New Jersey Equal Pay for Temps Goes Live, With Illinois Up Next

New Jersey employers that contract with temporary workers will soon face an equal pay mandate and joint liability for violations alongside the agencies providing those workers, in a novel approach to employment protections that could spread to other blue states.

The New Jersey law, set to take effect Saturday, will impose a broad range of requirements on temporary staffing agencies and the companies that use their workers in specific, mostly blue-collar occupations such as construction, manufacturing, and warehousing.

They include providing detailed notices and pay stubs to workers about each job, paying workers for a half day for last-minute job cancellations, and limiting deductions for meals and transportation.

The law is part of a nascent push by worker advocates to prevent mistreatment and underpayment of temp workers, particularly in low-wage, hourly jobs.

California, Illinois, and Massachusetts each have a “temp worker bill of rights” on the books. But New Jersey is the first to add the requirement that temps receive pay equivalent to the wages and value of benefits for comparable employees at the company contracting with them.

The measure met stiff resistance from the staffing industry while winding its way through the New Jersey legislature. After Gov. Phil Murphy (D) signed it in February, the American Staffing Association and its New Jersey affiliate went so far as to sue to block the law from taking effect. A federal judge last week denied their request for an injunction.

The equal pay mandate and the threat of joint liability are the big sources of uncertainty and compliance risk as the law comes online, said Sarah Wieselthier, an employment lawyer in the New Jersey office of Fisher & Phillips LLP.

“It’s very unique, I’d say, for the law to essentially put both the third-party company and the staffing company in a situation where you’re both on the hook for violations,” she said.

In addition to state agency enforcement, the New Jersey law will let workers sue the temp agencies and the companies contracting with them, bringing either individual or class-action claims.

Employers have lots of questions about how to calculate equal pay and which employees are the appropriate comparators, Wieselthier said. New Jersey’s labor department issued proposed regulations in July, but those rules won’t be final until later this year after a public comment period ends.

Illinois, Michigan Bills

A bill awaiting Gov. J.B. Pritzker’s (D) signature in Illinois (HB 2862) would expand that state’s existing temp worker law to add an equal pay requirement similar to New Jersey’s, with one notable difference. The Illinois pay requirement would apply only once a temp has worked at the same job site for 90 days.

“It’s a huge change for the way that the temporary market works,” said Jennifer A. Murphy, an attorney with Amundsen Davis LLC in Illinois. “One of the incentives that employers enjoy by using temporary labor is that they save on benefits. Under this legislation, that is eliminated basically to the extent that the temp agencies pass on their additional costs.”

In some cases, paying temp workers the cash equivalent of the benefits offered to permanent employees could cost the companies more than the actual benefits, she added. That’s because many employees decline to participate in benefits such as health care if they’re required to pay a portion of the premium, but all temp workers would receive the cash equivalent payment.

Pritzker has roughly two weeks to sign the Illinois measure, which would take effect Aug. 16 unless he uses his line-item veto power to change that date. The legislation generally doesn’t impose joint liability, instead specifying which parts of the law are the duty of the temp agency and which parts fall on the third-party company, Murphy said.

Pritzker’s office didn’t respond to a request for comment on the legislation.

Michigan also has a temp worker bill (HB 4034) pending in its legislature with many of the same disclosure rules and worker protections as the existing Illinois law, but not the equal pay mandate.

Temp worker advocates continue pushing to bring more attention to their concerns among state lawmakers and larger labor groups that could help advance their goals, said Roberto Clack, executive director of Temp Worker Justice.

They’re looking to spread ‘bill of rights’ legislation to more states, expand existing temp work laws such as California’s to include equal pay mandates, and cover more occupations such as nurses and tech workers who are generally omitted from the existing state laws, he said.

“We really need to branch out to incorporate more of the white collar and professional workforce. I think that will start to happen,” Clack said. “California could really take some leadership on this, with the tech industry there and so many temp workers that work in tech and health care in that state.”