, though, someone knocks him over the head with a bottle. Or something like that.

The NEW GIG Act has been introduced in Congress several times. If passed, it would Continue reading →

11.27.17
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Are Santa’s Elves Employees or Independent Contractors?

elves independent contractors or employeesFor roughly 200 years, Santa has been retaining seasonal help at his Arctic Circle workshop. His undersized non-union workers toil in an icy land that sits beyond the jurisdiction of U.S. employment laws, a wise move by Mr. Claus and his attorneys.

While children around the world ask silly questions like, Can I visit the elves? and What do elves eat? and How do they work so fast?, this blog asks the serious question that all adult businesspeople want to know: Are elves employees or independent contractors?

Spoiler alert for the children: The answers are No, Caribou, and Amphetamines.

The adult question takes some analysis. Let’s peek behind the wintry curtain.

Continue reading →