A bill in New Jersey, S. 511, could add several regulations to staffing firms and client companies in that state. It focuses on industrial contingent workers, not administrative or professional. The bill includes a provision for equal pay between contingents and directly employed workers, and some fear it could lead to increased litigation and make it more difficult for staffing firms and client companies.
A companion bill was approved by the New Jersey Assembly in the final week of June. The state Senate had approved S. 511, but a last-minute procedural issue meant the state Senate must vote again for the bill to be approved.
“With apologies, due to a technical procedure, S511/A1474 is required to have another vote and will have one at our next voting session,” New Jersey State Sen. Joe Cryan D-Union wrote in a tweet. Cryan is the bill’s sponsor.
The New Jersey Staffing Alliance has been working on efforts to amend the bill since last year with support from the American Staffing Association, says Toby Malara, VP, government relations, at the ASA.
Comparable pay and benefits language in the bill is the most concerning aspect, Malara says. Clients would have to turn over confidential data about their own pay and benefits to staffing firms in order to comply with the law.
“To put a requirement on a staffing company where they have to rely on their clients sharing propriety information is incredibly unfair,” he says.
Generally, information on employee pay is protected. Companies are typically not required to share that data. Under the legislation, staffing firms will be forced to work only with clients that provide this information; otherwise, they will be in violation of the law.
“The rationale behind the language is there’s an assumption that companies are using temporary employees to save money, and that’s not the case,” Malara says.
Pay can differ for a variety of reasons, and contingent workers are not necessarily paid less — they can be paid more than directly hired workers. A temporary worker may be on a job site because they are a perfect fit, or a temporary worker may come from a long distance to the job site and receive $2 or $3 more per hour to entice them to take the job.
Malara also says the bill creates joint liability concerns and could prompt litigation.
New Jersey Gov. Phil Murphy indicated he may issue a conditional veto on the legislation, in which he would offer the bill with amendments back to the legislature for consideration, Malara said. That means there could still be changes to the legislation.
The New Jersey Business and Industry Association also raised concerns about the bill, including what it says are burdensome requirements and making client companies liable if a staffing firm violated a wage payment provision of the bill. The organization also took issue with the legislation’s “four-hour reporting pay” requirement for contingent workers who report to a worksite but find no work upon arrival. Typically, employees receive a minimum reporting pay of one hour.
New Jersey’s legislation seems to emulate European rules regarding equal pay for contingent workers, notes Fiona Coombe, director of legal and regulatory research at SIA.
“However, the bill is particularly onerous in the requirement to keep substantial records for a period of six years and to provide information to workers,” Coombe says. “The obligations include providing a work verification form to day laborers for every day worked and an annual earnings summary in addition to the information about work and pay.”
Coombe also says the bill seems to go beyond protection for workers by overriding the commercial contractual relationship between the agency and its client.
“It creates penalties for third-party clients who fail to pay the agency for the workers’ services and requires an agency to disclose the placement fee charged for a worker to that worker,” she says.
Janette Levey, an attorney specializing in the workforce ecosystem, says that when looking at the big picture, laws are already on the books to protect contingent workers. The question is, why aren’t those doing what they are supposed to?
The concept of joint employment already exists as well, though Levey says client companies may ramp up use of indemnification provisions if the New Jersey legislation receives approval as is. Right now, though, it’s hard to say if the bill will bring increased litigation.
The provisions requiring contingent workers to receive the same benefits as direct hires are not practicable as written, according to Levey. Contingent workers by definition often go from one assignment to another and, therefore, from one client to another. The benefits that each client offers their direct hires differ from one company to another.
“Absolutely, I feel that workers especially in this sector, they do need protections — and there are abuses going on, and those need to be addressed,” she says. “How to address that is another story.”
A balance must be struck between workers and business interests, and Levey says she isn’t sure this legislation does that.