New Jersey Federal Court Denies Bid to Block Temporary Workers’ Bill of Rights Law

On Aug. 30, a judge of the U.S. District Court for the District of New Jersey denied a motion to partially enjoin the New Jersey Temporary Workers’ Bill of Rights based on Employee Retirement Income Security Act (ERISA) pre-emption.

Quick Hits

A federal district court in New Jersey denied a motion to partially enjoin the New Jersey Temporary Workers’ Bill of Rights, which seeks to equalize pay for temporary workers to that of permanent workers.

The court ruled that the plaintiffs have the potential to ultimately succeed on the merits of their ERISA pre-emption argument, but on the current record, they failed to show a likelihood of success on the merits.

In New Jersey Staffing Alliance v. Fais, the court denied the second attempt made by a staffing industry group and other business groups to obtain a preliminary injunction to prohibit enforcement of the New Jersey Temporary Workers’ Bill of Rights, which took effect on Aug. 5, 2023.

New Jersey Temporary Workers’ Bill of Rights

The act, signed by Gov. Phil Murphy on Feb. 6, 2023, imposes a host of obligations on staffing firms that provide temporary workers to employers in New Jersey. Most notably, the law requires firms to pay temporary workers no less than the average rate of pay and cost of benefits provided to direct employees in similar positions.

Prior to the act’s implementation in August 2023, the New Jersey Staffing Alliance filed a complaint and motion seeking a temporary restraining order and preliminary injunction to enjoin the act in its entirety on constitutional grounds. The district court denied that motion, and the law went into effect on Aug. 5, 2023. On July 24, 2024, the 3rd U.S. Circuit Court of Appeals affirmed the district court’s decision to deny a temporary restraining order or preliminary injunction.

In May 2024, the New Jersey Staffing Alliance filed an amended complaint to add an ERISA pre-emption claim. The group then filed a motion for a partial preliminary injunction seeking to enjoin the pay equity provision of the act on ERISA pre-emption grounds.

No Irreparable Harm or Likelihood of Success on the Merits

In denying the plaintiffs’ motion, the court found that they had failed to show that they would suffer irreparable harm if the injunction were not granted, “particularly considering and balancing the significant public interests and the greater harm that would result from granting injunctive relief at this time.”

The court held that the plaintiffs did not “adequately explain why they waited a year to bring” an ERISA pre-emption argument and that an injunction at this time would disrupt the status quo. The court explained that while the general purpose of a preliminary injunction is to preserve the status quo until a trial on the merits can be held, “here, there is no question that granting” the plaintiffs a preliminary injunction “would substantially alter the status quo” that has been in place since the act’s enactment in August 2023. The court highlighted concerns that temporary workers receiving increased wages or benefits pursuant to the law since August 2023 “would undoubtedly” be substantially harmed if the court enjoined the act now.

The court also determined there is insufficient evidence to find a likelihood of success on the merits. The court explained that discovery is needed to flesh out several issues and develop a sufficient record for the court to decide on the merits of the plaintiffs’ ERISA pre-emption argument. Without this, the court could not find that the plaintiffs met their burden to show a likelihood of success.

Next Steps

The New Jersey federal district court’s ruling means that the New Jersey Temporary Workers’ Bill of Rights remains in full force and effect. Staffing firms and employers that use temporary workers may want to consider the law’s obligations and review their practices and agreements.

The state has promulgated proposed regulations related to the act and is considering public comments before finalizing such regulations. In the interim, the state has said that it intends to enforce the act in accordance with the proposed regulations.

Leslie A. Lajewski is an attorney with Ogletree Deakins in Morristown, N.J. © 2024 Ogletree Deakins. All rights reserved. Reposted with permission.