Temp Agencies Moving to Comply With NJ Paid Leave Law

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By Genevieve Douglas

Temporary staffing agencies with employees in New Jersey—especially smaller businesses that aren’t already juggling multiple state and local laws—may be caught unawares by a new state law mandating paid sick leave.

Many employers who typically wouldn’t have to give workers paid sick leave, such as temporary service firms, are contacting counsel, Beth Braddock, an associate in the Morristown, N.J., office of Jackson Lewis, told Bloomberg Law May 7. “This is completely new for them and they’re trying to prepare.”

Gov. Phil Murphy (D) signed the legislation May 2; employers have until Oct. 29 to comply with the new law. It requires employers to let workers accrue one hour of paid sick leave for every 30 hours worked, and it preempts any county or municipal ordinances, resolutions, laws, rules, or regulations regarding earned sick leave.

The New Jersey Paid Sick Leave Act (A1827) is unique in that it includes employees of temporary service firms, who will now be able to accrue sick leave based on total time worked with the firm and not for each separate client for whom the worker may perform services.

Employees with temporary staffing firms typically work sporadically and with great flexibility off-site. These companies may not have systems in place to track employee hours worked toward paid leave, or paid leave used.

“That’s a huge game changer for employers,” Tracy Billows, a partner with Seyfarth Shaw and chair of the labor and employment practice in Chicago, told Bloomberg Law May 8.

In 2016, staffing firms employed 417,700 workers in New Jersey in about 1,110 offices, according to data from the American Staffing Association. Temporary staffing and contract sales in New Jersey top $4 billion annually, ASA said.

Challenging to Comply? Depends

The New Jersey paid leave bill “adds an extra layer of management here in terms of that time off,” for temp agencies, Billows said, and “this benefit is an added cost.” Temporary workers generate revenue by performing services for clients when full-time employees are absent, and it’s unclear who will bear the cost if temp workers are on paid leave, Billows said.

“Our operating revenue and expenses are based on labor, so we do get affected when there are statutory benefits that affect our costs,” Scott Schnierer, president of Uniforce Staffing Solutions based in Paramus, N.J., told Bloomberg Law May 7. It’s a good idea to talk to clients about the expense and how it will be accounted for, he said.

Large, multistate staffing agencies like Robert Half are less surprised by the new bill.

“Robert Half already complies with many state and local sick leave laws in other states, as well as local ordinances within those states,” Matthew Croteau, field public relations manager at the staffing firm, told Bloomberg Law via email May 9. “In terms of preparation for the new legislation, the greatest challenge is programming HR and payroll systems to each unique requirement a locality might adopt.”

Aligning Agencies, Clients

Multistate employers will need to pay attention to the requirements of this law, James McDonnell, a principal in the Morristown, N.J., office of Jackson Lewis, told Bloomberg Law May 7. “There will absolutely need to be coordination” among HR, managers, and clients to ensure compliance.”

Coordination also will be needed to align the staffing agency’s policies with a client’s policy, Marc Freedman, general counsel for the New Jersey Staffing Alliance, told Bloomberg Law May 8. “We have to make sure that the client is aware of the law, and we have to make sure that the client doesn’t do anything that would impede the individual’s ability to take the sick leave,” including retaliatory action, he said.

Staffing agencies in New Jersey will find there’s a benefit to the law, Freedman said, because it supersedes the local paid leave ordinances. That patchwork of laws was “very problematic” because different cities defined who was subject to the law in different ways, and keeping track of accruals was challenging, Freedman said. The new state law “is helpful and puts everyone on an equal playing field,” he said.

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