NJBIA has joined staffing agencies in filing an appeal in federal court of a district judge’s decision that refused to halt the implementation of New Jersey’s temporary worker law while legal challenges are pending about the constitutionality of the law, which is causing irreparable harm to the industry.
U.S. District Court Judge Christine O’Hearn denied the temporary injunction request made by the New Jersey Staffing Alliance, American Staffing Association and NJBIA last July.
The plaintiffs have filed an appeal with the 3rd U.S. Circuit Court of Appeals in a brief that includes statements from various New Jersey staffing agencies detailing how the law has cost them tens of millions of dollars in lost business from third-party clients and may soon force them to cease operations.
NJBIA and the other plaintiffs argue that the Temporary Workers Bill of Rights law, which took effect in August, is unconstitutional, overly vague and unworkable because it requires businesses that hire temp workers to pay them no less than the average rate of pay and the average cost of benefits, or cash equivalent, of its regular employees who are doing essentially the same work. In some cases, this could mean temp workers will be paid more than the regular employees of the business.
“Third-party clients are … declining to use staffing companies because their existing employees will not accept a temporary worker receiving higher wages than full-time employees of the third-party client are paid,” the legal brief states.
The Department of Labor & Workforce Development has proposed rules to provide guidance on the complex pay equity calculations, but NJBIA had contended the rules still fall short and need revisions. In written comments to the DOL last month, NJBIA Chief Government Affairs Officer Christopher Emigholz noted there is uncertainty about how seniority factors into calculations of the “average” pay and who the “comparable” regular workers are whose pay will be used to determine that average.
How to calculate the cost of “benefits” – health insurance, life insurance, disability insurance, paid time off and pension – provided to regular employees is also another sticking point.
In the case of health insurance, for example, the cost varies widely depending on family size and the benefit levels selected by employees. Determining what the average cost is for the purpose of incorporating that figure into a temp worker’s pay is unworkable.
“Third-party clients are unwilling to provide wage and benefit information necessary to make calculations required by the Legislation out of competitive concerns,” the plaintiffs state in their legal brief. “Clients will not utilize New Jersey staffing entities due to vagueness of the legislation and the joint and several liability imposed.”
The brief notes the devasting impact the law is having on staffing agencies. TeleSearch Staffing Solutions states its top 10 industrial clients producing almost $10 million in revenues will cancel its services, and that with this loss of revenues TeleSearch will not be able to continue operations, the brief says.
ProStaff Workforce Solutions is losing clients producing $8,700,000 in revenues, and with this loss it will close operations. Staffing Alternatives is losing clients producing over $50 million in revenues and United Temporary Services is losing clients producing $28 million in revenues.