New Jersey Temporary Worker’s Law Also Applies Out of State

Unfair-Sign

That’s right! The new law in New Jersey, titled “The Temporary Workers Bill of Rights” also applies “out of state”. According to a new article (August 30, 2023) in the “National Law Review”, any staffing company in the state of New Jersey that makes a placement “out of state”, the new temporary workers law applies in that state as well. This is not a court decision but an opinion of the New Jersey Dept. of Labor and which law is currently being challenged.

Making placements “out of state” is fairly common in New Jersey because of the close proximity to the Philadelphia, Pennsylvania, and New York city metropolitan areas. But it also raises some difficult questions about interstate enforcement and difficult and complex cooperation issues between staffing companies and their clients.

In order for the most controversial and difficult implementation parts of the law to work, the client company, which could also be, the “out of state” client company, needs to calculate and inform the staffing company of the average pay and cost of benefits of their permanent employees doing the same or similar work that the New Jersey staffing company will be placing at their business to assist temporarily with that same category of work.

That may not be an easy thing for any client company to agree to easily, since the client’s information complex, time consuming and private.  This will be difficult for an in-state company to agree to let alone a client who is out-of-state and not normally subject to the laws of New Jersey. Both companies have the option of simply not contracting with the staffing company.

Underscoring this dilemma, according to the National Law Review article (cited above), New Jersey Labor Department guidelines are clear that the law applies to New Jersey workers even when they are placed with a third-party client outside the state but note significantly that the guidelines “did not answer the questions of whether the law applies to third party clients located outside the state”.

Clearly the law will not work in other states unless the law actually applies to them.  The attorneys writing for the National Law Review(in the same article cited above) do give a rather limp opinion that “It is possible . . . .that the New Jersey Department of Labor will conclude that a third-party client located outside of New Jersey is “transacting business within New Jersey” when it engages in business with a New Jersey temporary help service firm and that, under those circumstances, the third-party client is subject to the TWBR”. Really? That seems like a stretch.

Yet even though, “it is possible” that New Jersey will conclude(my emphasis) that hardly means that businesses in other states nor their governments and courts will conclude the same thing regarding controversial legislation in New Jersey. Pennsylvania especially is a much more conservative state.

In any case it is one thing to have a questionable law implemented in one state and another thing to extend it by questionable legal theory to other states while claiming to be able to enforce it in those other states.

Ongoing action against the Law.

Meanwhile the New Jersey Staffing Alliance continues to fight this law in the Federal court for New Jersey. They had sought to secure a preliminary restraining order to prevent the law from becoming implemented, which was not successful partially because it had already been passed by the NJ legislature, signed into law, and partially implemented, when their legal action was initiated.

It was also probably not initially successful because of the high legal bar in securing a restraining order or any sort of injunction prior to a trial on the merits.

The New Jersey Business and Industry Association has joined the NJ Staffing Alliance as well as the American Staffing Association (ASA) in fighting this legislation.

Arguments against the legislation

There are two major objections, the first being that it is unconstitutional which is based on the interstate commerce clause of the U.S. Constitution that gives the Congress the sole right to regulate it.

As noted above, it is common for New Jersey firms to make worker placements in New York and Pennsylvania, but New Jersey cannot enforce its laws on those two states, which is necessary for the law to be effective in those two states, as well as any others. Yet, that is what the New Jersey Dept. of Labor says about their new law, that it will be effective in states outside New Jersey. That remains to be seen.

A second major argument against the law is that it is extremely impractical and burdensome in the implementation by the requirement that temporary workers be paid an amount equal to the average pay and cost of benefits of the staffing company’s client employees doing the same or similar work.

This requires staffing company’s clients to give up their private information under penalty of $500 for a first violation and $2,500 for each subsequent violation, and this in order to have the privilege of doing business with the staffing company!

OSHA set the federal standard for “joint employer” in 2013 for staffing companies and their clients, but OSHA is a creation of congress which has the authority to regulate interstate commerce and as a federal agency has interstate jurisdiction. But how can New Jersey regulate business procedures in Ohio? It is going to be hard enough to get staffing company clients to give up private info just to be able to do business with a staffing company in New Jersey.

There are other quite burdensome regulations. Here is just one.  For all pay periods, and for each temporary employee, staffing companies are now required to solicit, gather, calculate, and include on either a paycheck “stub”, or a two-page form, a crush of voluminous information which is detailed immediately below.  The staffing company can “conveniently” download the two-page form at the NJ dept of labor website for each employee, fill out each form by hand! (The info changes too often to last more than two paychecks)

For each 2-page form or paycheck “stubneeds to record the following: Each place the employee worked during the previous two week period, each company street address, city, state, zip code, telephone number with appropriate extension #, dates worked at each company, hours worked at each, pay rate for each company (using complicated formula established by state), deductions for each, description of each deduction, and, the fee to be paid if the client company makes a direct hire using another complex formula created by the New Jersey Dept. of Labor.

It is amazing that the government of NJ can actually print out the two-page form and in the explanation have the chutzpah to say that staffing companies can either put the information on a check stub or use the two-page form. Given this and the law in its entirety, it is no wonder the industry claims the potential of an “existential threat.”

But, given this law’s “glorious” name rooted in our own sacred national documents, i.e., “The Temporary Workers Bill of Rights”, it will no doubt be good politics for the majority of citizens who do not know how little good it will do for the average temporary worker and how much harm it will do to the 100 registered staffing companies in the state.

Is There a Better Way to Help Temporary Workers?  In the first 4 paragraphs of this new law there is a very telling clue as to what would probably be a much better way to help them. In those introductory 4 paragraphs, they make certain “findings and declarations” as background and reasons for the law.

Paragraph 1a, they mention that there are 100 licensed staffing companies in the state, however, they also state there are “a large though unknown number of unlicensed temporary help service firms that operate outside the purview of law enforcement.(My emphasis). More on this below.

Paragraph 1b, although it is clearly not the intention of this law to increase the wages or benefits of temporary workers (See Paragraph 1d below)this paragraph states that full time temporary workers earn 41% less than workers in traditional settings and are less likely to receive employer sponsored pension and health benefits. (Note: The current NJ state minimum wage that applies to temporary workers is $14.13 per hour and on January 1st goes to $15 per hour)

Paragraph 1c If ever there were solid reasons for a law this paragraph gives many good ones. The problem is they are reasons for a different kind of law and having much to do with the first paragraph (1a).

But here are the reasons the NJ labor Dept gives:

These workers are particularly vulnerable to abuse of their labor rights, including unpaid wages, failure to pay for all hours worked, minimum wage and overtime violations, unsafe working conditions, unlawful deductions from pay for meals, transportation, equipment, and other items, as well as discriminatory practices.”

There is not one item here for which there is not a sufficient body of state and federal law. The problem seems to be enforcement. If you look at what they tell us in the very first paragraph about “a large, though unknown, number of unlicensed temporary help service firms that operate outside the purview of law enforcement.

I think this fact tells us a good share of the problem as well as a better start to a solution. It suggests a better law that aids the enforcement of existing law, because if the above violations are common among temporary workers, enforcement is obviously not happening now.

Paragraph 1d the full statement of this paragraph simply says this: “This act is intended to further protect the labor and employment rights of these workers.

To “protect the labor and employment rights” of temporary workers you first need to enforce existing law (See 1a and 1c above).  A excellent step in that direction, suggested by the above realities, would be to license every staffing company and bring every operation that is acting in that capacity, inside“ the purview of law enforcement”.  The good guys will welcome it.

As always, Stay Safe and Continue to Pray for Ukraine!

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