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Interim Health Care Middlesex-Somerset, Inc. v. The Highlands

A-4467-04T1 (N.J. Super. App. Div. 2006) (Unpublished)

EMPLOYMENT AGENCIES; TEMPORARY—Under the Private Employment Agency Act, there are express exemptions for unlicensed temporary help service firms that allow such firms to charge a fee, as liquidated damages, to their employer-customers who hire away the service firm’s employees.

A registered health care service firm provided medical and personnel staff to clients on a temporary basis. One such placement was with a skilled nursing facility. The agreement between the service firm and the nursing facility provided that if the service facility hired a person temporarily placed at the nursing facility, the nursing facility would pay the service firm a buyout fee. The nursing facility hired such a person but refused to pay the buyout fee. “Instead, it requested proof that [the health care service firm] had an employment agency license which [the service firm] maintained was not required.” Under the relevant statute, an employment agency license is required for companies that procure employment for individuals. According to the Court, the service firm did not engage in such a business. “Instead, [it] hired and engaged its own employees, whom it placed temporarily with its customers in the health care field.” There are express exemptions to the Private Employment Agency Act for certain temporary help service firms. While it is true that New Jersey statutes “prohibit a temporary help or a health care service firm from charging a fee or a liquidated damage charge to any individual employed by the service or in connection with employment by the firm unless it has obtained an employment agency license,” the Appellate Division held that the lower court properly interpreted the language of the statute and its underlying regulations “to prohibit charges to the individual employee [but] not to the company that ultimately hires the individual employee.” According to the Court, the relevant language was “clear that temporary help service firms or a health care service firm may place its employees with the firm’s clients for temporary employment, that is, for a fixed duration over a period of time defined by the occurrence of some specified event.” The temporary help service firm “may not charge its employees a fee and it may not prevent its employees from becoming employed by any other person.” Neither the statute nor the regulations under the statute, however, preclude the “temporary help service firm from agreeing with its client that the client must pay liquidated damages in the event it hires an employee from the temporary help service firm.” This is because liquidated damages are “calculated to reimburse expenses incurred to recruit, train and evaluate the employees.” That, according to the Court, does not offend the Act or the regulations.

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