The Use of Staffing Agencies Is About To Get More Expensive (and Risky) in Illinois

As we have reported in the past, utilizing temporary staffing agencies to fill gaps in labor needs can be an efficient and economically beneficial way for companies to meet business demands. This is particularly true in today’s “gig economy,” where short-term staffing needs are high but small or mid-size companies do not have the resources or ability to hire permanent workers to complete the job.

But, as we have also cautioned, doing so comes with certain risks. Even as the Trump Administration rolls back Obama-era joint employer protections for certain workers, at least some states are making it more expensive and difficult to engage temporary staffing services, at least in the same manner as has been the traditional engagement.

Enter Illinois: starting on June 1, 2018, the state is imposing some additional obligations on both temporary staffing agencies and their clients. The Illinois Day and Temporary Services Act (the Act) is aimed at protecting day and temporary laborers from “abuse of their labor rights, including unpaid wages, failure to pay for all hours worked, minimum wage and overtime violations, unlawful deduction from pay for meals, transportation, equipment and other items as well as discriminatory practices.” See P.A. 100-0517, amending  820 ILCS 175/2.  Illinois has about 150 licensed temporary staffing agencies with over 600 branch offices around the state, which employ around 300,000 workers in the state.  This is no small number, and the state has made it a priority to protect these workers from the purported abuses suffered.

In the name of transparency and accountability, the Act require staffing agencies to, among other things, provide advance notice to workers as to:

• the name and nature of the type of work performed, including the types of equipment, protective clothing and training required for the task;
• the wages offered;
• the type of meals and equipment provided (if any); and
• the terms of transportation to and from the worksite.

Importantly, if the worker is provided transportation from the location where the worker applied for the job to the worksite, return transportation is required – in other words, a temporary worker cannot be left at a worksite to fend of himself or herself after the shift ends.

For companies utilizing staffing agencies, too, the law imposes some new requirements if the company requires background checks, consumer reports or drug tests. Specifically, the law prohibits both staffing agencies and their clients from charging temporary workers for conducting these checks, thus obligating the companies to pick up the tab for these expenses. Moreover, if a client informs its staffing agency that it intends to hire permanent employees for the positions in which temporary workers are placed, the agency is required to attempt to place the temporary workers for the permanent positions. Indeed, the obligation to pay temporary workers for the work they perform in their placements remains with the staffing agencies.

While not required under the amendments to the Act, there has been a push to require that certain companies conduct job hazard analyses for the jobs to which a temporary worker will be assigned prior to each assignment. For temporary laborers working in dangerous, dirty and low skilled positions – such as in the construction, warehousing, recycling and general industries – providing these trainings and hazard analyses are a recommended best practice, and will help those companies get ahead of the curve and avoid possible work hazard liabilities.  While implanting such measures will raise the administrative (and likely monetary costs) associated with hiring temporary labor through staffing agencies, doing so will ensure companies are providing safe and productive working environments for temporary and permanent workers alike.

Of course, these changes increase some of the costs and administrative burdens imposed on staffing agencies, but the amendments to the Act do not appear to impose significant additional costs for the time being. That said, the push to improve protections for temporary workers continues at the state level, and companies should ensure they remain informed of such changes as they are implemented.  Of course, if additional legal burdens are imposed on staffing agencies and their clients alike, the costs and fees associated with utilizing staffing agencies will increase, will likely make the use of staffing agencies less attractive, and will push employers to hire more full time workers – even if on a temporary basis – rather than seek to fill their labor needs through a leased employee arrangement.  For now, however, those mandated costs and burdens remain at bay.

Of course, protecting temporary laborers from purported abuses being one of the stated goals of the Act, it is a good time for businesses to review their existing relationships with staffing agencies in Illinois to determine whether they comply with these new obligations as of June 1, 2018.