Illinois Updates Its Law Governing Use of Staffing Agencies — Again

The Illinois General Assembly has been busy at work revising and updating the Illinois Day and Temporary Labor Services Act (the “Act”). The Act generally requires that temporary staffing agencies register with the Illinois Department of Labor (IDOL) and imposes special requirements on temporary labor agencies and their third-party clients. As we previously reported, in August 2023, the General Assembly amended the Act to allow temporary workers a right of refusal, require equal pay for equal work between temporary and directly-hired employees, and impose additional safety measures to protect temporary workers, among other changes.

As of August 2024, new amendments to the Act impose additional requirements on staffing agencies and third-party clients who use temporary labor. These amendments include:

• Temporary staffing agencies must provide temporary employees notice at the time the employee is dispatched or assigned to a job site of, among other things, the basic job duties, seniority, and hourly wage of the comparator being used to determine wage or the standard occupational classification used to determine equal pay.

• Temporary staffing agencies must provide applicants who are not provided a work assignment with a receipt confirming that the applicant sought work and includes information about their application and the temporary staffing agency.

• Temporary workers may refuse work assignments because of work stoppages and because of labor disputes such as picketing, bannering, or hand-billling at the work site without penalty.
• Temporary workers assigned to the same third-party client for more than 720 hours within a 12-month period are entitled to equal pay for equal work. The amendments provide two options, which the third-party client may choose, for how to calculate equal pay for equal work:
  • Option 1: Third-party client employee compensation as basis of equal pay. If there is a directly hired comparator employee with a substantially similar level of seniority performing substantially similar work, the temporary employee must be paid the same straight time hourly rate of pay or hourly equivalent of the lowest-paid, directly hired comparator employee of the third-party client who is entitled to overtime and is performing substantially similar work that requires substantially similar skill and responsibility. If there is not a directly hired comparator employee of the third-party client, the temp employee must be paid the straight time hourly equivalent of the lowest-paid, directly hired employee of the third-party client who is entitled to overtime with the closest level of seniority.
  • Option 2: Bureau of Labor Statistics data as the basis for equal pay. The temporary worker alternatively may be paid according to the Bureau of Labor Statistics Data. If the temporary employee worked at least 720 hours within a 12-month period for the same third-party client, the third-party client may choose that the temporary employee be paid no less than the median base hourly rate (or hourly equivalent if paid on a salary basis) of workers working in substantially similar job classifications as reflected in the most recent Standard Occupational Classification System published by the U.S. Department of Labor Bureau of Labor Statistics in the same metropolitan area or non-metropolitan area of Illinois where the work is performed. If the temporary employee worked at least 4,160 hours within a 48-month period for the same third-party client, the third-party client may choose that they be paid not less than the 75^th percentile base hourly rate of workers working in substantially similar job classifications as reflected in the most recent Standard Occupational Classification System published by the U.S. Department of Labor Bureau of Labor Statistics in the same metropolitan area or non-metropolitan area of Illinois where the work is performed.

• Temporary agencies must provide employees who work more than 720 hours within a 12-month period at the same third-party client the same benefits as the job classification of employees performing substantially similar work.
• If using the comparator method to calculate equal pay, a third-party client must timely provide the temporary staffing agency with all necessary information related to job duties, working conditions, pay, seniority, and benefits it provides to the applicable classification of directly hired employees necessary for the temporary agency to comply with the equal pay for equal work requirements upon the temporary agency’s request.
• The equal pay requirements of the Act do not apply to any company where the directly hired employees of the third party performing substantially similar work are covered by a valid collective bargaining agreement (CBA) in effect on April 1, 2024, for the period covered by that CBA. Thereafter, hourly cash payment for benefits shall not be required if the directly hired employees of the third-party client are covered by a CBA for any period covered by that CBA.

Staffing agencies and employers who use temporary labor in Illinois should be sure to carefully review these amendments, which already went into effect in August 2024. Failure to comply with the requirements of the Act can carry hefty civil penalties for each violation, and interested parties may initiate civil litigation to enforce their rights under the Act.