What employers need to know about the Temporary Workers' Bill of Rights

On Feb. 6, 2023, New Jersey Gov. Phil Murphy signed into law the Temporary Workers’ Bill of Rights to establish “necessary guidelines for temporary help service firms and third-party clients to ensure that these workers are afforded basic protections.” 

The Temporary Workers’ Bill of Rights brings new employment protections to an estimated 130,000 temporary workers in New Jersey at a time when employers are increasingly turning to staffing firms to outsource job functions and fill gaps in their workforce. The new law imposes onerous requirements on temporary staffing firms as well as the third-party clients that retain such workers. This article summarizes key takeaways from the new law.

Scope of coverage

The new law broadly covers all “temporary help service firms” that are located, operate or transact business in New Jersey. The law defines “temporary help service firm” to mean: “any person or entity who operates a business which consists of employing individuals directly or indirectly for the purpose of assigning the employed individuals to assist the firm’s customers in the handling of the customers’ temporary, excess or special workloads, and who, in addition to the payment of wages and salaries to the employed individuals, pays federal social security taxes and state and federal unemployment insurance; carries workers’ compensation insurance as required by state law; and sustains responsibility for the actions of the employed individuals while they render services to the firm’s customers.” 

One aspect of the new law eliciting a sigh of relief from the staffing industry is the law’s limited (though still broad) coverage. Under the law, only temporary laborers in certain occupations with “the greatest risk of exploitation” are entitled to the law’s benefits and protections. Specifically, application of the new law is limited to “temporary laborers” placed in an assignment by a covered temporary help service firm to perform work in any of the following occupational categories (as designated by the U.S. Bureau of Labor Statistics):

• Food preparation and serving (35-0000 Food Preparation and Serving Related Occupations).
• Production such as laundry and dry cleaning, food processing, textile, and wood workers (51-0000 Production Occupations).
• Construction (47-30000 Helpers, Construction Trades; 47-2060 Construction Laborers).
• Transportation and moving such as drivers, parking attendants and material moving (53-0000 Transportation and Material Moving Occupations).
• Personal care and service, such as amusement, entertainment and dressing room attendants (39-0000 Personal Care and Service Occupations).
• Building and grounds cleaning and maintenance such as janitors, cleaners and landscaping workers (37-0000 Building and Grounds Cleaning and Maintenance Occupations).
• Protective service such as security guards and crossing guards (33-9000 Other Protective Service Workers).
• Installation, maintenance and repair (49-0000 Installation, Maintenance, and Repair Occupations).
• Any successor categories as the Bureau of Labor Statistics may designate.

Assignment notification

The New Jersey Department of Labor and Workforce Development (NJDOL) recently issued the Temporary Laborer Assignment Notification form that all temporary help service firms must now complete and provide to each covered temporary laborer upon assignment to a temporary position. The notice requirement, which went into effect on May 7, 2023, provides temporary workers with specifics about the assignment including the name, address and contact information of the temporary staffing agency and the third-party employer; the applicable workers’ compensation carrier; information regarding paid sick and safe leave; the temporary worker’s assigned worksite; the nature of the work and description of the position; schedule; wages; and length of the assignment. The form also details, among other things, whether meals will be provided, whether licenses, equipment or special clothing will be needed, and whether training is provided. Failure to provide the requisite notice may result in a civil penalty for the temporary help service firm of between $500 and $1,000 for each violation. 

Additional notification requirements that are already in effect include the following: 

• In the event of a change in the schedule, shift or location of a multi-day assignment, the temporary help service firm must provide no less than 48 hours’ notice to the temporary worker in advance of the change when possible.
• No temporary help service firm will be permitted to send any temporary worker to an assignment where a strike, a lockout or other labor dispute exists without providing the temporary laborer with a written statement informing the temporary laborer of the existence of such strike, lockout or other labor dispute and the temporary laborer’s right to refuse the assignment.
• If the temporary laborer is not placed with a third-party client or otherwise contracted to work for that day, the temporary help service firm must, upon request, provide the temporary worker with a signed confirmation that the temporary worker sought work. 

Applicability to assignments outside of New Jersey

According to guidance issued by the NJDOL, the new law’s requirements apply to all temporary laborers who are assigned by a covered temporary help service firm to work in one of the above designated classification placements, regardless of whether the assignment is outside of New Jersey. As confirmed in an FAQ from the NJDOL:

Q: “I’m the owner of a temporary help service firm located in New Jersey. Must I comply with the requirements of the new law with regard to a temporary laborer if I’m assigning that temporary laborer to work for a third-party client located in New York?”

A: “Yes, you must comply with all of the requirements of the new law with regard to the temporary laborer who you are assigning to work for a third-party client in New York.” 

Therefore, every time that a covered temporary help service firm agrees to send a temporary laborer to work in a designated classification placement, it must comply with the requirements of the Temporary Workers’ Bill of Rights, regardless of the location of the assignment. 

Equal pay and benefits for substantially similar work

With respect to pay transparency and pay equity, the new law seeks to align temporary workers with similarly situated regular employees of the worksite employer. In this regard, as of Aug. 5, 2023, the law requires that covered temporary laborers must not be paid less than the average rate of pay and average cost of benefits, or the cash equivalent, of employees of the third-party client performing the same or substantially similar work. Substantially similar work means jobs which require equal skill, effort and responsibility, and which are performed under similar working conditions for the third-party client at the time the temporary laborer is assigned to work at the third-party client’s worksite. Notably, the third-party client and the temporary help service firm are jointly and severally liable for violations of this equal pay requirement. 

