Federal Court once again upholds enforcement of New Jersey’s Temporary Workers’ Bill of Rights
The district has once again upheld the enforcement of New Jersey’s Temporary Workers’ Bill of Rights. The decision was made in response to a challenge from a coalition of industry groups representing staffing agencies, who claimed that the section of Law requiring temporary employees to be paid an equal amount to the average pay received by similar-situated permanent employees was preempted under the federal Employee Retirement Insurance Security Act (“ERISA”) Please see our previous blog for a summary of the Law’s requirements.
As previously reported, industry groups sought to stop enforcement of the Law on constitutional grounds. They argued that the Law violated the dormant Commerce Clause, and was state overreach. A District of New Jersey court denied the groups’ motion for preliminary injunction, and that decision was upheld on appeal by a Third Circuit panel.
Approximately one year after first seeking injunctive relief, the industry groups amended their complaint to assert that Section (7)(b) of the Law is preempted by ERISA and should not be enforced. Section (7)(b), which prohibits a temporary worker from being paid less than “the average rate of pay, average cost of benefits or the cash equivalent thereof” of employees of a third-party client performing the same work or substantially similar jobs under similar working conditions, requires that the temporary worker be paid the same as the average rate of wage and average cost of benefit, or the cash alternative thereof. The court denied the motion because the industry groups had not shown irreparable damage. The court emphasized the groups’ delay of one year in seeking injunctive remedies based on ERISA Preemption. It noted that “how urgently a person pursues their claims” is relevant for the irreparable damage analysis, and pointed out that ERISA Preemption has been litigated for “decades.” The court noted that equal benefits provisions have been in place since over a year, and the State has already issued proposed regulations and established mechanisms to enforce the Law. The court noted that “many
workers and their families have likely made important decisions in life based upon the continued receipt of these enhanced wages and benefits
.” The court cited, among other reasons, that it was “not clear if [the Act] requires staffing agencies establish an ERISA governed benefit plan”, such that preemption might apply. The Law’s requirements remain in effect. Staffing agencies and employers should read the proposed regulations here and monitor the NJ Department of Labor & Workforce Development website to ensure compliance with the Law.
