The New Jersey Staffing Alliance filed a lawsuit May 5 against the state of New Jersey in federal court. It asks that a piece of legislation focused on the staffing industry and passed earlier this year be declared unconstitutional.
It argues the legislation represents and existential threat to New Jersey’s staffing industry.
“The amount of time and labor that will be spent with regard to compliance with this legislation will in all probability be cost prohibitive and ultimately destroy the temporary staffing industry in New Jersey,” according to the lawsuit.
Gov. Phil Murphy signed the bill, the “Temporary Workers’ Bill of Rights,” into law in February after a 21-16 vote by the New Jersey Senate.
Also joining the lawsuit as plaintiffs are the American Staffing Association and the New Jersey Business and Industry Association.
The lawsuit argues the law contains burdensome regulations on the staffing industry not found in in any other state. Particularly problematic is a provision that requires equal pay between temporary workers and those directly employed by client companies. The equal pay calculation is based on the average rate of pay and average cost of benefits for directly employed workers.
“This provision in and of itself can bring the temporary staffing industry in New Jersey to a halt,” according to the lawsuit. “This provision requires and assumes significant cooperation to be provided by the third-party client, and this provision assumes that the third-party client is willing to share its pay scale information with the temporary staffing agency. Those assumptions are not accurate.”
There are also questions about what constitutes equal work by directly employed workers.
In addition to the state of New Jersey, others named as defendants in the case are the New Jersey commissioner of labor and workforce development, the acting director of consumer affairs, the New Jersey Department of Labor and Workforce Development and the New Jersey Division of Consumer Affairs.
The legislation was enacted on Feb. 6, 2023; some sections became effective on May 7, and other sections will become effective on Aug. 5.
The lawsuit also noted temporary staffing firms employed more than 510,000 workers in New Jersey in 2021 alone.
Update
Steven Harz, an attorney for the plaintiffs, said a hearing has been set for June 13 regarding a request for a temporary restraining order. If granted, the order would prevent the law from going into effect. The goal of the lawsuit is to get a permanent injunction against the law.
Harz noted that many provisions of the law are extremely vague and violate the Dormant Commerce clause and Equal Protection clause of the US Constitution. The Dormant Commerce clause gives only the US Congress the right to oversee interstate commerce, and the argument is the New Jersey law would touch on interstate commerce because it would impact staffing firms doing business in other states. For example, a New Jersey staffing firm doing business in neighboring New York or Pennsylvania would be impacted by the law.
In addition, the equal pay provision of the law is also vague, and Harz argued the law would not guarantee higher wages for temporary workers. Directly employed workers might be paid less than contingent workers, or the client company might not have directly employed workers.
“The state seems to be well intentioned, but they are misguided in thinking this statute is something positive,” Harz said. In reality, it’s likely the law will cause staffing firms to go out of business, meaning fewer jobs for workers.
“The statute essentially doesn’t work,” he said.
Case number is 1:2023-cv-02494.
Separately, there will be discussion of the New Jersey law in the next issue of Staffing Industry Review to be released on May 16.