Legal implications for employers and temporary staffing agencies
By strengthening contract worker rights, New Jersey aims to protect its 127,000 temporary workers. Specifically, the law applies to workers in blue-collar jobs in sectors including warehousing, construction, and transportation.
Temporary worker average pay will be equal to that of permanent employees of a third-party client “performing the same or substantially similar work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.”
Wage deductions for transportation, background checks and cashing paychecks are prohibited. Costs of meals and equipment can only be deducted provided the hourly rate does not fall below the minimum wage. Workers are entitled to half-day pay for jobs which are canceled on arrival at work.
In addition, NJ’s law permits temporary workers to take individual or class-action claims against the agency and the third-party employer.
Significantly, the bill states that employers and temporary staffing agencies are “jointly and severally liable” for any violations.
Employers and staffing agencies cannot retaliate against a worker for exercising their rights under the law. This includes complaints to the agencies or employer.
Penalties for violations or non-compliance range from $500 to $5,000 per violation.
Contract worker rights in Illinois
New Jersey is not alone in its push for fair compensation and equal treatment of temporary workers.
On August 4, Illinois Governor Pritzker signed HB 2862, significantly expanding the state’s Day and Temporary Labor Services Act. Like New Jersey’s employment legislation, HB 2862 includes an equal pay mandate for temporary workers performing the same or substantially similar work on jobs which require “substantially similar skill, effort, and responsibility.”
Penalties for violations have also increased, to between $100 and $18,000 after the first audit. Subsequent violations will be subject to penalties ranging between $250 and $7,500 per violation. Significantly, each day that a violation continues is considered a separate violation.
Some key differences contained in HB 2862 bill include:
Contract workers in Illinois must work for 90 days before the equal pay law applies.
Only “employment of a clerical and professional nature” is excluded.
Both states are signaling a clear intent to protect their workers and make progress towards pay equity.
Employment legislation introduced in both states is in response to a broader shift in labor market trends to improve contract worker rights. Research shows that temporary workers make less money and benefits, and experience less favorable working and life conditions.
There’s a further risk of occupational segregation. That’s because temporary workers typically come from marginalized communities, including Black, Latinx, Asian, women, and LGBTQIA+. Data also suggests the number of Black and Latino temporary workers is disproportionate compared to the general workforce.
On signing the bill, New Jersey Governor Murphy stated: “Our temporary workers, regardless of their race or status, are key contributors to the workforce in our state.”
Legal implications mean that not every party has welcomed the bill. The American Staffing Association, The New Jersey Staffing Alliance and The New Jersey Business and Industry Association sued unsuccessfully to prevent it becoming law. The New Jersey Staffing Alliance condemned the legislation as an “existential threat” to the state’s staffing industry.
Equal treatment in the workforce: How does the US compare?
Almost every other industrialized nation offers greater protection for temporary workers.
31 states have laws that “work specifically against temporary workers.”
The organization claims that every move to improve contract workers rights has been met with opposition from staffing agencies.
At the other end of the spectrum, the EU Pay Transparency Directive deliberately uses the wider term of “worker”’ versus “employee”. That definition includes independent contractors, agency workers, job applicants, part-time and full-time employees, and more.
What’s next for contract worker rights?
As of August 2023, there are an estimated 3 million temporary workers in the US. Exact figures are difficult to calculate due to a lack of accurate data and transparency. But the mood is changing, and it’s hard to believe other states will not follow the path taken by Illinois and New Jersey.
Michigan also has a temp worker bill (HB 4034) pending, but while it affords similar protections to Illinois, there is no mandate for equal pay. It does, however, require that temporary workers are offered a permanent position if one becomes available. Temporary staffing agencies are also prohibited from sending temporary workers onto sites where there is an ongoing strike.
Speaking to Bloomberg Law, Temp Worker Justice (TWJ) also announced its intention to advocate for contract worker rights across more states. That includes expanding California’s temporary worker laws and incorporating occupations such as tech and nursing in future legislation.
Moving towards workplace equality
Contract worker rights and temporary worker pay are integral to the pay equity movement and closing the gender pay gap.
At Trusaic, we believe in equal treatment for all workers, and partner with companies to help them navigate complex legislation. That starts with a pay equity audit. Trusaic PayParity carries out an audit across your workforce at the intersection of gender, race/ethnicity, age, disability, and more. An intersectional audit is the only way to gain an accurate insight into pay disparities and create solid foundations for a culture of pay equity.
Speak to one of our pay equity experts today.
Conducting a pay equity audit is a key component to ensuring equitable compensation within your organization. Just as important as the analysis is how you communicate findings and progress with various stakeholders. Download The Pay Equity Communications Planner to learn best practices for discussing compensation, both internally and externally.