Oregon Legislation Targets Staffing Agencies | DCR Workforce Blog

Oregon Legislation Targets Staffing Agencies

In 2011, Oregon began considering legislation that could have enormous impact on the State’s staffing industry.  After two years of being “in committee”, the legislation has now moved to the state judiciary committee as Oregon Senate Bill 610.  The bill has caused a firestorm which continues to grow.  To objectively consider the legislation, its merits and its potential impact (good and bad) we must answer the fundamental questions:

  • Who introduced this legislation?
  • Why?
  • What is included in the bill?
  • What are the potential unintended consequences?

The bill was introduced on behalf of the Oregon Coalition to Stop Wage Theft, an organization consisting of Northwest Workers’ Justice Project (NWJP), PCUN, Rural Organizing Project (ROP), Oregon Center for Public Policy (OCPP), VOZ Workers’ Rights Education Project, Oregon School Employees Association (OSEA), CAUSA, Portland Jobs with Justice, Oregon AFLCIO, SEIU Local 503, SEIU Local 49, Economic Fairness Oregon, Oregon Thrives, Oregon New Sanctuary Movement and Ecumenical Ministries of Oregon (EMO). This organization states that SB 610 addresses the serious problem of wage theft – workers not being paid in full for the work they do.

Wage theft is the widespread and illegal practice of not paying workers for some or all of their work. It happens when employers pay less than the minimum wage, don’t pay overtime, force employees to work “off the clock” or “under the table”, issue paychecks that bounce, steal tips, deny legally required meal and rest breaks or don’t pay workers at all.

These organizations declare that, while a majority of Oregon employers follow the laws, some are cutting costs in ways that hurt Oregon workers and the businesses that are competing with them. They support legislation that defines worker pay and limits what can be charged by the staffing industry.

Staffing agencies are united in their opposition to the legislation, which they have labeled “the Oregon Anti-Staffing Bill”.  They claim that they are being targeted by this bill even though there are few if any instances where staffing agencies are guilty of “wage theft”.  They further claim that the restrictions that would be imposed on staffing agencies operating within Oregon are so onerous that it would be unprofitable to conduct business in the state.

The Contents of Oregon Senate Bill 610

Like many unfortunate pieces of legislation today, Senate Bill 610 is unclear in many areas, leading to differing interpretations of its contents and its intent.

  • Equal pay – The bill specifies that permanent hires and contingent workers should receive equal hourly pay, except those based on “differences in job duties”.  Opponents charge that this means that experience, skill level, training, education or length of service would no longer factor into wages, discriminating against the more skilled or experienced worker.
  • Surcharge – SB 610 would mandate an additional 30% surcharge on the wages of each contingent worker payable in wages or benefits.  The intention here is primarily to compensate workers who need to cover their taxes, statutory charges, healthcare and other benefits, especially when they are not offered by the staffing agency. This surcharge is based on the notion that the typical “true payroll cost” of an employee is the gross pay plus 30% uplift for these charges.  This is separate from the “mark up” charged by staffing agencies to cover their expenses.

However, the flaw in this logic is that it fails to recognize that workers under contract to a staffing agency are W-2 workers.  As such, the agency pays federal and state employment taxes, FICA, SUTA and other statutory charges. In addition, the agency incurs expenses, causing the 30% to be an inflated percentage while failing to recognize the actual costs to the staffing agency.

  • Temp to Perm Conversion – The bill precludes staffing firms from charging the client or the worker any fees for converting a contingent worker to a permanent hire.  These charges are normally applied for a limited period of time, enabling the staffing agency to recoup the cost of sourcing, screening and onboarding an employee who quickly becomes a permanent member of the client’s staff.

Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.