New Jersey businesses that utilize staffing agencies to hire temporary workers are subject to burdensome requirements and possibly lawsuits under a bill that gets a re-vote by the Senate in a special session on Monday.
NJBIA had long opposed bill A-1474/S-511, as it makes third-party companies liable if temp agencies they use violate certain provisions of the legislation.
Although the bill passed both houses by relatively narrow margins in June, it never got to Gov. Phil Murphy’s desk due to a procedural error where the Senate and Assembly version of the bill were never properly combined.
“This is a second chance for our lawmakers in the Senate to get this right and not put more burdens on New Jersey businesses,” said NJBIA Director of Government Affairs Alexis Bailey.
“While the intent of the bill is to create additional protections for temporary workers, the provisions in it range from concerning to completely unworkable for businesses which are often challenged enough to maintain their workforces. It’s important that the policymakers who voted ‘yes’ previously truly know the ramifications before re-casting their votes.”
Problematic Provisions
Troublesome legal remedies contained in A-1474/S-511 include a requirement for temporary workers to receive the same compensation and benefits as their equivalent employee counterparts, a provision that Bailey said was “unworkable.”
“Benefits can encompass a wide range of offerings such as health insurance, 401(k) matches, life insurance policies and other unique features of compensation packages,” Bailey said. “Since temporary laborers are not employees of third-party businesses, they cannot be directly enrolled into the various types of benefit plans that may be provided to a third-party business’ permanent workforce.
“Additionally, temporary help service firms assign temporary laborers to various workplaces. It would not be administratively possible for them to administer these equivalent, extensive benefits packages based on offerings that will vary widely across companies.”
NJBIA also takes issue with the bill’s “four-hour reporting pay” requirement for temporary workers who are requested to report to a worksite but find no work available upon arrival.
“This reporting pay requirement is not consistent with current statute, which requires other types of employees to receive a minimum of one hour of reporting pay if they report to a worksite and their place of business is closed,” Bailey said.
The bill also calls for a “private right of action” against third-party companies that could lead to expensive class-action lawsuits with the potential for large settlements that drive up the cost of doing business.
“The inclusion of a private right-of-action often leads to costly lawsuits with little merit against employers, even for minor, inadvertent violations,” Bailey said. “The bill also provides for liquidated damages and attorneys’ fees, which will encourage class action suits with the goal of large settlement payouts.”
While narrower in scope than the original draft, the bill still includes joint legal liability between third-party businesses and temporary help service firms for certain violations, Bailey said.
This provision, coupled with the extensive legal remedies, will lead to the possibility of litigation for third-party businesses using workers from a properly registered temporary help service firm if the temporary help service firm commits violations that could be out of their control.
Pathway to Disruption
Moreover, Bailey said, the Commissioner of the Department of Labor already has extensive authority to penalize bad actors through current statutes.
“It’s also important to remember that temporary laborers often choose temporary work arrangements for the flexibility these roles provide,” she said. “Many businesses rely on these types of work arrangements to fill temporary gaps in their labor force.
“We respect the sponsors’ intent to provide more transparency and consistency for temporary laborers. But this legislation will disrupt and jeopardize the necessary relationship between third-party businesses and temporary help service firms.
“As businesses continue to face workforce shortages across industries, now is not the time to advance this legislation without addressing these glaring concerns,” Bailey said.
