Quick Hits

• New Jersey’s labor department released responses to comments on its proposed TWBR regulations published last year.
• Following a review of the comments, the regulations appear to be moving forward without substantial changes.
• The final regulations are expected to be adopted and published on September 16, 2024.

On August 21, 2024, the New Jersey Department of Labor and Workforce Development’s (NJDOL) Division of Wage and Hour Compliance issued its response to comments on proposed regulations implementing the TWBR released in July 2023. The response, which exceeds eighty pages in length, responds to more than eighty public comments received by the NJDOL.

According to the comment responses, the executive director of the NJDOL’s Office of Legal and Regulatory Services recommended the agency adopt the proposed regulations “with non-substantial changes not requiring additional public notice and comment,” setting up the publication of the final regulations on September 16, 2024.

Temporary Workers Bill of Rights

The TWBR, which took effect in August 2023, institutes several protections for temporary workers and requirements for temporary help service firms and their third-party employer clients that use temporary workers. Specifically, the TWBR states that “[a]ny temporary laborer assigned to work at a third party client in a designated classification placement shall not be paid less than 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 for the third party client at the time the temporary laborer is assigned to work at the third-party client.”

Applicability Outside New Jersey

The TWBR applies to temporary service firms located, operating, or transacting business within New Jersey. The proposed regulations clarify that the TWBR applies to temporary workers of temporary help service firms in New Jersey, even if the workers are placed with a third-party client located in another state, if the temporary workers’ “primary residence[s]” are in New Jersey.

The NJDOL disagreed with commenters who suggested that the TWBR should not apply to temporary workers placed out of state because the requirement “unconstitutionally interfere[d] with interstate commerce” and because it might reduce out-of-state employment opportunities for temporary workers from New Jersey. The NJDOL stated that it believes “the State has a legitimate interest in protecting” both those who work in New Jersey and those who live in New Jersey.

The NJDOL made clear, however, that the requirements of the TWBR—and “coverage of a temporary help service firm under the TWBR”—would “never be triggered, alone, by the primary residence in New Jersey of a temporary laborer” and do not apply “[i]f the temporary help service firm is not located in, does not operate in, and does not transact business in New Jersey.”

Cost of Benefits

Under the proposed regulations, the term “benefits” is defined as “employee fringe benefits, including but not limited to, health insurance, life insurance, disability insurance, paid time off (including vacation, holidays, personal leave and sick leave in excess of what is required by law), training, and pension.” The NJDOL disagreed with commenters who suggested that “benefits” as referenced in the TWBR was meant to apply only to “employer-sponsored retirement and health benefits.”

The NJDOL also clarified that “the cost of the benefits to the employer, not the value of the benefits to the employee” is what “is relevant for purposes of undertaking the comparison of the temporary laborer’s pay and benefits to that of any comparator employees of the third-party client.” (Emphasis in the original.) The proposed regulations set forth a “step-by-step process” for determining the cost of benefits.

Pay Rates of Comparator Employees

Additionally, the NJDOL’s responses to the comments clarify that while temporary workers are not to be paid less than the average rate of pay and average cost of benefits, or the cash equivalent thereof, of direct employees of the third-party business in similar positions and performing similar work, nothing within the TWBR prevents a temporary service firm from paying the temporary workers a higher hourly rate.

Different Shifts

The NJDOL’s responses also clarify that when identifying comparator employees, it is necessary to look not only at the direct employees working the same shift as the temporary employees but also at direct employees who work different shifts. Many stakeholders had previously interpreted the language of the proposed regulations, which excludes job shifts from the analysis of comparable “working conditions,” to mean that direct employees on a different shift were not comparators with respect to temporary workers on another shift.

However, the NJDOL stated that “employer[s] may not use the fact that the work of a temporary laborer being assigned to work for a third-party client and the work of a potential comparator employee of the third-party client will be performed on different shifts, in and of itself, as the basis to conclude that the working conditions of the two positions are dissimilar.” As such, they are all comparators (e.g., second shift as comparator with respect to third shift) in general.

‘Geographical Scope’

The NJDOL also clarified that comparator employees include a third-party employer’s direct employees at all locations of the third-party employer’s business, even locations outside the state of New Jersey. The NJDOL stated that “[t]here is nothing within the TWBR … to suggest that the identification of comparator employees of the third-party client should be limited to a geographical scope, or that it should be limited to a department or facility of the third-party client, or to facilities of the third-party client within the state where the temporary laborer is being assigned to work in a designated classification placement.” Thus, for the purposes of calculating temporary employees’ minimum hourly pay rate, “third-party client[s] should evaluate all of [their] employees” (at least those performing the same or substantially similar work).

Application of the TWBR

The NJDOL clarified that the TWBR applies to temporary workers who were already assigned to third-party clients as of August 5, 2023, the date the TWBR went into effect. According to the NJDOL, temporary service firms are required to perform the pay equity calculation for temporary workers as of August 5, 2023, and adjust their pay accordingly.

The NJDOL confirmed that there is no exemption from the TWBR for unionized workforces. It also explained that it does not have discretion to create a process to seek an exemption from the TWBR.

Next Steps

The TWBR creates compliance concerns for temporary help service firms and third-party employers. The law took effect in 2023 and has survived unsuccessful legal challenges seeking to block it. NJDOL is expected to publish the final regulations clarifying the law’s requirements. Given the NJDOL’s responses to public comments and upcoming final regulations, temporary service firms and employers utilizing temporary workers may want to review their practices and agreements to ensure compliance.