The Illinois legislature recently passed HB2862 amending the Day and Temporary Labor Services Act (the "Act"). If signed by Gov. J.B. Pritzker in its current form as expected, it will have significant implications for staffing agencies and their clients (i.e. employers that use staffing agencies to supplement their workforce with non-employee, temporary workers). Gov. Pritzker has 60 days from June 16, 2023, to sign the bill. Once signed, the bill takes effect immediately.

Importantly, the amendments do not alter who is covered under the Act or their corresponding definitions. Under the Act:

  • "Day and temporary labor service agency" ("Labor Service Agency") means "a person or entity engaged in the business of employing day or temporary laborers to provide services, for a fee, to or for any third party client pursuant to a contract with the day and temporary labor service agency and the third party client."
  • "Third-party client" ("client company") means "any person that contracts with a day and temporary labor service agency for obtaining day or temporary laborers."
  • "Person" means "any natural person, firm, partnership, co-partnership, limited liability company, corporation, association, business trust, or other legal entity, or its legal representatives, agents, or assign."
  • "Day and temporary labor" means "work performed by a day or temporary laborer at a third party client, the duration of which may be specific or undefined, pursuant to a contract or understanding between the day and temporary labor service agency and the third party client. 'Day and temporary labor' does not include labor or employment of a professional or clerical nature."

While below is a summary of the amendments in their current form, if Gov. Pritzker signs the bill into law, additional guidance will be needed from the Illinois Department of Labor (the IDOL), the administrative agency tasked with interpreting and enforcing the Act. Such guidance likely will be in the form of IDOL webinars, FAQs, and/or regulations.

Day or temporary laborers' right to refuse a placement if there is a labor dispute

The amendments provide that Labor Service Agencies will be prohibited from sending a day or temporary laborer to a client company's workplace if there is "a strike, a lockout, or other labor trouble" occurring at the time of the placement, unless the Labor Service Agency provides the laborer "at or before the time of dispatch, a statement, in writing and in a language that the day and temporary laborer understands, informing the day or temporary laborer of the labor dispute and the day or temporary laborers' right to refuse the assignment without prejudice to receiving another assignment." The amendments do not define "other labor trouble," leaving such interpretation to the IDOL, who likely will interpret broadly.

Thus, the amendments will require Labor Service Agencies to obtain information relating to any such occurrences at their client company's workplace before placing a day and temporary laborer there. The amendments do not appear to address a client company's failure or unwillingness to provide such potentially confidential information to a Labor Service Agency. Arguably, however, a Labor Service Agency could seek redress under Section 95 of the Act, which provides, "A day and temporary labor service agency aggrieved by a violation of this Act or any rule adopted under this Act by a third party client may file suit in circuit court of Illinois, in the county where the alleged offense occurred or where the day and temporary labor service agency which is party to the action is located." Guidance will be needed from the IDOL to address this scenario.

A separate notice violation will be assessed against a Labor Service Agency for failing to provide a laborer with the required information each time it is required to do so.

Equal Pay for Equal Work

The amendments will require a Labor Service Agency to pay "a day or temporary laborer who is assigned to work at a [client company] location for more than 90 calendar days ... not less than the rate of pay and equivalent benefits as the lowest paid directly hired employee of the [client company] with the same level of seniority at the company and performing the same or substantially similar work on jobs the performance of which requires substantially similar skill, effort, and responsibility, and that are performed under similar working conditions."

In the absence of client-employee/comparator, the amendments will require the Labor Service Agency to pay the day or temporary laborer "not less than the rate of pay and equivalent benefits of the lowest paid direct hired employee of the company with the closest level of seniority at the company." The amendments provide that Labor Service Agencies will have the option to pay the individual the cash equivalent of the actual cost of benefits, in lieu of providing the actual benefits.

The amendments will impose obligations on the client company to assist the Labor Service Agency to comply with the Act's requirements of determining what constitutes "equal pay for equal work." Specifically, the amendments provide that if a Labor Service Agency makes a request to a client company "to which a day or temporary laborer has been assigned for more than 90 calendar days, [the client company] shall be obligated to timely provide the day and temporary labor service agency with all necessary information related to job duties, pay, and benefits of directly hired employees necessary for the day and temporary labor service agency to comply." The amendments provide that a client company's failure to provide a Labor Service Agency (who makes such a request) with any the required information will be deemed in violation of the Act and subject to a $500 penalty and attorneys' fees and costs.

The IDOL will need to provide guidance on what specific benefits a Labor Service Agency is required to provide to eligible day or temporary laborers, such that they can make proper requests to client companies for that information, and how to quantify the cash equivalent of the actual cost of such benefits, should they opt to pay the cash equivalent instead of providing the actual benefits. The IDOL also will need to provide guidance on all relevant factors for determining who is a proper comparator and who ultimately makes that determination (e.g. the Labor Service Agency or the client company).

