NJ Temporary Workers Bill of Rights

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And one of my biggest customers laid off a thousand employees right off the bat, right after this law passed. So that was a thousand people who lost their jobs. The New Jersey Staffing Alliance is the nonprofit trade association for contract staffing, direct hire, and temporary placement firms. For more information about the benefits of joining the Alliance, visit our website at njsa .com.

I'm Dave Koch and this is Gord  from Two River Benefits Consultants and we have been working on the Temporary Workers Bill of Rights for the last 18 months and we're going to talk to our customers and the staffing industry in general about how this has affected everybody, how it's affected us, how it's affected mostly the light industrial staffing companies, but it hasn't affected all the staffing companies. It started as SBIL

5 -11, back in, I guess it was June of 22, I think, kind of behind closed doors in Trenton with the Senate. And we got involved with it because I'm, we're all members of the, Gordon and I are members of the NGASA, but we're also members of Mesa Mid -Atlantic Staffing Association, New Jersey Staffing Association, which Alliance, which is NGASA and the NJBIA, New Jersey Business and Industry Association, with which we're all affiliated. And.

They decided to fight the law because they really didn't have much of a chance to, actually we didn't have any chance to put any input, the industry, it was kind of jammed through at the end of June in 2022 without much discussion. So we started fighting it and it didn't pass until September of 22 after it was stopped a couple of times by one of my senators, Vin Gopal.

That's how I got involved ultimately. And Gordon and I pulled together a lot of our clients, the industrial staffing firms in New Jersey. We did it through the American Staffing Association, Ed Lands, Toby Bellara, Steve Dwyer, who's now the president and Toby's the head of, Toby and Ed are run the,

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legal side of the American Staffing Association. So we got some advice from them. We pulled everybody in in New Jersey. We had many discussions about it with the association and customers of ours. We got our customers all on board. Ultimately, we lost the fight in September of 2020. Was it 2022, right? It ultimately did pass. So we filed a

The NJSA, NJBIA, and Mesa filed a lawsuit to stop it in the New Jersey courts, and that was ultimately ruled against in September of 23. They reinstituted a lawsuit again, and now it's in the third district court, federal court in Philadelphia, awaiting an assignment or...

a pushback that it's not going to be looked at by the Third Circuit Court. The final briefs have been put in by New Jersey, the state of New Jersey and Steve Haars and his firm, Javerbaum, Wurghaft and Hicks. And we're awaiting whether we're going to get any...

We're going to get an audience at the Third Circuit Court of Appeals. So it's been quite a battle over the years. And it's been run by a couple of our bigger clients. I'll leave their names off the board at this point. They and I, they and us have coordinated the battle with the states because Gordon and I have a lot of the big light industrial staffing firms in New Jersey. And...

That's where this whole thing started 18 months ago and we're awaiting the regulations from the state of New Jersey. And I'm going to turn it over to Gord to kind of outline the law and what, how it's affected a lot of our clients. And I'll jump in here and there to help our customers understand it. And that's what this is about is to help the state of New Jersey, um, staffing companies and our, you know,

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our constituents and our members and everybody with the law. For the temporary employee Bill of Rights to provide Bill of Rights for those people who are at the lower echelon who make minimum wage just to make sure that they were protected and at the same time rid the industry of the bad apples that are part of any industry and then in staffing industry there were some firms that just ignored the existing state laws.

paid in cash, paid under the table, didn't pay taxes, changed their names whenever they got in trouble and continued to do business in that manner. And the intent of this law was to get rid of those companies, to make it difficult for them to do business in New Jersey at all. Unfortunately, good intentions also led to unintended consequences. And those unintended...

