Federal Court denies industry challenge
Earlier this year I wrote a story entitled: "New Jersey Declares War on Industrial Staffing." Well, it looks like New Jersey just won the war. In what may be the most important legal ruling ever impacting the staffing industry, a Federal Court in New Jersey has denied a Constitutional challenge to the New Jersey law known as the "Temporary Workers’ Bill of Rights."
The challenge was brought by trade organizations New Jersey Staffing Alliance, New Jersey Business & Industry Association, and the American Staffing Association (copy of Complaint attached below). The groups sought an injunction blocking enforcement of the law. Remarkably, the challenge failed even though U.S. District Court Judge Christine O'Hearn ruled that the law will cause economic losses "that will be so significant as to threaten the existence of the members’ businesses" (copy of Order attached below). In other words, it is legal for the state to wipe out an entire industry segment by passing a law so onerous and difficult to comply with that industry clients will no longer use staffing agencies for the covered work.
There was plenty of evidence supporting the Plaintiffs' contention that the law will devastate industrial staffing in New Jersey:
Staffing company TeleSearch filed a declaration stating that its top 10 industrial clients, producing almost $10 million in revenues, will cancel its services, and that with this loss of revenues, it will not be able to continue operations.
Accu Staffing testified that it has sustained a $7 million loss in revenues to date, year over year.
ProStaff Workforce Solutions is losing clients producing $8,700,000 in revenues, and with this loss it will close operations.
Staffing Alternatives testified that it is losing clients producing over $50 million in revenues.
United Temporary Services is losing clients producing $28 million in revenues.
These are just 5 examples from a much larger industry.
The New Jersey law will require, effective August 5, 2023, that industrial staffing firms match the average pay and benefits of similarly situated full time employees of their clients. The evidence introduced by the trade groups established the practical impossibility of doing this, even if the clients were open to sharing the necessary data, which many (or most) are not. The Plaintiffs pointed out that there are simply too many combinations and permutations of traits among individuals to permit an accurate comparison, including comparisons of benefit plans whose costs are shared by the employee and client.
The law was promoted by New Jersey pro-labor organizations such as New Labor, whose mission is "Amplifying Workers Voices And Fighting For Social Justice In NJ." After the court ruling, the organization re-posted victory tweets like this:
Starting next week, N.J. temp workers should start seeing less fees and better pay in their checks—
A judge just said NJ’s landmark law protecting temp workers can be fully implemented next week. That means temp workers will get the same rate of pay as permanent workers for doing the same job come Aug. 5.
What these naive social justice warriors do not realize is that nothing of the sort is going to happen. The clients are not going put up with calculating and disclosing their employee's average pay rates. Nor will they put up with paying temp bill rates that greatly exceed their own cost of labor, because the staffing agencies must markup the rates they pay their workers when billing clients. As a consequence, industrial workers who once chose to belong to the temporary workforce will simply no longer have job opportunities in New Jersey.
The law applies to the following staffing categories:
Protective Service Workers
Food Preparation and Serving Related Occupations
Building and Grounds Cleaning and Maintenance Occupations
Personal Care and Service Occupations, Construction Laborers
Helpers, Construction Trades
Installation, Maintenance, and Repair Occupations
Transportation and Material Moving Occupations
I expect there will be an appeal to the U.S Third District Court of Appeal, but for now there will be significant economic damage done to both the staffing industry (including internal employees who will lose jobs) as well as to short-term workers by choice who will no longer have the ability to move in and out of the New Jersey workforce at will.