On August 5, 2023, New Jersey’s Temporary Workers Bill of Rights (TWBR) law takes full effect, bringing new obligations for temporary service firms and employers that utilize temporary workers. The State of New Jersey has indicated that it intends to enforce the new law in accordance with the proposed regulations unveiled on July 21, 2023.
- New Jersey’s Temporary Workers Bill of Rights, which includes equal pay and transparency obligations regarding temporary workers, goes into effect on Saturday, August 5, 2023.
- The NJDOL has proposed regulations implementing the law and the 60-day comment period expires on September 21, 2023.
Temporary Workers Bill of Rights
The TWBR, which was signed by Governor Phil Murphy on February 6, 2023, is aimed at equalizing the pay of temporary workers with that of direct employees. The law requires that covered temporary workers be paid no less than the average rate of pay and cost of benefits provided to direct employees in similar positions and with similar skills.
The law prohibits temporary service firms from restricting the rights of temporary workers to accept permanent employment, restricts the amount they can charge in placement fees, and requires temporary service firms to be certified by the New Jersey Division of Consumer Affairs. Further, temporary service firms will be required to provide certain disclosures to temporary workers upon assignment and to provide temporary workers with itemized wage statements. The state has provided a verification form that third-party employers must provide to temporary workers who are assigned to work only a single day for the employer.
Under the TWBR, employers that contract with temporary staffing firms will be jointly and severally liable for any violations of both the wages and placement fee notice provisions.
On July 21, 2023, the New Jersey Department of Labor and Workforce Development (NJDOL) Division of Wage and Hour Compliance published a set of proposed regulations implementing the TWBR.
While there is a 60-day comment period before the regulations become final, the state has represented that, at this time, it intends to enforce the TWBR in accordance with the proposed regulations. In light of this, employers may want to consider their obligations and requirements under the proposed regulations. Here are some key points from those proposed regulations.
The regulations clarify that the law applies to temporary service firms that are located, operate, or transact business within New Jersey. The regulations state that the law applies to each temporary worker for such a firm that either: (1) has been assigned to work within New Jersey, or (2) has been assigned by the firm to work outside of New Jersey, “but who has his or her primary residence in New Jersey.” This clarifies the NJDOL’s earlier interpretation of the law to mean that temporary service firms in the state of New Jersey must comply with the new requirements even when assigning temporary workers to a third-party client outside the state.
The regulations define benefits to include all employee “fringe benefits”—not simply health insurance—with the exception of benefits the employer is required by law to provide the employee (e.g., New Jersey Paid Sick Leave).
According to the regulations, a placement fee “shall not exceed the equivalent of the total daily commission rate that the temporary help service firm would have received over a 60-day period, reduced by the equivalent of the daily commission rate that the temporary help service firm would have received for each day the temporary laborer would have performed work for the temporary help service firm in the preceding 12 months.” The regulations provide a step-by-step calculation to determine the placement fee allowed to be charged by a temporary service firm for a temporary worker being directly hired by an employer.
The regulations state that third-party clients must provide temporary service firms with a “listing of the hourly rate of pay and cost per hour of benefits for each employee of the third-party client who the third-party client determines would be a comparator employee.” This must be disclosed at the time the third-party client contracts with the temporary service firm for placement of the temporary worker. The regulations provide a step-by-step calculation to determine the rate of pay for a temporary worker where the third-party client has determined that it has comparator employees performing similar functions with similar skills and experience as the temporary worker.
The regulations set forth a list of factors that are to be considered when determining whether a temporary worker and third-party employee are performing “substantially similar work” for the hourly wage analysis.
Detailed Itemized Statements
The law requires temporary service firms to provide temporary workers with a “detailed itemized statement” either on their paycheck stubs or with a special form available from the NJDOL. The regulations detail the information that must be provided on pay statements to temporary workers. In addition to what may be considered standard payroll information, the pay statements must include:
- the maximum amount of any placement fee that may be charged;
- the total charged by the temporary service firm to the third-party client for the temporary worker’s services; and
- the total compensation cost to the temporary service firm for the temporary worker, including the cost of any benefit provided to the worker.
The TWBR imposes a host of obligations and requirements on temporary service firms and their third-party clients. Temporary service firms and employers utilizing temporary workers may want to review their practices and agreements in light of these new obligations. The comment period for the proposed regulations expires on September 21, 2023.
Ogletree Deakins will continue to monitor developments and will provide updates on the New Jersey blog.