Does N.H.'s temp worker industry need tougher regulation?

HB 1189 is modeled after a Massachusetts law that is one of the most far-reaching state laws specifically targeting the industry

Gregory Hunt didn’t even think about using a staffing agency when he got laid off from a job at a commercial real estate firm.

“I had never used a temp agency in the past,” he said. “I’m 53. I’ve always found a job on my own. My resume spoke for itself.”

And then there was the experience of a friend who was burned by an agency that moved out of state and had been “hiring people out of the halfway house with criminal records.”

But after looking every day for nearly a year, and with his extended benefits running out, “I figured I’d give it a shot. It was a last resort. When all else fails.”

The Leddy Group didn’t fail. It quickly got Hunt a position with Felton Inc. in Londonderry, and after several months he was hired on as a permanent employee. Hunt had nothing but praise for Leddy’s professionalism.

That’s the way it’s supposed to work, and usually does, in an industry that has just about doubled in size in the last two decades and has become more of a first resort for employers concerned about the economy.

Even Steve Wood, CEO of Leddy Group, is quick to acknowledge that there are “fly-by-night operators” breaking the law, picking up workers from Lowell and Lawrence in Massachusetts, “packing them in a van, dumping them here and picking them up at 4:30, paying them in cash.”

Such methods have made the “staffing industry almost a commodity.”

The question is what to do about them, and that question became very concrete with the introduction of House Bill 1189 – a bill that would tighten regulation of temporary workers.

The bill – which was still being considered by the House Labor Committee at deadline – is based on what has been dubbed the “Temp Workers Right to Know Law” that went into effect in Massachusetts at the end of 2013.

The Bay State law requires that agencies spell out in writing the wages, locations and descriptions of the jobs they are sending people out for, which makes it one of the most far-reaching state laws specifically targeting the industry, though it exempts administrative employees.

New Hampshire’s law would even go further. It doesn’t exempt white-collar workers. It would require that temp agencies – who now pay one composite workers’ compensation rate – adopt the experience modification rate of each of their clients for the workers employed there.

It also might end up requiring that an agency reimburse a worker for expenses to commute to their workplace from home (though bill supporters say it was meant to cover transportation costs from the temp agency to the job site or between different job sites).

Those that violate the law could face a fine of $500 a day per violation, though the bill’s sponsor, – Rep. Charles Weed, D-Keene – has proposed reducing that penalty to $100 a day.

Enforcement questions

The staffing industry – including Leddy, whose Steve Wood said it goes too far – has came out in full force against the bill. They say it would hamper what it does best – putting people to work who have difficulty entering the workforce directly.

The agency is a “bridge to employment,” said Kirk Hanna, a lobbyist for Kelly Services Inc. “Almost like an extended interview.”

“This would destroy New Hampshire jobs,” led off Stephanie Richfield, director of government affairs and training for American Resource Staffing in Bedford.

Nicole Horan, business manager at Squires Staffing Services in Nashua, called it an “administrative nightmare.”

Rather than come up with more regulations, the industry argues that the state should do a better job of enforcing existing labor law, which applies to temporary agencies the same way it does to other employers.

However, the state Department of Labor can’t provide enforcement statistics because it doesn’t treat temporary employment as a special category.

Those pushing the bill think that it should. They maintain that temporary employees are particularly vulnerable and require the most protection, since they are really working for two companies at once. They talk of workers injured on the job not getting workers’ compensation or their full pay or having to pay a fee to get proof of income needed for government benefits.

“This is an unregulated multimillion-dollar industry employing thousands of workers in New Hampshire in a unique and precarious condition that is rapidly expanding,” said Judy Stadtman, campaign coordinator and field director at the New Hampshire AFL-CIO. “We understand that a lot of companies are following the standards. We just want to make it industry-wide.”

There is no doubt that the staffing industry is expanding, though whether that growth will continue remains to be seen. Nationally, it employed 2.8 million workers each day in January, compared to 1.1 million at the same time in 1990.

However, in 2014, there were slightly fewer temporary workers than there were in 2000, as the industry rose and fell with the rest of the economy. The numbers, however, are back on the upswing – about 9 percent higher than January 2013.

Some say that growth will accelerate and that temp workers will soon be the “new norm” – a term that was the title of a recent Union Leader article.

Tracey Madden, CEO of McIntosh Staffing Resources, even testified that temp workers will make up 63 percent of the workforce by 2025, prompting House Labor Committee Chair Rep. Andrew White, D-Lebanon, to ask how this would be a good thing for New Hampshire workers.

When asked to back up that figure, the closest thing Madden could come up with was a Staffing Industry Analysts estimate that contingent workers – which also include independent contractors – may comprise 50 percent of the worldwide workforce in 2020.

Manufacturing jobs

For now, temp workers account for 2.2 percent of the labor force in the United States, though that figure is also a bit misleading.