Tended consequences have really impacted heavily the light industrial sector of the staffing industry here in Jersey. The law originally included all staffing companies in New Jersey. Fortunately, the NJSA, ASA, Mesa, Dave, myself, the committee that we had put together of staffing companies were able to have the governor approve an amendment that excluded

all staffing companies except for the commercial ones which deal in light industrial and 12 job classifications. This law affects about 150 ,000 New Jersey residents and out of that about 90 % of them are in the light industrial sector in New Jersey. The law has caused irreparable harm to this light industrial staffing industry and there's basically six

common issues that affect all of those companies. And as bullet points, and we can go into them a little later, we've got companies now have to pay an average rate of wage based upon what their clients are paying their employees. They have to provide cash equivalent of benefits based upon what the clients are providing to their employees. They have to not

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offer transportation any longer to employees who depended upon transportation in the I -95 corridor between Exit 7 and 8. And now where there is no public transportation and the only way those employees could get to work was via transportation that was being subsidized by the staffing companies. That's gone. Placement needs. That's gone because the state requires them to pay for the entire...

cost of the transportation, basically the commuting that's gone to work. And one of my biggest customers laid off a thousand employees right off the bat, right after this law passed. So that was a thousand people who lost their jobs. Placement fees. It used to hire has always been a part of the light industrial staffing, um, business structure in which an employee, they could place an employee on assignment for say three to four months. I then.

that client can hire that employee full time and they pay a small placement fee to the staffing agency for training and markup and things of that nature. The state has imposed a mandatory placement fee, which essentially doesn't reimburse the staffing company for any of their expenses towards that employee. Proprietary information is another issue where

Staffing companies are being forced to share their markup structure with their employees, which is something that's unheard of in industry where you tell your employees what the actual profit's going to be based upon their job. That doesn't exist. So that doesn't exist in any industry, Gordon. It's not just the staffing industry. It doesn't exist anywhere, really. Right, David. There's not an industry in...

in this country that has to share, unless it's maybe an ESOP that shares that type of proprietary information with employees. We're not going to share our profit margins with all of our customers, nor is a wholesaler, a retailer, whomever it happens to be. And that regulation is just very anti -competitive, anti -capitalistic. So if we talk about the big three,

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issues. Probably, there were regulations that were published back in August of 23, and the final regulations won't be determined until after the appeals court has reached a decision. And so, in the interim, with the pre -regulations, let's call them, staffing companies had been told just act in good faith. So, they had been act right.

in good faith for the past six months awaiting an outcome of the appeal, the appeals court, and the final regulations whenever they get published. So the average rate of wage is an issue because what is happening here is that their third -party clients say, call it a warehouse if you will.

They may have full -time employees that are doing, say, a similar, perhaps a similar job to what the temporary employee who's coming in on assignment from the staffing company will be doing. And so the third -party client now has to designate those employees who do a same or similar job as comparator employees. And based upon their average rate of wage, not the lowest rate of wage that the

warehouse is paying their employee, the temporary employee will receive that average rate of wage. What's happening is that for the newly hired full -time employee of that warehouse, when the temporary employee comes in, they're actually making more money being paid a higher salary than the lower paid warehouse employee because they're taking an average rate. Now, if you were in Illinois,

With their static company law, it's based upon the lowest rate, something that perhaps New Jersey will adapt when it comes time to the final regulations. They're also being told that they have to match the employer cost of benefits that are being provided to those comparator employees. Normally, when we think of benefits, we think maybe meta.

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potentially you could add 401k retirement to that to that bump. However, the state in there being so generous has also included dental 401k, right? Ancillary benefits, not only the 401k, there's a whole suite of benefits now that

Staff and companies have to pay a cash equivalent of if the third party client has actually paid for it for those territory employees. And it makes it very difficult because every third party client or warehouse, when they're offering benefits, those benefits differ from one warehouse to the other or from one third party client to the other. No one's the same. It makes it so much harder when you're

feeling about a temporary employee who may be on an assignment in one location for one week and the following week when that assignment ends, they're somewhere else. So they're constantly having to recalculate and communicate with the third party client as to what that average rate of wage should be and what those cash equivalent benefits should be. If...

