News

It is a busy time for employment-related legal updates in Illinois, with Governor J.B. Pritzker recently approving various laws that expand employee protections and add new obligations for employers.

This Client Alert is part of a seven-part series discussing laws Illinois employers need to consider as we move toward 2025. Those laws include:

• amendments to the Illinois Day and Temporary Labor Services Act, which modify and build on 2023 amendments regarding equal pay and benefits for temporary workers (effective 8/9/24) (the following alert);
• amendments to the Illinois Human Rights Act expanding the statute of limitations to 2 years and adding new protected classes (effective 1/1/25) (Client Alert here);
• amendments to the Illinois Human Rights Act, which prohibit the discriminatory use of artificial intelligence and require employer notice of AI use in the workplace (effective 1/1/26) (Client Alert here);
• amendments to the Illinois Equal Pay Act governing pay transparency in job postings (effective 1/1/25) (Client Alert here);
• amendments to the Illinois Wage Payment and Collection Act, which expand pay stub requirements (effective 1/1/25);
• expanded scope of documents and protections under the Illinois Personnel Records Review Act (effective 1/1/25);
• a new Illinois Worker Freedom of Speech Act, which protects employees who decline to participate in certain employer-sponsored meetings on religious or political matters (effective 1/1/25) (Client Alert here);
• amendments to the Illinois Biometric Information Privacy Act, which limit damages for BIPA violations, among other things (effective 8/2/24) (Client Alert here); and
• amendments to the Illinois Right to Privacy in the Workplace Act, which regulate employer use of E-Verify and similar systems (effective 1/1/25).

Stay tuned as other alerts are released in the coming weeks regarding the above updates.

Illinois Day And Temporary Labor Services Act Amendments

As expected, on August 9, 2024, Governor J.B. Pritzker signed Illinois Senate Bill 3650 into law (Public Act 103-1030), which further amends the Illinois Day and Temporary Labor Services Act (“Act”), and became effective immediately. The amended Act is available here.

The amendments modify and build on controversial amendments signed into law in 2023 regarding equal pay and benefits for day and temporary laborers (“Temporary Workers”), which we previously reported on here and here. As before, the amended Act requires day and temporary labor service agencies (“Agencies”) to pay Temporary Workers “equal pay for equal work,” although it clarifies how long Temporary Workers must work for the same third party client (“Client”) before the Act’s equal pay and benefits provisions apply and includes a new method for determining “equal pay.” The amendments also include a new requirement that Agencies provide “applicants” with a detailed “application receipt” if they apply for day or temporary labor work and are not placed on a work assignment that day. These and other significant changes, which will impact both Agencies and their Clients, are described in more detail below.

Scope of Act and New Collective Bargaining Agreement Exception

The Act generally applies to Agencies that employ Temporary Workers to provide day or temporary labor services to Clients for a fee, typically as part of a contract between an Agency and a Client. “Day and temporary labor” does not include office, clerical, or professional work.

The amendments include a new (but limited) exception to the equal pay and substantially similar benefit requirements, which applies only if the Client has directly hired employees covered by a CBA and the Temporary Worker is performing the same or substantially similar work as those CBA-covered employees. This exception applies to the Act’s “equal pay” and “substantially similar benefits” provisions for the period covered by any applicable CBA in effect on April 1, 2024. However, once the period covered by the current CBA expires, the exception appears limited to the Act’s “substantially similar benefits” provisions (i.e., not its equal pay provisions).

Changes to the Pay and Benefits Eligibility Threshold

The amendments clarify how long Temporary Workers must work at the same Client before the Act’s pay and benefits protections apply to a Temporary Worker. Specifically, the time period has been changed from “more than 90 calendar days” to “more than 720 hours within a 12-month period.” Agencies must count all hours a Temporary Worker works at the same Client beginning on April 1, 2024.

720 hours is equivalent to 90 8-hour workdays. Therefore, in practice, if Temporary Workers typically work less than 8 hours per day at the same Client, it is likely they will have to work more than 90 days before reaching the amended eligibility threshold. On the other hand, Temporary Workers who typically work more than 8 hours per day at the same Client will likely reach the amended eligibility threshold in less than 90 days. If Agencies have not already done so, they should establish a system to ensure they are properly tracking a Temporary Worker’s hours at the same Client so that Temporary Workers who reach the eligibility threshold are paid correctly.   

