Questions remain: As temp workers’ Bill of Rights kicks in, employment lawyers say staffing agencies and others face many issues

Local labor lawyers expect New Jersey’s new so-called “Temporary Workers’ Bill of Rights” to have an effect that’s long-lasting.

The legislation, which Gov. Phil Murphy signed back in February, was adopted into law this month. In these past months, the firms involved in the employment of the state’s estimated  127,000 temporary workers have been weighing the impact of this law, which Garden State leaders saw as providing new assurances that temporary workers would see fair treatment.

Grace Byrd. (Sills Cummis & Gross)

Grace Byrd, of counsel to the Sills Cummis & Gross Employment and Labor Practice Group, described this as a “groundbreaking” overhaul in New Jersey — and nationwide, as few similar examples exist of these changes in compensation, benefits and protections for temporary workers.

From conversations Byrd is having from the management-side labor and employment counsel perspective, temporary staffing agencies and the companies that use their services know they have a host of new compliance requirements to prepare for.

“It’s still hard to assess what the full ramifications of the law will be,” Byrd said. “But, in terms of what we’re hearing from clients … they expect it does create significant impacts for them. So, they’ve really been taking time ahead of many of the different components of the law going into effect to assess their procedures and practices.”

Nobody wants to be first to run afoul of the new law. The proposed penalties for noncompliance are fines of between $500 to $5,000 per violation — with each worker in a temporary staffing role acting as a multiplier if an audit reveals noncompliance. There’s a framework for private legal actions, as well as class action lawsuits, and a statute of limitations that stretches back six years.

Pat McGovern. (Genova Burns)

Outside of the penalties, Pat McGovern, a partner at Genova Burns, points out that there are also going to be expenses incurred in implementing the disclosure requirements and other changes for businesses that deal with temporary staffing.

“This is going to be onerous and expensive for them to comply with,” he said. “The basic issue is that, if a business needs more people on staff right away, now they have to send agencies all this information first, have them crunch the numbers and then generate a notification that lays out all that information. Meanwhile, that client has probably sourced its staffing needs elsewhere.”

McGovern and clients he has spoken to expect temporary staffing agencies to lose work. He adds that this might be the intent, given the recent emphasis of New Jersey leaders on the misclassification of workers and bolstering protections for what has been described as a vulnerable workforce.

“In fact, in the proposed regulations, they’re not even hiding it,” he said. “It’s mentioned that the compliance efforts required by the change might be so onerous that some companies will just decide it’s not worth the effort.”

Believing the changes to have the potential to lead to a paralysis of the temporary staffing industry, the New Jersey Staffing Alliance proactively filed a lawsuit to strike the bill down before it went into effect. But, in late July, a federal judge dismissed the legal action. With that decision, the bill’s major provisions took effect last Saturday.

Labor and employment lawyers had two weeks prior to that deadline to review proposed regulations. The full regulations aren’t expected to be published until later in August and will possibly be finalized in October.

McGovern’s clients have been clamoring for guidance, and uncertain of how to proceed, given the potential of modifications between the proposed and adopted regulations. And they’re not feeling optimistic about what it all means for them.

“They’re saying, ‘We want to stay in business, but we don’t want to get hit with violations, and there’s too much uncertainty now,’” McGovern said. “And the burden is on them. It’s expressly stated in the proposed regulations: The fact that a client is not cooperating with efforts on the part of the temporary staffing agency to comply is not itself a defense. And that’s another indicator that this is becoming risky business.”

In other words, if an agency is going to continue to do business with a client utilizing its temporary staffing services, it’d better be certain that client has personnel in place who are aware of what the compliance requirements are, McGovern said.

“Which means those businesses, as well as the (temporary) staffing agencies, should be ramping up to get knowledgeable professionals in position there,” he added. “But my sense is — that’s not happening yet.”

Byrd added that some companies might not be inclined to think about this at all right now.

“While staffing agencies all definitely have this on their radar, clients who use third-party staffing for seasonal needs that haven’t come into effect this year yet — such as retail clients, the hospitality sector or moving or trucking industries — they might not be focused on the new law and its impact on the business,” she said.

In its February announcement of the bill’s passage, Gov. Phil Murphy’s office described the change as helping temporary workers secure the fair wages and protections they are entitled to. That would involve asking temporary help services to provide workers with “common-sense information detailing key terms of employment in the workers’ primary languages, such as hours worked and rate of pay.”

The bill protects workers from being barred from accepting another position with a permanent employer or a third-party client. It also forbids temporary staffing agencies or their clients from retaliating against any temporary worker by firing them or treating them unfairly in any other way for exercising their legal rights.

Among the other changes is a ban on pay deductions for meals and equipment that would reduce temporary workers’ pay below minimum wage.

New Jersey lawmakers, the NAACP, New Jersey Policy Perspective, the AFL-CIO and other unions and labor groups have issued statements in support of the change.

McGovern’s expressed take is one of welcoming protections against cases of employer abuse. He also argues that there’s a cost associated with denying an entryway to work for some individuals who perhaps don’t want to end up in full-time employment.

For now, McGovern said clients involved in temporary staffing intend to try to stay in business while operating under “reasonable interpretations” of the new law as it’s rolled out.

“For now, that’s going to be the best they can do,” he said.