And when the state gets around to enforcing it, that's going to be a huge gray area that's going to be open to interpretation upon whatever inspector comes in to do an audit. It just reeks of confusion. The light industrial staffing companies, when they have temporary employees who couldn't take public transportation to get to their job site, subsidized the cost. And that

cost was usually subsidized to a form where the temporary employee would pay no more than they would have paid if public transportation was available. The state in this particular law said, hey, we don't like that. We don't want employees to pay for transportation. We want you to pay for it, the staffing company. Most staffing companies couldn't afford to do that in their markup structures. And so they just did away with it.

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because the state was also making them responsible for the condition and safety and making of the transportation mode, whether it was vans or however they were being transported, and also making sure that the drivers and the companies that were offering those vans were licensed and regulated by the state. So here we have a law that's saying, hey,

We've licensed these transportation companies. We've regulated these transportation companies. But at the end of the day, we don't really want the employees to be using them unless you, the staffing company, pay 100%. And we're not going to allow the staffing company to make any sort of referrals or references for a transportation mode to their employees because they could be liable for a fine.

under this particular law. Transportation is essentially a non -issue any longer. They're not offering it. And it would have been so easy for the state to say, well, we'll make an amendment to the New Jersey Commuter Tax Savings Program. Just like people who commute on the train get a tax savings, they could have done the same thing for all of these temporary employees that have now lost.

Anyway, unless they can have a car and in certain areas, you don't even have cars, um, do the density of the population. So they're, they're basically, they can't find a job within the neighborhood. They're on unemployment. You have anything there? The other issue that comes up with that Gordon is that if they're not on the staffing companies, um, you know, recommended jittneys, buses, whatever you want to call them.

They don't have any workers' compensation, and it leaves the employee bare should there be an accident. And that's a serious problem for the state of New Jersey. They have pushed this law and destroyed that whole infrastructure where these people were covered by the employers while they were going to work. Now they're not involved in it at all, so their liability on the workers' compensation

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zero now. And the next time a van turns over, the Senate's probably going to have to answer for that and the assembly and the governor. That's even if though, David, they even find a way to use a van because I mean, I know you have a lot of so -called ghost vans now that have started an operation and they're totally crap about that because they're essentially not licensed. They don't have insurance.

but they're providing a service that these temporary employees need and they really don't have any other choice. So we'll only have to hope that they avoid any sort of accidents going forward. That's inevitable Gordon, I think it happens and it happened during this bill and that was one of the things that Senator, you know, one of the senators pressed one of our members.

that he was responsible for it. And now he's not going to be responsible for it. Actually, he wasn't responsible for it. But point being is that there is no coverage for those people other than the auto insurance coverage of the people who are driving the lifts and the Ubers and these uninsured vans, possibly, Gordon. And I'm sure some of them are insured for it. We're in a no fault state. And that's assuming that they actually have insurance.

Yeah, that too. So they've weighted into a tool that they really don't want to be in. And I think they need to understand that. So the other thing that I was referring to that is a common issue is placement fees for temp to hire. The temp to hire is...

kind of a declining point of their business. One, because the state mandated the formula for how they would be reimbursed. And essentially, they don't get reimbursed for any of the training expenses or whatever that they may have incurred in putting an employee out on assignment. What's actually happened is that I'm being told that,

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employees who are being offered a full -time position by the warehouse's third -party clients, but whatever you may, is they're turning them down because with the average rate of wage and cash equivalent of benefits, they're actually making more money than they would if they were working for that third -party client or warehouse. So in a way, if this law was to row full -time employment and

to kind of push back, push the staffing industry back in terms of attempt to hire. It's a total failure. The other thing that's come of it to Gordon is that it's frightened a lot of staffing companies and it's frightened a lot of companies from doing business in New Jersey. Well, they've left. I mean, I've had numerous customers as have you that basically have said, we're not going to do this business anymore. We're not going to hire temps anymore.

just out of the knee jerk reaction because they don't understand it. And that's one of the reasons that we wanted to do this podcast so that we could explain this to not only our customer base, especially the smaller customer base who hasn't been involved in this as much, who does like manufacturing. A lot of the bigger ones were involved with us, but the smaller ones are not, and they're afraid they're going to be put out of business. And there is a way for them to stay in business, but...