New Method for Determining Temporary Workers’ Minimum Pay Rate

The Act now includes two methods that can be used to determine an eligible Temporary Worker’s minimum pay rate. In the first method, Agencies determine Temporary Workers’ pay based on the amount the Client pays to its most comparable directly hired employee. In a new, alternative method, Agencies determine Temporary Workers’ pay based on relevant statistics published by the U.S. Department of Labor’s Bureau of Labor Statistics (“BLS”). Significantly, the amendments provide that the Client, in its “sole discretion,” can require Agencies to use the second BLS-based method.

Method #1: Pay Based on the Client’s Pay to Its Directly Hired Employees

If this method for determining a Temporary Worker’s pay is used, the Agency must pay the Temporary Worker as follows:

• If the Client has a directly hired comparator employee “with the same or substantially similar 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,” the Agency must pay the Temporary Worker not less than the straight time hourly rate of pay (or hourly equivalent) the Client pays to its lowest paid comparator employee who is entitled to overtime under the federal Fair Labor Standards Act (“FLSA”); or
• If the Client does not have a directly hired comparator employee as described above, the Agency must pay the Temporary Worker not less than the straight time hourly rate of pay (or hourly equivalent) the Client pays to its lowest paid employee who is entitled to overtime under the FLSA with the closest level of seniority.

Method #2: Pay Based on Bureau of Labor Statistics

The amended Act provides that at the sole discretion of the Client, Agencies must use a different method for determining a Temporary Worker’s minimum pay rate, which is tied to certain BLS occupational and wage statistics:

• Temporary Workers who have satisfied the 720 hours eligibility threshold with the same Client are entitled to pay that is not less than the “median base hourly rate” (or hourly equivalent) of employees working in the same or substantially similar job classification in the same metropolitan area or non-metropolitan area of Illinois where the work is performed.
• Temporary Workers who have worked more than 4,160 hours at the same Client within a 48-month period are entitled to pay that is not less than the “75th percentile base hourly rate” (or hourly equivalent) of employees working in the same or substantially similar job classification in the same metropolitan area or non-metropolitan area of Illinois where the work is performed.

A Temporary Worker’s “job classification” must be determined using the BLS’s most recent Standard Occupational Classification System. Once that job classification is determined, Agencies must use the BLS’s most recent Occupational Employment and Wage Statistics Survey to determine the Temporary Workers' minimum pay rate by reviewing the wage statistics available for that job classification in the appropriate Illinois metropolitan or non-metropolitan area.

Clients will have to balance the pros and cons of requiring Agencies to use the BLS-based method to determine Temporary Workers' pay rates. Demanding that Agencies do so could result in higher fees to the Client, particularly if the amount the Client pays to its own employees in comparable positions is less than the amount reflected in the relevant BLS wage statistics. That said, requiring Agencies to use the BLS-based method could minimize the Client’s burden to share certain pay information about its own employees with Agencies.

Amendments Related to “Substantially Similar Benefits”

Previously, the Act required Agencies to provide eligible Temporary Workers with benefits “equivalent” to those the Client provides to its comparable employee or the “hourly cash equivalent” of the actual cost of such benefits. The amendments modify this language, now requiring that Agencies provide Temporary Workers with “substantially similar benefits” or the “hourly average cash equivalent” of the actual cost of such benefits.

Notwithstanding the amended language regarding benefits, we do not believe the language is currently enforceable or being enforced by the Illinois Department of Labor ("IDOL"). As previously reported here, in March 2024, a federal court issued an order that preliminarily enjoined the IDOL’s Director from taking any action to enforce the Act’s “equivalent benefits” provision or its “hourly cash equivalent” alternative. The court determined that plaintiffs are likely to succeed on their argument that the Act’s “equivalent benefits” provisions are preempted by the federal Employee Retirement Income Security Act of 1974 (“ERISA”). Based on the court’s reasoning, we do not believe the new language requiring “substantially similar benefits” or the “hourly average cash equivalent” resolves the concerns covered by the court’s preliminary injunction order.

While affected Agencies and Clients will need to continue monitoring the legal developments regarding the Act’s benefit provisions, we believe the modified benefits language falls within the scope of the current injunction. This conclusion is further supported by the fact that on August 13, 2024 (i.e., four days after the amendments were signed into law), the IDOL issued a bulletin regarding the amended Act that expressly states: “NOTE: The ‘equal benefits’ part of the law remains enjoined by the courts and is not currently being enforced by the Department.”

