Staffing agencies continue fighting New Jersey’s temporary worker protections

Staffing agencies fighting New Jersey’s landmark law providing temporary workers with sweeping new protections have appealed to a federal court, maintaining the law is too vague to interpret and implement.

In a brief filed in the U.S. Third Circuit Court of Appeals Monday, the agencies say a federal district court judge erred in her July decision that rejected staffing agencies’ claims the law is unconstitutional, vague, and “unreasonably exercises police power.”

It’s the latest filing in the ongoing legal battle between the state Labor Department and the New Jersey Staffing Alliance, New Jersey Business and Industry Association, and American Staffing Association — groups that lobbied aggressively against the bill for years, warning it would be a fatal blow to staffing agencies.

The companies call New Jersey’s law “indecipherable” and its impact on the state economy and the companies “decimating” and “devastating.”

“The Legislation will drive businesses from the state, decimate New Jersey temporary staffing providers and as a result, hurt temporary workers,” the lawsuit states.

Gov. Phil Murphy signed the “Temp Worker Bill of Rights” into law in February, after years of advocacy from immigration and labor activists. The law created protections from retaliatory employment actions, unsafe working conditions, and pay deductions for meals and transportation, as well as what supporters call basic workers’ rights, like providing work assignments in an employee’s native language and notice of schedule changes.

It took effect in August, but it’s unclear which provisions have been implemented as the Department of Labor continues to finalize regulations. About 127,000 temporary employees work at nearly 100 staffing agencies in New Jersey.

Make the Road New Jersey, an immigrant and labor advocacy group, led the years-long battle to push the legislation to passage.

Garrett O’Connor, the group’s director of worker organization and policy, called the companies’ brief a “desperate attempt by the race-to-the-bottom staffing agencies to stop workers from maintaining the rights they’ve already won.”

“The current law brings justice and fairness to our essential workers and finally holds lawless employers to account,” O’Connor said. “No law-abiding business should fear that.  Change is here, and the staffing industry — and their multinational corporate clients — need to accept that.”

A costly law?

The staffing agencies fighting the law say it has spawned economic losses that will cause them irreparable harm. They want a judge to block its enforcement.

In their brief this week, they included statements from 12 companies claiming the new law cost them millions.

Two River Benefits Consultants CEO David Koch said his company’s commissions fell 33% in the first five months of the year, compared to 2022. Many clients have discontinued some services because of the law and the “guesswork” it requires, he said. And he said he canceled his building lease and is opening a new business in South Carolina because of the new law’s “difficult provisions.”

TeleSearch claims it may close because its top 10 industrial clients, worth $10 million in revenue, will cancel services. Staffing Alternatives expects to lose clients worth over $50 million in revenue, and United Temporary Services will lose clients producing $28 million in revenue.

They blame a provision in the new law requiring agencies to give temporary workers pay and benefits equal to their full-time counterparts doing similar work. Many temporary workers remain at the same job site for years, a so-called “perma-temp” position where workers earn less than their full-time counterparts and don’t get benefits.

The companies also argue the law violates interstate commerce laws by requiring other states to comply with New Jersey’s temporary worker protections. That could drive neighboring states to enact retaliatory legislation, and a “price war for laborers will result,” the companies charge.

And they called New Jersey’s law too vague to interpret, rendering it unconstitutional. It requires employers to provide benefits equivalent to what a full-time worker receives, but staffing agencies say there’s no way to calculate that or understand what “benefits” encapsulates.

After agencies’ attorneys asked in court in July whether pay and benefit calculations should include the time of work, merit, workplace location, travel, education, and more, the district court judge said the plaintiffs were “tacitly admitting that they know exactly the sort of relevant factors” to consider. She also directed the plaintiffs to wait until the Department of Labor released proposed regulations for the law later that month.

But in their latest brief, the agencies argued the long list of what should be included and which benefits — health and life insurance, paid time off, vacation, disability, 401K or other retirement funds — “creates an open-ended list of potential benefits.”

“Even sophisticated employers in the temporary staffing industry lack understanding of these vague, contradictory provisions,” the agencies argued.

No standard exists for how the benefits, whichever are included, are converted to the cash equivalent required under current law. The agencies call it “mathematically impossible” to calculate the cash equivalent, considering the many various benefits packages available. Some benefits start after a certain period, like pension or accrued vacation time, and they say there’s no explanation for how to account for this.

Because agencies say they can’t uniformly comply with these “standardless” provisions, they warned it would lead to arbitrary enforcement from the Department of Labor.

Companies can be fined thousands for failure to follow the law’s regulations. That leads to an unreasonable exercise of police power, because it imposes “unusual and unnecessary restrictions on lawful businesses,” the agencies said.