It's also very difficult for them to do all this administrative work that the bigger companies can do. So that may be an unintended consequences. A small staffing company actually going out of business. So is that, was that the intent of the law? Again, I don't think it was, but that's a result. And if this law goes through and the regulations come out and they're really, really tight laws, difficult laws.

You may see a number of staffing companies move out and I think you may see a number of manufacturers moving out too. That's already happened. There's been a number of big manufacturers that have left. Hello, Fresh, being one of them, I know for a fact. In part, Dave, that's also due to the several liability in the law. The law is requiring, in many cases, the third party client to have a joint responsibility with the staffing company.

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Yes. In case of bullying or sexual whatever, harassment. That didn't used to exist prior to this law. And they expanded that part of it with the third party client with the warehouses. They also put a huge, just referred to a new administrative burden on them. For instance, there's a single day work assignment verification.

Where if a third party client provides a temporary labor to one day, they have to give that temporary labor a work verification form. If they work just one day, the third party client does. A working different jobs creates a large administrative nightmare. You mentioned it earlier, but just to that point is that they work two days.

at one company three days at another company that's near impossible to administer for a staffing company. I mean, some of our, even some of our best and most well organized, capable staffing companies looked at that and said, this is insane. This is how can we do this? I don't know. Maybe the state of New Jersey was thinking they have a computer system. It's similar to the States that could do almost anything. I have no idea. But yeah, that one.

the

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I guess that's part, you know, because it's so difficult to do, it's part of the appeals that's ongoing with based upon vagueness. And the vagueness works in that direction. It's very difficult to ascertain that average rate of wage, the cash flow of benefits when you have people moving from one job site to another frequently. At the same point in time, and I think I mentioned this earlier,

You have the matter. Eventually, there's going to be enforcement of this law by the state, and they're going to train people to come in. But because of this whole gray area and the vagueness that's been written into this law, it's going to be open to interpretation. And that's going to cause issues down the road that, again, will have consequences that we probably

have no idea what they're going to be, but they will be there. There's another item that affects New Jersey workers and clients say over in Pennsylvania, Delaware, Maryland, where if I live in New Jersey because I like to live in New Jersey and I go over to work in Pennsylvania at a work site, that work site client, whoever owns that work site warehouse, whatever, they're going to have to pay me based upon the New Jersey law.

Even though I'm working in Pennsylvania or Delaware or a different state, if I owned a facility in Pennsylvania or a joint estate, I probably wouldn't use New Jersey workers any longer because I'm going to have to pay them based upon the New Jersey law. And in that case, I'll probably end up paying, if I was to do that, I'd end up paying those New Jersey residents more than I was paying my Pennsylvania employees or Delaware, Maryland, state.

that are currently working in that facility. Again, it's another part of the law that when they wrote it, maybe they had good intentions, but the consequences are such that it's going to impede people from actually going to work. But how do you enforce that if you're the state in New Jersey? If you're trying to enforce that in Pennsylvania and the attorney general of Pennsylvania says, I don't know, Dave, there's part about when you find taxes in New Jersey, you have to declare whether you worked in another state or not.

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Yeah. I don't know. It's like you said, Gord, it's maybe they know, obviously they know better than us. It's just a little frustrating. Here's the other alternative is the companies and the headquarters of companies of the biggest players that we deal with could just move to Pennsylvania and, you know, put people in New Jersey. Then they don't have to follow the New Jersey law for all their people in Pennsylvania. That's a pretty simple alternative. Yes. Grand Pennsylvania has a great location.

in terms of their location with lots of lots of turnpikes and whatever coming in. It's been a hub in the past and it will probably just continue to grow going forward. Yeah. And it's just, you know, you're pushing employers out of New Jersey, you're pushing employees out of New Jersey, you're pushing staffing companies, customers out of New Jersey. Is that what the goal is? And it is the original attitude that.

