New Jersey Employment Law Protecting Temporary Workers Survives Challenge in Federal Appeals Court

The United States Court of Appeals for the Third Circuit, which hears appeals from federal district courts in New Jersey, Delaware, Pennsylvania and the United States Virgin Islands, recently rejected a challenge to the New Jersey Temporary Workers’ Bill of Rights in the case of New Jersey Staffing Alliance vs. Cari Fais, Acting Director of the New Jersey State Division of Consumer Affairs in the Department of Law and Public Safety.

 

Background: The New Jersey Temporary Workers Bill of Rights

The New Jersey Temporary Workers’ Bill of Rights was passed by the New Jersey Legislature in 2023.  It was designed to protect temporary workers employed in New Jersey.  It enacted several measures to meet this goal.  These include disclosure requirements and certification procedures.  It also imposes joint and several liability on both staffing firms and the businesses which obtain temporary workers through those staffing firms.

The Court explained that the New Jersey Temporary Workers’ Bill of Rights also requires that:

staffing firms to pay temporary workers at least ‘the average rate of pay and average cost of benefits, or the cash equivalent thereof, of employees of the 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.’ Simply stated: staffing firms must peg their wages to the average wage of a permanent employee performing similar work at the client company. To comply with this provision, New Jersey staffing firms must obtain their customers’ pay and benefits data.

 

The Lawsuit and Request for an Injunction

The New Jersey Staffing Alliance and New Jersey Business and Industry Association filed suit in Federal District Court in New Jersey seeking to declare the law unconstitutional and invalid, and seeking an injunction preventing the law from being enforced while the lawsuit was pending.  The District Court judge denied the injunction.  While he found that New Jersey staffing firms would suffer damages because of the law, he found that the law was nonetheless valid.  Proving a probability of success on the merits is one of the requirements for a preliminary injunction – since the law was valid, the judge explained, the associations had no probability of success on the merits of their suit, and therefore denied the request for an injunction.

The groups appealed to the Third Circuit.

 

The Third Circuit’s Decision

The Third Circuit denied the groups’ appeal in a published, precedential decision.

The business associations made three arguments why they had a probability of success on the merits, each of which the Third Circuit rejected.  First the associations argued that the New Jersey Temporary Workers’ Bill of Rights violated the Commerce Clause of the United States Constitution under the “dormant Commerce Clause” line of cases.  These hold that state laws may not be driven by “‘economic protectionism’ … designed to benefit in-state economic interests by burdening out-of-state competitors.”  The Court found that the law uniformly regulated in-state and out-of-state staffing firms doing business in New Jersey, and thus the New Jersey Temporary Workers’ Bill of Rights did not violate the Commerce Clause.

Second, the business associations argued that the law was too vague in its definition of “benefits” or “same or similar work” by listing only some factors to be considered, and thus violated the Due Process Clause of the United States Constitution by failing to give fair notice of the law’s requirements.  The Third Circuit rejected this as well.  The Court explained that the language the Legislature used in the New Jersey Temporary Workers’ Bill of Rights was substantially similar to that of the Federal Equal Pay Act.  That Act was held not to be unconstitutionally vague, and the Third Circuit explained that the Temporary Workers’ Bill of Rights was likewise not too vague because it gave fair notice of the factors that went into the determination, and used plain, easily understood language.

Finally, the business associations argued that the New Jersey Temporary Workers’ Bill of Rights exceeded the State’s police power.  The Third Circuit rejected this argument too.  The Court explained that a State’s police power “extends health, morals and safety, and comprehends the duty, within constitutional limitations, to protect well-being… of a community.”  This includes protecting “the labor and employment rights” of temporary workers.  The Court therefore found the New Jersey Temporary Workers’ Bill of Rights to be a valid exercise of New Jersey’s police powers.

Having rejected every theory the business associations put forward, the Third Circuit held that the District Court judge correctly found that they had no probability of success on the merits, and therefore were not entitled to a preliminary injunction.

 

The Takeaways

The New Jersey Temporary Workers’ Bill of Rights is a valid exercise of the Legislature’s police powers.  Therefore temporary workers working for a company through a staffing agency must be treated similarly in pay and benefits to the company’s regular employees performing similar work.

 

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