In New Hampshire, for instance, the daily employment rate is about 8,777 temp workers in 2012 – 1.2 percent of the state’s workforce – with 26,000 workers doing some temporary work that year.

The state Department of Employment Security recently tried to categorize the occupations into which temporary workers are placed. The largest percentage – about a quarter – wind up on the factory floor, where manufacturers use temp workers to keep fixed costs down.

Gunmaker Sturm Ruger & Co., for instance, in a recent filing with the Securities and Exchange Commission, said that 500 of its 2,400 employees companywide are temporary.

“We need that flexibility,” explained Donna Basinow, human resources manager at another manufacturer, Precision Tool & Die in Derry. “We don’t want to hire off the streets, because you are looking at unemployment insurances and increasing the risk rate. Our turnover is low this way.”

About 20 percent of New Hampshire’s temp workers were in an office setting in 2012, some 13.5 percent were in health care and about 10 percent were laborers or in construction.

Their median weekly wage was $632 per week, about 20 percent less than permanent workers’ median wage.

They are employed by some 73 agencies in more than 550 offices around New Hampshire. More than half of these firms are members of the Northern New England Association of Personnel Services, which was the main group lobbying against HB 1189.

Most of these staffing agencies pay by the week and boast of the various benefits they offer workers, including safety programs. Indeed, they argue, their own workers’ compensation experience rating is an economic incentive for them to continue to do so, and it’s another reason they opposed the bill.

Such safety problems mainly involve day-labor agencies, which are “a whole different breed,” said Joe Wentworth, vice president of Wilson Employment Network. No one at the House hearing testified on behalf of such firms.

Indeed, the only specific example of safety violation was attributed to such an agency. Rick Castillo, a housing counselor with The Way Home in Manchester, said in written testimony that in November, a worker employed by Labor Ready – a subsidiary of TrueBlue Inc., a national firm with some $1.4 billion in revenues – injured his knee while unloading a truck in Goffstown.

When the worker contacted the Labor Ready office, according to Castillo, he was told he was drunk and banned from working. The worker successfully appealed his case, and TrueBlue allowed him to resume working, but, Castillo said, the worker never was referred to or received workers’ compensation, or even compensation for the day the injury occurred.

(Calls to the local Labor Ready office were referred to corporate headquarters, which did not return calls by deadline.)

The worker did not identify himself for fear of losing his job, which is why, say advocates, no temporary workers spoke in support of a bill filed on their behalf. This fear is particularly strong amongst immigrant workers.

“They don’t know where to take different complaints,” said Maggie Fogarty, program director at the American Friends Service Committee in Concord. “They don’t know where they are showing up that day. One was fired for calling in sick to the wrong person. One supervisor told them to show up and the other told them not to.”

Several advocates particularly mentioned Kelly Services, a national staffing agency with more than $5 billion in annual revenue which supplies an undisclosed number of new Americans – primarily African refugees – to Lindt USA’s factory in Stratham.

One issue involved the difficulty of getting income verification for various benefits, without a credit card. One advocate of African workers – who asked not to be named for fear of jeopardizing the employment chances of those he advocates for – complained to NHBR about Hispanic workers in economically depressed area of Massachusetts treated better than New Americans who lived closer to the plant.

Dawn Ford, regional vice president of Kelly Services, said that the agency will provide a code upon request that enables state agencies and nonprofits to download and print out income documentation for free, though she acknowledged that some of the workers may not have understood that.

She also said that, while the agency will hire out of state to get the best workers possible for clients, they are not bussed in.

“We don’t provide transportation. We don’t discriminate based on ethnicity – only on qualifications,” she said.

Lindt does employ another temporary agency, she noted, and she could not vouch for it.

Bhan Rasaily, a 27-year-old who fled the turmoil in Nepal to settle in Manchester in 2010, said that some of his former coworkers were still working as Kelly temps at Lindt after five years without obtaining a permanent position.

But Rasaily – who worked in video production in his native land – said that the staffing system worked out well for him. When he didn’t see himself advancing at Lindt, he went to another firm, Micro Tech Staffing. This time, he got a job at a plastics factory that became permanent, and his wages went up from about $9.50 to $11.50 an hour.

“When you come here, and I don’t have good English, it was really hard to find a job, and the temporary agencies helped me. I’m very happy thanks to them,” he said.

So are Jessenia Mercure, who emigrated from South America and now manages the Hampshire Green Apartments complex in Bedford, and John Molkentine, a former New Hampshire construction worker who now runs BAE Systems’ janitorial services in Hudson. They’re so happy, in fact, that both are now hiring temporary workers from Leddy Group, the agency that helped them get their permanent positions.

Ironically, though, Molkentine no longer works directly for BAE, which outsourced janitorial services to another company, GCA Services, a third-party employment agency – another trend that’s growing in use among Fortune 500 companies.