When we said something about that, you know, a year ago, some of the senators, basically the feedback was, oh, we've heard that before. Never happens. Well, I mean, ever since those regulations were published last August, there's a list of companies that have actually left the state. And there's a list, and there's an essential list of the number of

approximate number of employees say that are no longer employed by those staffing companies that were providing them jobs that enabled them to keep food on the table and a roof over their head. Right. And many of them are on unemployment, like you said, Gordon. That doesn't help anybody either. Apparently the state doesn't care. Yeah. And the other part of where the state is,

Um, I don't know. I forget, I forget the book, but anyway, where they're looking over your shoulder is where their proprietary cost sharing that being required for the employer to share with the temporary employee. It requires the temporary staffing company to show the current maximum amount of placement fee that they can charge. And it.

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requires the third party client to do the same. So the margins that the staffing company has are being exposed to the employee.

Um, there's no, there's no purpose in that, um, again, unintended consequence to trying to do the right thing. And, and in this case, they're really not. Unfortunately, Gord, they didn't really allow for any feedback and they still haven't allowed for any feedback in the regulations. No one's really, no one that I've heard of has heard back from the state. Even though there's supposed to respond.

respond with public comments during that open window. But I don't...and perhaps the regulators who are responsible for writing the regulations with good faith for whatever, in good faith of how the law is written, doesn't necessarily mean they have to follow the exact wording, as long as they're more or less have the intent.

Um, I, I think I've been told that once that they're not going to reply until after the appeals court makes a decision. Okay. And at that point in time, because they are required to, to, to reply to each of the public comments before they can publish the final regulations. So I think, you know, at the very best you're looking at this law becoming.

effective July 20th, July, this July at the very best. Yeah. The, uh, state replied to the original brief from our law firm, uh, Steve horse on the 12th of January. I have these here and Steve and his team replied on February 2nd. So that's the most recent.

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update of the current situation with the Third Circuit, the Federal Third Circuit Court of Appeals. So if you draw a timeline, and let's just say February 2nd, all the required documentation is at the appeals court. I don't know where it would stand on their docket, but let's just say sometime between now and March 15th, they would get around to reviewing the documents and issuing a decision.

At which point in time, let's say it's March 15th, DOL, CFA, they have 60 days to reply to the public comments to put you out to May. And then once the final regulations are published, there's 90 days before they become effective. So perhaps now we're really looking at some time in mid August to afford this. Towards the end of the summer, the fall for sure. And I think that's a key word is that, that.

The industry does need to understand this. I mean, they're going to try and we've worked with a lot of them because we're their benefits brokers and we're caught, we've been caught in the middle of this for better and worse for, you know, since June of 22. So we can help them individually with what we have programs that we've worked on that can help them save some money, uh, administratively and tax wise. And there's a number of other things we can do to mitigate.

help them mitigate the law. And we understand that because you and I have been caught in this mixer for so long, Gordon, we can throw it out off the top of our heads at this point. It's just, it is a difficult law to understand and we've come to understand it because you didn't really have a choice. So we threw ourselves in the middle of it and...

Actually, it's been a little bit of a respite since they filed again. It's been quiet since then and everybody, a lot of our customers have learned to adjust. I think you said that the other day when we were talking that they've made allowances for some of the law done the best that they can with what they know. And so it's calmed. And I think all the way around, it's calmed and some customers said it's helped them.

