Are Major Changes Coming to the Temporary Staffing Industry?

Proposed legislation would bring major change to staffing industry, including IC usage

Released on September 28, 2020, (re-posted from MRINetwork, Pulse)

changes to the temporary staffing industry may be costlyThree Democratic lawmakers introduced legislation Thursday that would require client companies to hire temporary workers after one year, require staffing firms to register with the US Department of Labor and require staffing companies to pay a fee among other things. It would also put in place an “ABC” test for independent contractor misclassification.

The legislation, called the “Worker Flexibility and Small Business Protection Act,” was referred to the Senate Committee on Health, Education, Labor and Pension. It aims to protect workers classified as independent contractors, workers from temporary staffing firms and workers at corporate franchises.

Introducing the bill were Sen. Sherrod Brown, D-Ohio; Sen. Patty Murray, D-Wash.; and Congresswoman Rosa DeLauro, D-Conn.

“Hard work doesn’t pay off like it should — wages and benefits have declined or stagnated for decades while corporate profits soar because employers increasingly use independent contractor status, temp staffing agencies, franchises, and subcontracting to increase profits and shed responsibility to their workers,” Brown said.

There’s much skepticism the bill has a chance of becoming law.

Mark Roberts, CEO of the TechServe Alliance, said the proposal is essentially an organized labor “wish list” as it relates to independent contractors and would upend long-established principles and rules if enacted. However, the proposal has zero chance of seeing any movement, let alone passage, in the Republican-controlled Senate during this Congress, he noted. Also, it will be universally opposed by all Republicans and likely some more moderate Democrats.

According to the Brown and Murray, among other things the bill if enacted would:

  • Add protections for temporary workers including ensuring they are not paid less than direct employees, have the right to transition to full direct employees after one year and have access to unemployment insurance and workers’ compensation. The transfer to permanent status would involve temporary workers that worked 1,040 hours in a 12-month period; after that number of hours have been worked, they would need to be transitioned to direct employees.
  • Limit use of temps as replacement workers during strikes.
  • Make large companies jointly responsible for worker protections.
  • Require temporary staffing firms to register with the US Department of Labor and pay $1,000 plus $250 for each branch office.
  • Update the definition of “employee” by creating a new standard where workers are always presumed to be employees. It would also create an “ABC” test where workers are only considered independent contractors if (A) the individual is free from control and direction; (B) the labor is performed outside the usual course of business; and (C) the individual is engaged in an independently established business. A similar test is already in place in some states such as California.
  • Create a right to flexibility at work. The bill would give workers who are currently treated by their employers as independent contractors the right to maintain their scheduling flexibility.
  • Make it a violation to misclassify a worker as an independent contractor and includes civil penalties of $10,000 for the first violation.
  • Require companies to post notices of their compliance with labor laws. Would direct the US Department of Labor to create a website with ratings of companies.

The legislation specifically mentions “network dispatch entities” that use a digital network to connect workers to those seeking labor. Workers for these firms would be employees under the law and the workers would also be compensated for time spent waiting for receiving and accepting work.

It also would allow for the right of a private attorney general that would give employees the right to sue an employer and recover 25% of civil penalties.

The bill has been endorsed by the National Employment Law Project, AFL-CIO, the Service Employees International Union and the Economic Policy Institute.

Original author: Staffing Industry Analysts (SIA) | Daily News


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