With a spotlight thrown on gender pay equity in recent years, another group of workers is coming to the attention of lawmakers as needing protection: temporary workers. “Temporary workers have been treated differently for far too long and have been forced to deal with a multitude of injustices, all while carrying out essential work and trying to provide for their families,” state Assemblywoman Yvonne Lopez said on the signing into law of New Jersey’s so-called “Temp Worker Bill of Rights.
Starting Aug. 5, New Jersey temporary workers in certain sectors will be entitled to the same average rate of pay as a permanent employee of the third-party client who performs the same or substantially similar work for the employer at the same time the temporary worker is assigned to the position.
A similar law is pending in Illinois that amends the Illinois Day and Temporary Labor Services Act 820 ILCS 175. Assuming Gov. J.B. Pritzker signs HB2862, Illinois temporary workers will also be entitled to the same pay rate and provided with the same benefits as the client’s comparable regular employees after working for the same client for 90 calendar days.
Existing Illinois regulations. Illinois temporary staffing firms are already highly regulated under the Illinois Day and Temporary Labor Services Act, which took effect Jan. 1, 2000. As it currently stands, temporary staffing firms are required to register with the Illinois Department of Labor with proof of workers’ compensation insurance as well as identification of client and employee data. The act currently restricts fees that temporary staffing firms may charge their clients for converting the firm’s staff to permanent employees. It also provides many additional safeguards pertaining to temporary workers’ pay and other terms and conditions of employment.
Licensing requirements. Illinois is one of only a handful of states that currently require all staffing firms to be licensed; New Jersey will require covered temporary help service firms to be registered with the Commissioner of Labor and Workforce Development starting Aug. 5. Recently, Iowa, Louisiana, Connecticut and Oregon have all passed laws requiring healthcare staffing firms to be licensed.
Restrictions on fees. In another similarity to Illinois’ longstanding law, New Jersey’s new law places restrictions on the placement fees charged to a third-party client for employing a temporary worker assigned to them. The fee must not exceed 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 has received for each day the temporary worker has worked in the preceding 12 months.
Limitations. Illinois’ law does not apply to temporary workers undertaking work of a professional or clerical nature, while New Jersey’s law specifically only applies to workers in certain occupational categories such as construction, maintenance, cleaning, food preparation and personal care.
Despite their limited application, there’s a chance these laws could hurt the temporary work sector. Any cost savings for clients using temporary workers for longer periods of time will be reduced by matching wages and benefits and could lead to clients offloading temporary staff before they reach the threshold for increased wages. This could, in turn, be detrimental to the temporary workers who the law is designed to protect.
For staffing firms, the administrative cost and burden of registration or licensing has not driven up compliance. In fact, it often has the opposite effect with noncompliant firms undercutting the compliant ones. The UK took this view in 1995 when it abolished licensing for the majority of staffing firms. In addition, a cap on placement or conversion fees may hamper staffing firms’ ability to recoup upfront costs that are not automatically passed on to clients.
It remains to be seen what the impact of these more stringent rules regarding temporary staffing will be for New Jersey and Illinois. But as often happens with state laws in the US, other states’ like-minded legislators may be persuaded to introduce similar laws to protect their own temporary workforces. Staffing firms and their buyer clients should watch such developments closely.