August 7, 2023Client Alert

Governor Signs Bill Amending Illinois’ Day and Temporary Labor Services Act

On August 4, 2023, Governor Pritzker signed a bill amending the Illinois Day and Temporary Labor Services Act. The new law is effective immediately and creates significant new obligations and penalties for temporary labor agencies and their clients.

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Covered Agencies and Clients
The Illinois Day and Temporary Labor Services Act (“Act”) applies to “Day and Temporary Labor Services Agencies” (“Agencies”) (i.e., any person or business that employs day or temporary laborers (“Temporary Workers”) to provide services to third-party clients for a fee) and “Third-Party Clients” (“Clients”) (i.e., any person or business that contracts with an Agency for obtaining Temporary Workers). Day and temporary labor does not include labor or employment of a clerical or professional nature. Given the Act’s broad coverage, it is estimated over 650,000 individuals in the state are impacted by the Act.

Change #1: Temporary Workers May Refuse Assignments Where a There is a Labor Dispute
If a Client is having a labor dispute, Agencies must give Temporary Workers the right to refuse the assignment. Specifically, Agencies may not send a Temporary Worker to a Client location where a strike, lockout or other labor trouble exists without first giving the Temporary Worker a written statement, in a language they understand, informing the Temporary Worker of the labor dispute and their right to refuse the assignment “without prejudice to receiving another assignment.”

Change #2: Equal Pay for Equal Work
In perhaps the most significant, immediate change for Agencies, the Act requires a change in pay for most workers. Agencies are required to pay Temporary Workers assigned to a Client for more than 90 calendar days at least the same rate of pay and equivalent benefits as the lowest paid direct hire at the Client with the same seniority level and performing the same or substantially similar work. The Act defines comparative work based on skill, effort, responsibility and working conditions. If there is no direct comparator, Agencies must look at the lowest-paid direct hire with the closest level of seniority. The Act does not say whether Agencies or Clients are the final arbitrators of which individuals are appropriate comparators.

Agencies may ask their Clients, and Clients must timely respond to requests, for “all necessary information” to comply with the equal pay for equal work requirements. This includes information related to job duties, pay and benefits of the Clients’ employees. Failure to do so is a violation of the Act.

Change #3: Interested Party Litigation
Presumably to increase the prospect of enforcement, the Act gives enforcement rights to “interested parties.” Significantly, any “organization that monitors or is attentive to compliance with public or worker safety laws, wage and hour requirements, or other statutory requirements,” and which reasonably believes an Agency or Client is violating the Act, can sue one or both of them in state court after submitting a complaint to the Illinois Department of Labor (“IDOL”) and obtaining a notice of right to sue. The statute of limitations applicable to both Agencies and their Clients is 3 years. The “interested party” bringing suit may recover penalties, injunctive relief, attorney’s fees and costs. The lion’s share (90%) of any penalties the court assesses will be deposited into a state enforcement fund. For those employers familiar with California’s Private Attorneys General Act (“PAGA”), this provision, though not the same by any stretch, may feel all too familiar.

With the ability to recover attorney’s fees, “interested parties” are likely to be created by plaintiff’s law firms seeking to pursue litigation and recover attorney’s fees.

Change #4: New Safety Mandates for Both Agencies and Clients
The Act imposes new safety-related requirements on Agencies and their Clients.

Agencies are required to:

  • inquire—at the start of a placement contract with the Client—about the Client’s safety and health practices and hazards at the assigned workplace to assess the safety conditions, Temporary Worker tasks and the Client’s safety program (this includes a right to visit the Client’s worksite);
  • make the Client aware of any job hazards the Client does not mitigate, urge the Client to correct the hazard and document their efforts; otherwise, Agencies must remove the Temporary Workers from the Client’s worksite;
  • provide safety training for recognized industry hazards Temporary Workers may encounter at the worksite;
  • provide a general description of the training program to the Client at the start of any placement contract;
  • provide Temporary Workers the IDOL’s hotline number to report safety hazards and concerns; and
  • inform Temporary Workers to whom they may report safety concerns in the workplace.

Clients of Agencies are required to:

  • document and inform the Agency about anticipated job hazards;
  • review the Agency’s safety and health awareness training to determine if it addresses recognized hazards in the industry;
  • provide training on the particular hazards at the worksite;
  • document and maintain records of the training program and provide the Agency with confirmation the training occurred within 3 business days;
  • comply with additional notice and training requirements if the Temporary Worker’s job tasks or work location change such that they may encounter new hazards; and
  • provide worksite specific training and allow the Agency to visit the worksite, if Clients are supervising workers.

Agencies and Temporary Workers may refuse a new job task if the task has not been reviewed or if the Temporary Worker has not had appropriate training.

Change # 5: New Attorney General Power
Agencies already must register with the state to do business providing Temporary Workers. The Attorney General now will have authority to ask a court to suspend or revoke an Agency’s registration when warranted by a public health concern or for violations of the Act.

Change #6: Increased Fees and Penalties
The Act also makes it more expensive for Agencies to operate. The annual fee to register an Agency with the state will increase to $3,000 per Agency (up from $1,000) and $750 for each branch office (up from $250). More importantly, the penalties (of which an “interested party” may now recover 10%) are increasing. An Agency or Client may be penalized not less than $100 and not more than $18,000 (up from not more than $6,000) for first violations and not less than $250 and not more than $7,500 (up from not more than $2,500) for each repeat violation. Finally, a Client may be penalized not less than $100 and no more than $1,500 (up from $500) for each day it contracts with an Agency that is not registered with the state.

Agencies and Clients who rely on Temporary Workers should:

  • assess how they will request and produce the employment data necessary to comply with the equal pay for equal work provisions, including how that data will be used and kept confidential;
  • assess their current training programs to ensure those programs will comply with the amendments;
  • assess any applicable insurance policies to determine whether coverage exists for interested party litigation; and
  • review contracts between Agencies and Clients to allocate responsibilities and risks.
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