With more than three million temporary and contract employees working for America’s staffing companies, demand for other-than-permanent workers continues to stay strong.
One goal for many staffing firms involves multi-state expansion. Having a presence in more than one state acts as a buffer against a slowdown in one location; and it enhances the firm’s image, helping it pitch to large companies with multistate operations.
But staffing firms that expand across state borders need to multitask, and consider issues like whether they need to register with each state in which they’re active.
In July 2015, international staffing services company Insight Global LLC sued competitor Collabera Inc. in New Jersey Superior Court. Global alleged that Collabera induced at least 12 former employees of the plaintiff to leave Global and work for Collabera in violation of their employment agreements.
It turned out that at the time Global filed the complaint against Collabera, the plaintiff firm was NOT registered or licensed to do business in New Jersey, as was required under the Private Employment Agency Act, or PEAA.
“All businesses that provide employment and personnel services must be licensed and/or registered in New Jersey in order to operate within the State,” according to the PEAA.
That apparently helped to nail the Court’s decision to dismiss Global’s suit, since “…if an employment agency, temporary help services firm, or consulting firm failed to prove licensure or registration, the entity cannot bring a cause of action in New Jersey state courts.”
Collecting fees in multi-states…
The wording indicates that the ruling may not be limited to voiding separation agreements and employment agreements. The court ruling also notes that the PEAA bars an unregistered company’s claims “for a collection of fees…”
When Crossing the Border…
Staffing services firms as well as all businesses should review the laws of the states in which they do business, and determine whether or not they are complying with registration requirements. Firms need to be aware that they may not be able to enforce contracts or collect fees if they are not registered properly in the states and major cities in which they operate. In addition to registering with the Secretary of State and Division of Taxation, staffing companies should handle other requirements in each state, including sales tax, worker’s compensation and disability insurance coverage.