Legal Update
Jul 26, 2023
New Jersey Temporary Workers’ Bill of Rights: Regulations Issued
Seyfarth Synopsis: The New Jersey Department of Labor and Workforce Development issued its proposed regulations for New Jersey’s Temporary Workers’ Bill of Rights. The proposed regulations provide some clarity on several provisions. However, these proposed regulations leave several areas ambiguous, particularly regarding the calculation of benefits for pay equity, and the scope of the law itself. Temporary help service firms and third-party clients should diligently monitor new developments to ensure compliance amid the law's complexities and uncertainties.
The Garden State is forming the contours of its ambitious new law regulating temporary help service firms. Indeed, in the last few months the notice and retaliation provisions went into effect, a mandatory notice form was issued, FAQs compiled, and now the New Jersey Department of Labor and Workforce Development has proposed regulations.[1] Briefly, the proposed regulations provide some clarity, but many provisions remain ambiguous. For example, the proposed regulations do not engage some of the biggest questions regarding the law’s scope, including issues with the Bureau of Labor Statistics’ Standard Occupational Classification system and the law’s supposed extraterritoriality.
Pay Equity and Placement Fees
The cornerstone of the Temporary Workers’ Bill of Rights (TWBR) is the pay equity provision. The law’s demand for equal pay for substantially similar work, however, comes with challenges. The calculation of the average cost of benefits is not clearly defined, making compliance difficult. For example, after several businesses called for greater detail surrounding benefit calculations, the regulations merely state that “benefits” means “fringe benefits, including but not limited to, health insurance, life insurance, disability insurance, paid time off (including vacation, holidays, personal leave and sick leave in excess of what is required by law) training, and pension.” The regulations go on to say third-party clients should provide “a listing of the hourly rate of pay and cost per hour of benefits for each employee of the third-party client who the third-party client determines would be a comparator employee.” The proposed regulations do not clarify the precise contours of the benefit calculations, potentially leaving firms open to liability. Further guidance on this issue is desperately needed.
The lack of clarity with respect to benefit calculations also implicates placement fees. Under the TWBR, a temporary help service firm cannot restrict the right of a third-party client to offer employment to a temporary laborer or restrict the right of a temporary laborer to accept a permanent position for any other employment. The temporary help service firm may charge a placement fee, but the TWBR did not provide clear guidance on how such placement fee should be calculated. The regulations provide step-by-step instructions to calculate the placement fee, but those instructions require temporary help service firms to calculate “the daily cost” of benefits provided to the temporary laborer during the period of the temporary laborer’s assignment with the third-party client. Given the ambiguities above with respect to the scope of benefits, calculation of the placement fee is likewise unclear.
The proposed regulations provide some clarification to help firms determine whether a temporary laborer and third-party client employee are performing substantially similar work. Among a dozen points, the regulations make clear that “working conditions” means the physical surroundings and hazards but does not include job shifts. Additionally, “skill” is measured by factors such as the experience, ability, education, and training required to perform a job.
Notice Requirements and Anti-Retaliation Measures
As a reminder, the notice and retaliation provisions went into effect on May 7, 2023. The law and proposed regulations impose strict notice and anti-retaliation requirements on temporary help service firms. The regulations make plain that all temporary help service firms must use the state authorized form. The regulations state “[t]he Commissioner will not accept applications from temporary help service firms for approval of other assignment notification statement forms.” Therefore, temporary help service firms ought to use that form.
The proposed regulations also indicate, as many have suspected, that for multi-day assignments a temporary help service firm is only required to provide the assignment notification statement to the temporary laborer on the first day of the assignment and on any day that any of the terms listed on the assignment notification statement are changed.
The detailed wage notice to temporary workers and the comprehensive prohibition of retaliatory actions significantly strengthen protections for temporary workers. However, the proposed regulations might have further clarified the practical aspects of these requirements, such as detailing methods for recording receipt, like “read receipts” on emails, and how the presumption of retaliation might be rebutted.
Obligations of Third-Party Clients
The law requires third-party client to remit certain information to the temporary help service firm within seven days of the last day of the workweek worked by a temporary laborer. The regulations make clear that a third-party client’s failure to remit the requisite information will not constitute a violation “when the third-party client has been precluded from submitting those time records for reasons beyond its control.” It is unclear from the regulations what kinds of circumstances would be “beyond [the] control” of third-party clients. That said, third-party clients need to tread carefully as each violation could result in penalties of up to $500.
Clarification on Penalties
The proposed regulations describe the criteria the Commissioner will use to determine administrative penalties. The Commissioner will consider (i) the seriousness of the violation; (ii) past history of violations; (iii) the good faith of the temporary help service firm or third-party client; (iv) the size of the business; and (v) any other factors the Commissioner deems appropriate.
A Note About the FAQs
The FAQs provide helpful information every temporary help service firm in New Jersey should know about. For example, temporary help service firms must comply with all of the requirements of the new law with regard to the temporary laborer who is assigned to work for a third-party client in New York. Additionally, the FAQs indicate firms that do not know the length of an assignment do not need to specify the length of the assignment on the notification form. Temporary help service firms and third-party clients should review the FAQs for additional pertinent information.
The Law is Subject to Ongoing Litigation
As of the time of writing, a federal court in New Jersey is considering a temporary restraining order to delay implementation of the remaining provisions of the law. The plaintiffs in that case, the New Jersey Staffing Alliance, New Jersey Business and Industry Association, and American Staffing Association challenges the validity of the law and argues the enactment violates the dormant Commerce Clause and the Privileges and Immunities Clause under the United States Constitution, among other things. Temporary help service firms should keep abreast of developments in this case.
Concluding Thoughts
Overall, the TWBR and its proposed regulations offer a remarkable extension of rights and protections to temporary laborers in New Jersey. However, several areas might have benefited from greater clarification in the regulations, such as the scope of the law, calculation of benefits for wage parity, and details of joint liability in private lawsuits.
In the meantime, it is advisable for all temporary help service firms and third-party clients to closely monitor any new developments and diligently implement the new requirements. Legal consultation should be sought to ensure compliance with the law, and to navigate the potential complexities and uncertainties surrounding its application.
The Department has provided a 60-day comment period for this notice of proposal. To the extent you are interested in submitting comments, Seyfarth Shaw maintains a deep bench of New Jersey admitted labor & employment attorneys. Please reach out to your Seyfarth contact for further guidance.
[1] The Department proposed regulations for Sections 1 through 7, and Section 10 of the Temporary Workers’ Bill of Rights. According to the Department’s proposed rules, the Division of Consumer Affairs, within the Department of Law and Public Safety, which is responsible for enforcing other sections of the Temporary Workers’ Bill of Rights, will be promulgating its own rules to implement those sections of the law.