New Jersey’s far-reaching “Temporary Workers’ Bill of Rights” law is expected to take effect August 5 after the United States District Court for the District of New Jersey denied a staffing industry request for an injunction to delay its implementation. The law, signed in February 2023 by New Jersey Gov. Phil Murphy, creates broad rights for certain temporary workers and places significant new obligations on staffing companies.

Staffing companies and businesses that employ their services should prepare now, in consultation with legal counsel, to assess their exposure and take steps toward complying with the law.

The new law is expressly intended to “further protect the labor and employment rights of [temporary] workers” whom the New Jersey Legislature found “are particularly vulnerable to abuse of their labor rights, including unpaid wages, failure to pay for all hours worked, minimum wage and overtime violations, unsafe working conditions, unlawful deductions from pay for meals, transportation, equipment.”

Along with these protections for covered workers, the new law imposes stringent new obligations on the companies that place such temporary workers, known as Temporary Help Service Firms (THSF) and the businesses that utilize their services. For example, THSFs will need to:

• Offer compensation and benefits to their temporary workers that are equivalent to those provided to their clients’ employees
• Follow expanded notice and record-keeping requirements
• Cease charging temporary workers for transportation to the worksite, a common practice in the industry
• Refrain from restricting the right of a temporary worker to accept a permanent position with a THSF’s client (known as “no-poaching”)

The new law also prohibits related retaliation, provides temporary workers a private right of action to bring a civil lawsuit for violations of the new law, and imposes joint and several liability for violations on both a THSF and its client.

The industry has expressed significant concerns about the new law. Last month, certain staffing industry associations filed a lawsuit and sought an injunction to stop its enforcement on constitutionality grounds. After extensive briefing, on July 25, 2023 the U.S. District Court for the District of New Jersey declined to issue an injunction, finding that the industry associations were unlikely to succeed in proving the new law to be unconstitutional.

On July 21, 2023, the state issued proposed regulations designed to provide additional guidance concerning the enforcement of the new law, and these preliminary regulations were cited by the District Court judge in denying the injunction. The proposed regulations, however, will not be finalized before August 5, which leaves some uncertainty concerning the immediate enforcement of the new law. The regulations are voluminous and will be subject to public comment in the near future. It is unclear whether they are sufficient to allow for adequate compliance. Further, the New Jersey Division of Consumer Affairs recently issued a notice stating that the Division did not expect to enforce the certification and bond requirements of Section 8 of the new law until the Division had adopted corresponding rules.Until the rules and regulations are finalized, best practice dictates that affected companies make good-faith efforts to comply with all aspects of the new law.

The significance of the new law cannot be understated. Even the District Judge recognized that “it is likely that many New Jersey temporary staffing agencies will go out of business because of” the new law. In an attempt to minimize the impact, both THSFs and businesses that utilize the services of THSFs should seek experienced counsel to guide them in complying with the new law.

For THSFs, their analysis will need to begin with:

• Determining whether and which of their temporary employees are covered by the new law
• Making necessary changes to ensure compliance with certification, notice and record-keeping requirements
• Determining the equivalent wages and benefits to be provided
• Reviewing their contracts to determine whether they may pass along to their clients the additional costs associated with compliance, and revising their contracts to remove no-poaching provisions.

Businesses that engage THSFs also must take steps to ensure compliance by their THSF, minimize the related costs and prepare for temporary worker unavailability.

[View source.]