Labor Service Agencies and client's safety and health practice required responsibilities

The amendments will require Labor Service Agencies to do the following:

  • Inquire at the start of any contract for placement about a client company's safety and health practices and hazards at the workplace where the work is to be performed to assess the safety conditions, workers' tasks, and safety program. A Labor Service Agency could request to conduct the inquiry at the actual workplace where the work will be performed. If at any time during the contract the Labor Service Agency becomes aware of job hazards at the workplace that are not mitigated by the client company, it will be required to apprise the client company of any such job hazards, urge the client company to correct the job hazards and document their efforts. Failure of a client company to remedy the job hazard will require the Labor Service Agency to remove the day or temporary worker from the worksite;
  • Provide the day or temporary laborer with "general awareness safety training for recognized industry hazards" the laborer may encounter at the worksite – offered in the preferred language of the laborer and at no cost to the laborer;
  • Provide the client company with a general description of the training program, including topics covered, at the start of any placement contract;
  • Provide day and temporary laborers with the IDOL's hotline number to report safety hazards and concerns as part of their on-boarding documents; and
  • Inform day and temporary laborers to whom they may report safety concerns at the client company's workplace.

The amendments will require client companies to:

  • Document and inform Labor Service Agencies about anticipated job hazards day and temporary laborers are likely to encounter in the workplace;
  • Review the Labor Service Agency's "general awareness safety training" to determine if the training addresses recognized hazards of the industry;
  • Provide training tailored to the particular hazards at the worksite;
  • Document and maintain records of site-specific training and provide the Labor Service Agency with confirmation within three business days of the training;
  • If during the contract, the client company changes the day or temporary laborers' job tasks or work location, and in doing so, "new hazards may be encountered," the client company will be required to inform the Labor Service Agency and the laborers of such changes, inform each of "new hazards not previously covered" before the laborer starts the new tasks, and "update personal protective equipment and training for the new tasks." If the training is not sufficient, the laborers or the Labor Service Agency may refuse a new job task at the worksite.
  • If the client company is supervising a day or temporary laborer (which could lead to a joint-employer determination), the amendments will require it to provide the laborer with worksite specific training and permit the Labor Service Agency to visit the worksite to confirm that the client's training is sufficient.

At a minimum, the IDOL will need to provide guidance on assessing what constitutes a job hazard under the Act and provide template training materials for Labor Service Agencies and client companies to use to comply with the Act's requirements.

Increased Fees and Penalties

The amendments will increase the non-refundable annual registration fee that Labor Service Agencies are charged for registering with the IDOL to $3,000 (currently $1,000) and $750 (currently $250) for each branch office or other location where the Labor Service Agency regularly contracts with day or temporary laborers.

Under the amendments, Labor Service Agencies and client companies will be subject to civil penalties between $100 and $18,000 (up from not more than $6,000) for violations found in the first audit conducted by the IDOL or determined in a court in a civil action brought by an "interested party" (see below) or by the Illinois Attorney General, and between $250 and $7,500 (up from not more than $2,500) for each repeat violation found by the IDOL or a circuit court within three years of the first audit.

A client company will be subject to civil penalties of between $100 and $1,500 (up from $500) for each day it contracts with a Labor Service Agency that is not registered with the state. The amendments provide that each violation of the Act will be viewed as separate and distinct violations for each day the violation continues or for each temporary laborer who is aggrieved.

Finally, the amendments provide that the Illinois Attorney General may request that a circuit court suspend or revoke the registration of a Labor Service Agency for violating any portion of the Act or when warranted by public health concerns.

Civil litigation initiated by an "interested party"

The amendments create a private right of action for any "interested parties" who have a "reasonable belief" that a Labor Service Agency and/or client company has violated the Act in the preceding three years, thus giving "interested parties" standing to file a lawsuit against one or both to aggrieve the alleged violation. The amendments define "interested parties" as "an organization that monitors or is attentive to compliance with public or worker safety laws, wage and hour requirements, or other statutory requirements."

Prior to filing a lawsuit, the amendments will require the interested party to first submit a complaint to the IDOL and obtain a notice of right to sue from the IDOL. The IDOL will provide the Labor Service Agency and/or client company with an opportunity to contest and/or cure the alleged violation. Importantly, however, even if the IDOL finds there to be no violation or the violation is cured, the interested party can still receive a right to sue notice from the IDOL and file a lawsuit. If an interested party files a lawsuit and is successful, it is entitled to 10 percent of any statutory penalties assessed (see above), as well as attorneys' fees and costs in bringing the lawsuit. The remaining 90 percent of the assessed statutory penalties will be deposited in the Child Labor and Day Temporary Labor Services Fund.

With the ability to recover attorneys' fees, plaintiff's law firms likely will join forces with interested parties to pursue litigation and recover attorneys' fees, considering the minimal threshold of a "reasonable belief" necessary to initiate action with the IDOL, and the ability to sue, regardless of the outcome or steps taken to cure at the IDOL stage.

The amendments will certainly change the temporary worker landscape for staffing agencies and companies using staffing agencies for temporary workers. As set forth above, while the IDOL will need to provide guidance on, among other things, the equal pay and equal benefits, and safety training and notice requirements, staffing agencies and their clients should not delay in complying until such guidance is issued, as such guidance could take several months after the amendments go into effect to be issued.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.