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Some said it's hurt them. I think some of them said it's helped them for that very reason that you mentioned to go, it is that, you know, it costs more to hire an employee than it is to put them at a temporary agency. And I'm sure that was definitely an, and you know, something that the state did not plan on. So, um, you know, it depends. It depends. I mean, they're business people and they're smart and they're not, they're

especially the bigger players who have 20 million plus, they know how to deal with these things. They're smart. They're, you know, they've been in business a long time. A lot of our customers are in business for 20 plus years and they'll manage as best they can. It frustrates them, but they'll manage as best as they can. Well, I think Dave, true. They are living, call it living with the law as best they can.

I think.

probably, you you always hate to say 100%, but let's just say in the high 90%, they've all experienced some sort of margin erosion since the, since the laws implemented. Sure. You know, we, we have a program to help them with that, help their EBITDA. And we're also working on something that can perhaps help them with providing the reasonable medical plan for those temps.

so that they aren't looking at a huge differential or maybe no differential whatsoever, working with the cost of benefits for the clients. So we do have programs that we've been working on as well to help them. It's just a matter of timing and getting around to everyone. Yeah. Well, that was really one of the points of this, Gordon, is to help get the...

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information out there through the staffing agencies and our prospects and our customers because we've been dealing with it for so long. We just understand what the problems are and the issues surrounding this law and how do you, as we say, work around it as best we can, you know, within the auspices of the law basically. And we don't want to

We don't want to create any issues for our customers or the state that go against the law. Although it can be extremely difficult on the players. I would say all, I was going to say most, but I would say all of our customers want to be, you know, in compliance with the law as we do. It's just, we have to manage it the best that we can. And I think you said it.

best when you said that there are those actors out there who are not going to do it and they're going to work. They're going to do illegal things. They're not going to pay their people. And that's where the focus, at least in our customers eyes and in our eyes should, you know, should be where they should be focused. And I've heard many of my customers, members of the board at the NJSA and at

Mid -Atlantic Staffing Association say the same thing is we'll point them out for you if you like. Cause they're the ones causing us problems too. We're trying to be, you know, we're trying to be good stewards of the law and good stewards of our employees and, and our customers. So we'd be happy to point them out. Uh, and I think if there was some form of cooperation given between our associations, our boards, the state,

The NJBIA who was a big player in the state. Michelle Sakurka is terrific. I think she, you know, I think she'd be a tremendous help in any of those negotiations as would our NJSA board, you know, presidents, Mike Menzer and Wendy Tordillo and Mesa's president Bill Emerson. Bill's a very savvy, smart guy. And as are all those people. It's just, we need an audience with the state. Well, you know, David, as you're implying.

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Over the last 18 months, the state has refused to negotiate period. Yeah. They've been intractable. Um, and. That's a very good word, Gordon, intractable. I'm not exactly sure why. Although the law was union driven. That's beyond question. I mean, beyond any, any doubt that it was union driven by 23 unions. Um, and even some of the unions.

are appalled by the way that the law has actually worked out. And they find that some of these employees are actually making more than the union employees, you know, which is not what they expected. Well, it's again, I think it's, it's unintended consequences. They don't understand and I don't know how they could understand. And in defense of some of the people, you know, Vin Gopal has been very helpful.

And his assistant, Mike, has been very helpful. And Paul Sarlo apparently has also. And some of them, Paulistino from Atlanta County was, but ultimately they voted for it. And now we're stuck with this and we're in the middle of this and nobody's really being helped at this point. It's just, it's just a constant battle between the state and its employers. And for some reason,

The state never seems to understand that the employers provide all the payroll taxes and many of the taxes, the New Jersey state taxes of our employees, my employees, you, and the thousands upon thousands of employees that work at these industrial staffing firms. They get paid a state tax every time those people work. And when you make them work less, they get paid less tax. And that's what, that's what creates deficits. So.

I'll get off my cell box, but that's an issue. You know, it's an issue that they need to contend with. And when, you know, HelloFresh and all the other companies walk out of the state and they're doing business in Arizona and other places, Arizona gets the taxes. That's the way it works. And I don't know why people in positions of power forget that, but they seem to have forgotten.