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  • Writer's pictureNick Andriacchi

Is Negative Legislation Hurting Staffer’s and Contract Employees?

Demand for contract staffing has been soft for over a year. This runs counter to a relatively stable jobs market and contract staffing should be doing well at this stage of the cycle. Can this be the result of anti-staffing legislation that’s happening nationwide?

State legislation like California's AB5, equal compensation laws in New Jersey and Illinois, paid time off regulations, and the NLRB rule on co-employment significantly impedes franchise and temporary staffing, hurting both employees and employers.

California's AB5 with its stated goal of protecting gig workers, has inadvertently constrained staffing agencies. Its strict criteria for classifying workers as independent contractors’ forces agencies to reclassify temporary workers as employees, leading to increased costs and administrative burdens. This may cause employers to hesitate hiring temporary staff, freelancers, and independent contractors thus reducing job opportunities.

Equal compensation laws in New Jersey and Illinois mandate that temporary workers receive the same compensation, including benefits, as permanent employees after a probationary period. While the stated goal was fairness, these laws strain staffing agencies financially. Employers may limit hiring temporary workers, particularly for low-skilled roles, to avoid the added costs of equal compensation, further limiting job opportunities for this demographic. Besides, these laws are confusing, and compliance is difficult. They are both currently being challenged in court.

Paid time off regulations in various states add complexity for temporary staffing agencies. Compliance with state-mandated paid time off requirements increases administrative burdens and costs. Employers may reduce hiring temporary workers to avoid these additional expenses.

The NLRB rule on co-employment for staffing and franchise employees holds agencies and client employers jointly responsible for labor law compliance. The rule may be invalid because it would treat some companies as the employers of contract or franchise workers even when they lacked any meaningful control over their working conditions.

These laws detrimentally impact both employees and employers. Low-skilled workers face reduced job opportunities and benefits, while employers contend with increased costs and regulatory complexities. Staffing companies should unite through their state chapter associations to collectively advocate against detrimental legislation.

Many temporary workers rely on coaching from staffing company recruiters to secure employment, emphasizing the importance of agencies advocating for policies that sustain job opportunities for this vulnerable demographic.

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