Last year, Maine enacted a law that focused on limiting the use of noncompete agreements but included language that could have barred the use of staffing firm conversion fees.

The law defined a “restrictive employment agreement” as an agreement between two or more employers, including through a franchise agreement or a contractor and subcontractor agreement, that prohibits or restricts the employers from soliciting or hiring one another’s employees or former employees. The concern was whether this language could be construed to prohibit the use of conversion fees by staffing firms. After hearing from some members that clients were pushing back on agreements that contained traditional conversion fee language, ASA sought clarification from the state’s department of labor.

In a letter to the Maine commissioner of labor, ASA asserted that the law’s prohibition against restrictive employment agreements should not apply to staffing firm conversion fees charged to clients. The Maine Bureau of Labor Standards replied that because the legislature did not appear to have considered the consequence of prohibiting staffing firm conversion fees when writing the law, the department of labor “does not intend at this time to pursue penalties or otherwise enforce alleged violations of the law involving reasonable conversion fees.”

Staffing firms doing business in Maine should share this information with any clients that are concerned about traditional conversion fee language that appears in their agreements.

ASA advocacy was instrumental in influencing the outcome of two California bills that would have had a major negative effect on the staffing industry.

On Sept. 30, California Gov. Gavin Newsom signed SB 973 into law; it requires businesses with 100 or more employees to annually report employee salary and wage information to the state’s Department of Fair Employment and Housing, along with data on workers’ race, ethnicity, and sex. ASA and California Staffing Professionals, an ASA-affiliated chapter, urged lawmakers to exempt temporary workers because such workers are excluded for federal EEO-1 reporting purposes and thus should be exempted from state requirements. In a major win for the industry, the legislature agreed and excluded temporary workers.

ASA advocacy also helped derail a bill that would have required hotels, event spaces, airport businesses, janitorial service companies, and certain other employers to offer newly open jobs to employees who had been laid off for pandemic-related reasons. ASA and CSP argued that the bill would harm the state’s temporary workers and would unduly hamper employers’ ability to augment their workforces at their discretion. Despite strong union support for the bill, Gov. Newsom vetoed it, saying that it was confusing and would “place a heavy burden on hotels that have suffered financially during the Covid-19 pandemic.” It is unclear whether the legislature will attempt to override the governor’s veto.

Two bills that were being considered in state legislatures before the Covid-19 outbreak died when both were excluded from lists of bills for their legislatures to consider before adjourning for the year.

ASA engaged with lawmakers in Connecticut and Kansas regarding the bills, explaining why they would have negatively affected staffing firms’ ability to do business and would have hurt businesses throughout those states.

Legislation in Connecticut would have required that certain types of employees be provided with advanced notice of their work schedules and receive additional pay if they are notified upon short notice that a shift has been cancelled or that their work hours have been reduced. The legislation also would have prohibited certain businesses from using temporary and other workers supplied by third parties, including staffing firms, unless such businesses first offer additional work to their existing employees. The bill died when the legislature was forced into recess by the Covid-19 pandemic.

A bill in Kansas would have placed severe restrictions on health care staffing firms’ businesses, including a prohibition against conversion fees as well as limitations on amounts staffing firms charge to clients. The legislation received a committee hearing, but legislative leaders declined to present the bill for further consideration during a special session.

In Colorado, temporary worker right-to-know legislation that was introduced shortly before the Covid-19 outbreak died when it failed to advance out of the Senate Judiciary Committee earlier this week.

The bill, SB 20-192, required staffing firms to provide temporary employees with written information concerning the terms and conditions of their employment before the end of the first pay period. The legislation also required each staffing firm to annually register and pay a fee to the state’s Division of Labor Standards and Statistics, which would have maintained a list of the registration status of each staffing firm on its website. Staffing clients that use staffing firms would have been required to verify the staffing agency’s registration and would have faced fines for working with an unregistered firm.

ASA and its lobbyists, Hicks & Associates, opposed the bill because it would have imposed onerous administrative burdens on staffing firms. The legislature was forced into recess by the Covid-19 pandemic, and the bill subsequently died when the legislature determined that SB 20-192 was not a priority. However, the legislation may be reintroduced once the 2021 legislative session commences in January, at which time ASA will re-engage in advocacy efforts.

After a lengthy internal review, the Michigan Department of Labor and Economic Opportunity has determined that the state Paid Medical Leave Act that became effective March 29 last year does not cover employees assigned to staffing firm clients, although staffing agencies may provide the benefit voluntarily. In contrast, staffing agency internal employees are not excluded from coverage and thus are eligible for benefits.

The ruling is set forth in a policy update that LEO will provide to interested parties upon request. The ruling confirms the position advocated by ASA in meetings with state regulators.

On Jan. 12, the U.S. Department of Labor issued final joint employer rules that acknowledge and reflect the American Staffing Association’s comments on proposed rules DOL issued in June 2019. ASA supported DOL’s proposed streamlined four-factor test for determining joint employer status but pointed out that DOL’s proposed joint employment example pertaining to staffing could be misinterpreted, thus frustrating DOL’s goal of providing greater clarity.

The example provided that a client exercised control over a staffing firm’s temporary workers by, among other things, setting their hourly rate of pay. ASA noted that in most staffing arrangements, clients do not set temporary workers’ pay and urged DOL to revise the example.

The final rules include a revised example, reflecting ASA comments, that focuses on clients’ supervision and control over temporary workers’ work, as well as their control over work schedules. DOL also included a new example to show when a staffing client will not be a joint employer. In that example, the staffing firm not only exclusively determines assigned workers’ pay and work schedules, it also supervises them through an on-site supervisor.

The joint employer rules are available at dol.gov. (TEST FOR 1/13/20)