This equal pay/benefit requirement will likely be difficult to implement, especially given that, at this time, the NJDOL guidance does not address how to calculate the average rate of pay and cash equivalent of benefits. In addition, the law does not take into account the fact that employers often set compensation based on factors such as seniority and length of service, which are generally inapplicable to temporary workers. As a result of this equal pay/benefit requirement, third-party clients may no longer be able to retain temporary workers for less pay than their full-time workers who perform similar job duties, possibly disincentivizing the use of staffing firms altogether. 

Itemized statement requirement and wage deductions

Beginning Aug. 7, 2023, a temporary help service firm will need to provide written notice to all temporary laborers, including those employed on a day-to-day basis, of their right to have the staffing firm hold their daily wages and request biweekly payments via check, cash or direct deposit. In addition, temporary help service firms will soon be required to provide each covered temporary laborer with a detailed itemized statement that includes: 

• The name, address and telephone number of each third-party client at which the temporary worker worked.
• The number of hours worked by the temporary worker at each third-party client each day during the pay period. 
• The rate of pay for each hour worked, including any premium rate or bonus. 
• The total pay period earnings.
• The amount of each deduction from the temporary worker’s compensation by the temporary help service firm, and the reason for each deduction.

The temporary help service firm must also include in the wage statement “the maximum amount of a fee that shall be charged to a third-party client by the temporary help service firm, and the total amount of actual charges to the third-party client for the worker during each pay period compared to the total compensation cost for the temporary laborer, including costs of any benefits provided.” The temporary help service firm and third-party client can be held jointly and severally liable for failing to include this information.

Deductions

Under the new law, a covered temporary help service firm will be permitted to deduct a temporary laborer’s food and equipment from wages, provided that doing so does not cause the worker’s hourly wage to fall below minimum wage. Neither the temporary help service firm nor the third-party client will be permitted to charge temporary workers for: (1) transportation fees to and from a worksite, (2) consumer report expenses, (3) a criminal background check, or (4) a drug test. Furthermore, the new law prohibits a third-party client from withholding or diverting a temporary worker’s wages for any reason.

Work verification

For each temporary laborer who is contracted to work a single day, the third-party client must, at the end of the workday, provide the temporary laborer with a work verification form that contains the date, the temporary laborer’s name, the work location and the number of hours worked. Failure to do so could result in civil penalties of up to $500 for each violation.

Certification requirements

Effective Aug. 5, 2023, covered temporary help service firms must be certified by the director of the Division of Consumer Affairs (DCA) within the Department of Law and Public Safety to make “designated classification placements.” Moreover, temporary help service firms must obtain a $200,000 surety bond issued by a surety company admitted to do business in New Jersey. Failure to comply with this registration requirement will subject staffing firms to civil penalties up to $5,000 per day, suspension or debarment. Third-party clients could also face penalties for entering into a contract for the assignment of a temporary laborer with a temporary help service firm that has not registered as required by the new law. While a temporary help service firm is required to provide proof of valid registration at the time of entering into a contract, the burden is on the third-party client to verify the firm’s registration status: (1) before entering into a contract, and (2) on March 1 and Sept. 1 of each year. 

No restrictions from acceptance of a permanent position with the third-party client

A temporary help service firm may not restrict a third-party client from offering employment to a temporary laborer, nor restrict a temporary laborer from accepting a permanent position with a third-party client. The temporary help service firm may, however, charge a placement fee to the third-party client for employing a temporary laborer. Any such placement fee is capped at “the equivalent of the total daily commission rate the temporary help service firm would have received over a 60-day period, reduced by the equivalent of the daily commission rate the temporary help service firm would have received for each day the worker has performed work for the temporary help service firm in the preceding 12 months.” 

Record-keeping requirements

Covered temporary help service firms must keep and maintain all records of each temporary laborer’s assignment for six years. Staffing firms must make these records, as well as the number of hours billed to a third-party client, available to a temporary laborer within five days of the worker’s written request.

Private cause of action

In addition to filing a complaint with NJDOL, the law also provides temporary laborers with a private cause of action to bring a civil action to the New Jersey Superior Court within six years of the temporary worker’s employment with the staffing agency, or within six years of the end of the temporary worker’s contract with a third-party client. 

Anti-retaliation provisions

Effective May 7, 2023, the termination, discipline or other adverse action against a covered temporary laborer within 90 days of the temporary laborer’s exercise of rights under the new law shall raise a rebuttable presumption of retaliation for the exercise of those rights.

Read more: How HR departments can traverse the complexities of the FMLA

Next steps

The Temporary Workers’ Bill of Rights is set to take effect on Aug. 5, 2023, but certain provisions, including the requirement to use the new NJDOL issued Temporary Laborer Assignment Notification form and the anti-retaliation provisions, went into effect on May 7, 2023. 

Employers engaging temporary staffing firms should consider conducting a cost-benefit analysis to determine whether the benefits outweigh the burdens imposed by the new law. Temporary service firms and employers utilizing them should review their staffing agreements, hiring practices and policies to ensure that both parties are satisfying their statutory obligations. In addition, staffing firms and third-party clients should cooperate to conduct a pay equity analysis to ensure compliance with the law’s equal pay/benefit mandate for temporary laborers. Staffing firms and third-party clients should also train personnel about the law’s anti-retaliation protections to avoid running afoul of those provisions.

Alexa E. Miller is a partner with Faegre Drinker Biddle & Reath in Florham Park. She works on labor and employment law, regularly counseling employers on planning workplace restructurings, complying with federal and state drug testing requirements and cannabis laws, structuring diversity, equity and inclusion (DEI) goals, and other topics.