On February 6th the New Jersey Governor, Phil Murphy signed into law a very controversial piece of legislation, of questionable value, with the somewhat inflated title of (the) “Temporary Workers Bill of Rights”. It will affect some 127,000, yet not all of the temporary workers in the state. It does not cover any other industries in New Jersey except Staffing, nor does any other state have a similar law.
Because of the unprecedented awkwardness in compliance with the new law, and its fundamental constitutional unfairness, on May 5th of this year, the New Jersey Staffing Alliance filed a lawsuit in federal court seeking a temporary restraining order to halt its implementation. This was a preliminary action, with the final goal of the suit being a permanent in junction against its implementation.
On May 18th we published a blog and a newsletter questioning the law and promising a follow up on the legal challenge and any other developments. We also asked the N.J. Alliance, just two days ago, for a contact person who would be able to provide us with any new information going forward.
This request was made just after last Wednesday’s denial by the federal court of the N.J Staffing Alliance’s request for a “temporary restraining order”. This ruling does not deny the ultimate goal of the lawsuit seeking a “permanent injunction”, so the case is ongoing. The “bar” is always quite high for the granting of a “temporary restraining order” because the plaintiff (N.J. Staffing Alliance) needed to demonstrate the likelihood of ultimate success in the main goal of the lawsuit, i.e., getting a permanent injunction against implementation of the law.
Although last Wednesday’s decision was a disappointment, the case is far from over. Already we have had personal input from staffing companies in two other states who were quite concerned about the probability of similar legislation in their own states. This opens up another legal avenue.
I am not an attorney, but this seems like the case in New Jersey could turn into a class action lawsuit involving scores or even hundreds of staffing companies throughout the country. Would this be an overreaction against what some might believe is more of a nuisance law? Or, is it such a serious legal issue that if it were to spread to other states, would not only be a threat to the Staffing Industry, but have serious implications for the entire business community? This is because the lawsuit argues against significant constitutional violations that are a threat to every business.
Most of the requirements of the new law are not a serious problem at all and some are simply unnecessary. For example, the new law requires that employees receive an annual statement of total earnings by February 1 of the following year. This is already required by long standing Federal law (W2’s, etc.) and the IRS has great enforcement abilities.
If this annual statement of earnings and deductions is being violated by some companies in New Jersey, the solution is not to have a new law targeting only the staffing industry but simply have the IRS enforce the quite effective existing one.
Another requirement is to give the employee an itemized list of the following: hours worked each day, pay rate for each hour, total earnings, and every deduction. Maybe overkill on the report of hours worked each day and the rate for each hour but temp workers might work at three different places in one week and each might have a different pay rate.
But compliance can be accomplished without too much difficulty (new pay stubs or new reporting forms to be programed into the company’s staffing software).
Another requirement of the new law needed some additional research into the reason for it. It requires the staffing company to inform the worker, in writing and in their own language, of the length of the job assignment. The reason given for this was that some assignments went on for years. The purpose of having a temp worker do the job was to avoid providing benefits.
I still have a problem understanding this. As an employee they would be entitled to unemployment insurance, workman’s comp, overtime, ability to get health benefits with subsidies (ACA), if necessary, etc.
Also, the staffing company’s client pays an additional premium (20%-40%) to the staffing company on top of the workers’ wage plus mandated benefits. So, what “cost of benefits”are they saving?
If the staffing company and the client (“Joint employers) are misclassifying the employees as an “independent contractors” to avoid paying routine benefits, including overtime, that would save a lot of money but is already seriously illegal. The Labor dept investigates these situations every day and assess fines, liquidated damages, compensation to workers for lost wages, etc.(Question) If the joint employers are violating the existing law now, then why would they obey a new law?
I am beginning to think this entire law is simply a public relations ploy to make it appear like the state is doing something great for “the little guy”, while doing very little. Notice the name of the law, “Temporary Workers Bill of Rights”. Sounds wonderful! Most everyone would agree, as the N. J. Governor Murphy said when he signed the bill into law, i.e.,that temporary workers “regardless of their race or status”, (should be) “afforded basic protections and treated with the dignity they deserve”. Agreed! Agreed! But there is a difference between treating people with dignity and pandering to them.
This brings us to the much more serious, unfair, and unconstitutional core of this law that targets only staffing companies. They pompously call it a “Bill of Rights”, yetas I read the original 10 amendments to our federal Constitution that make up our own “Bill of Rights”, I do not find any that give something by taking it away from someone else. Nor do I find trivial and duplicated rights in that Document like most of the “rights” in the “Temporary Workers Bill of Rights”.
As we learned in the famous Supreme Court case of “Citizens United”, corporations are juridical persons with constitutional rights. So, a business has a right to its own confidential information in all matters that do not infringe on the rights of others or that others may have some right to know.
For example, a government agency in charge of environmental protection would have the right to know what a business was discharging into the ground water or a nearby stream. Likewise, an employee would have the right to know if a business carried Workman’s Compensation Insurance.
But, in this New Jersey case, the state is demanding wide public broadcasting of private information that there is absolutely no need to be made public.
In trying to better understand this myself, I was thinking through this with an example. So, If a company hires a person for a job and pays him or her the minimum wage, which in NJ is now $14.13 per hour, and the employee understands their job to be that the company will assign them to do temporary work at one or more companies,do the employees have the right to know what the staffing company is charging those companies?
Do the employees also need to know what the client pays their own permanent employees plus the cost of their health insurance and other benefits? This NJ “Bill of Rights” says that the employees are entitled to both as a matter of right.
And what about the client company being mandated to turn over to the staffing company and thence to the temp employees, the pay rates and total benefits cost of their permanent employees?
And why should all other companies in other industries in the state not be required to report to their employees, their total payroll cost and their total gross income, to let their own employees know, as in the new staffing law, how much their companies are making from their labor?
Another question would be: Is there any harm that could be done to staffing companies, by making this very misleading information available to their employees? I say “misleading” because the NJ law requires only the gross charges to the client for the temp employees’ services. So, the comparison of what the employee is paid to what the staffing company charged the client for their services is a false one.
If we look at the average net profit of staffing companies in general, it ranges from 3% to 10% and for the largest companies the average is 5%. So, if an accurate comparison of what the staffing company earns from each employee is not the difference between what the employee is paid and what the staffing company charges, but the actual earnings range between 3% and 10%.
The probable harm caused in labor relations by requiring only the gross profit to be reported, in every single paycheck issued, is obvious.
But the real harm being done by this law is both the prejudicial singling out of the staffing industry and the unconstitutional demand to reveal unnecessary, private, and damaging information via an awkward and burdensome compliance process.
Because this law has such a lofty title in “Temporary Workers Bill of Rights” it will be very attractive to politicians in other states to propose similar legislation to score political points without any cost to their state governments.
I believe the case is important enough to become a class action law suit on behalf of the entire staffing industry nationwide with support from every staffing company.
As always, Stay Safe and continue to pray for Ukraine.