Amendments Regarding Clients’ Obligations to Share Information With Agencies

The amendments clarify that a Client does not have to provide an Agency with information about the Client’s own employees until the Agency requests it and a Temporary Worker has worked for the Client more than 720 hours within a 12-month period (or 4,160 hours within a 48-month period). Clients must provide required information to Agencies in a “timely” manner. The amendments confirm that the Agency (not the Client) is responsible for determining a Temporary Worker’s rate of pay and benefits (or cash equivalent of such benefits).

Even before the new amendments, Clients were required to provide Agencies with certain information about the Client’s comparable employees, “as necessary” for an Agency to comply with Act’s equal pay and benefits provisions. Now, in addition to the categories previously identified (i.e., information related to the Client’s employees’ job duties, pay, and benefits), Clients will have to provide Agencies with information related to the “working conditions” and “seniority” of its employees in the “applicable classification,” at least if such information is necessary for the Agency to determine a Temporary Worker’s required pay and benefits. It is unclear what information would suffice to reflect the “working conditions” of potential comparators.

Amended language suggests Clients have a duty to ensure the information they provide to Agencies is “accurate and complete.” This new language is important, particularly because a Client’s failure to provide an Agency with information required under the Act constitutes a “notice violation” – and an Agency can file a lawsuit against a Client for the violation.

New “Application Receipt” Requirement Imposes Significant Burden on Agencies

Before the recent amendments, Agencies were required, upon request, to provide Temporary Workers not assigned to work on a particular day with “confirmation” that the Temporary Worker had sought work but not been placed on a work assignment that day. In a major development, the amendments delete this provision regarding Temporary Workers in its entirely and seemingly replace it with a new requirement focused on “applicants.” Specifically, the amendments require Agencies to provide “applicants” seeking day or temporary labor work (by applying in-person, online, or using an app-based system) with an “application receipt” if the applicant is not placed with a Client or otherwise contracted to work “for that day.” On its face, this requirement seems to apply each time an applicant seeks a work assignment and is not assigned to work that day, even if the applicant does not request confirmation from the Agency that they sought work.

Notably, the following detailed information must be included in the application receipt:

1. The name and location of the Agency and branch office;
2. The name and address of the applicant;
3. The date and time the applicant sought the work assignment;
4. The manner in which the applicant sought the work assignment; and
5. The specific work sites or type of jobs sought by the applicant, if applicable.

This application receipt requirement is likely to result in a significant burden on many Agencies and make it more expensive for Agencies to operate, particularly those Agencies that receive a high volume of applicants. We encourage Agencies to reach out to their employment counsel to discuss options for compliance with this new requirement. Although the Act requires Agencies to use an IDOL-approved form for the application receipt, the IDOL had not issued a form for Agencies to use as of this alert’s publication.

Additional Information to Include in Employment Notice Given to Temporary Workers

Even before the amendments took effect, Agencies were required to provide Temporary Workers with an IDOL-approved “employment notice” on the first day of a work assignment and on any other day when the terms listed in the employment notice change. In addition to the information previously required (e.g., the name and nature of the work, the wages offered, the name and address of the Client, and other information), Agencies must now include the following:

• a list of basic job duties;
• the county where the Temporary Worker is assigned to work; and
• if the Temporary Worker is eligible for the Act’s equal pay requirements, either: (a) the seniority and hourly wage of the Client’s comparator employee being used to determine the Temporary Worker’s wage rate (pay based on Method #1); or (b) the standard occupational classification used to determine the Temporary Worker’s wage rate under the BLS-based (pay based on Method #2).

As of this alert’s publication, the IDOL had not issued an updated employment notice for Agencies to use.

Other Significant Changes in the Amended Act

In addition to the changes described above, the amendments include other protections for employees and impose additional obligations on Agencies and/or Clients, including the following:

• The amendments expand a Temporary Worker’s right to refuse an assignment based on certain labor activity and an Agency’s accompanying notice obligations. As amended, the Act provides that Agencies must give written notice to a Temporary Worker if any of the following types of labor disputes are taking place where the Temporary Worker is being assigned (new language in bold): a strike, lockout, or work stoppage exists because of a labor dispute or where a picket, bannering, or handbilling exists because of a labor dispute.
• The amendments clarify that the mandatory safety and job hazards training Clients provide to Temporary Workers must be “consistent with training requirements provided for in the standards, guidances, or best practices issued by the federal Occupational Safety and Health Administration" ("OSHA").

Conclusion

Except as explained above regarding the “substantially equivalent benefits” provisions, these amendments are effectively immediately. We will continue to monitor developments in this area. In the meantime, if Agencies and Clients have not already done so, we recommend that they analyze how these significant changes impact their compliance obligations and other business practices.