Amendments to the Illinois Day and Temporary Labor Services Act Take Effect – What Temp Agencies and Contracting Companies Need to Know

On August 4, 2023, Illinois Governor JB Pritzker signed into law HB 2862, which significantly amends the Illinois Day and Temporary Labor Services Act (the “Act”). The amendments, which took effect immediately, provide most temporary workers with increased equal pay rights and include new safety and training requirements. Shortly thereafter, on August 7, 2023, the Illinois Department of Labor (“IDOL”) adopted emergency rules to provide additional details and clarifications regarding the amendments. It is important to note that the Act does not apply to professional and clerical temporary workers.

Among the most notable changes in HB 2862 and IDOL’s related guidance are:

• Equal pay and benefits. Temporary laborers assigned to work at a third-party company for more than 90 calendar days (whether consecutively or intermittently) within any 12-month period must be paid at least the same wage as the lowest-paid comparable direct-hire employee and must receive equivalent benefits as comparable direct-hire employees. If there is no comparable direct-hire employee, the temporary laborer must be paid at least the same wage and equivalent benefits as the lowest-paid direct-hire employee of the third-party client.

IDOL guidance clarified that the 90-day clock starts to run after HB 2862’s effective date of August 4, 2023. If compensation increases are required to comply with the Act’s requirements, the increased wage will apply as of the temporary laborer’s 91st day working at the third-party client.

• Cash in lieu of benefits. Temp agencies may choose to pay the temporary laborer the cash equivalent of the actual cost of the benefits rather than providing the benefits. IDOL clarified that “benefits” means health care, vision, dental, life insurance, retirement, paid and unpaid leave, other similar employee benefits, and employee benefits as required by state and federal law.
• Information to be provided by third-party clients. Businesses that use a temporary laborer for more than 90 days must provide the agency with the necessary information related to job duties, pay, and benefits of direct-hire employees to enable the agency to meet its obligations related to equal pay and benefits.
• Right to refuse assignments. Temporary agencies cannot send temporary laborers to third-party clients engaged in a strike, lock-out, or similar labor dispute without notifying the temporary laborer, in writing, of the labor dispute and the laborer’s right to refuse the assignment. IDOL guidance confirms that the right to refuse must be honored without prejudice.

IDOL guidance provides that the temporary agency must ask the third-party client whether a strike, lock-out, or other labor dispute exists at the client’s business before sending a temporary laborer to work there.

• Workplace safety requirements. Before assigning a temporary laborer to a third-party company, the agency must inquire about safety and health practices at the worksite, provide training on general safety and recognized industry hazards, transmit a general description of the safety program at the start of the contract with the third-party client, provide IDOL’s safety hotline number to the temporary laborer, and inform the temporary laborer of how to report safety concerns.

The third-party company utilizing temporary laborers must document and inform temporary laborers about potential workplace hazards, review the agency’s safety training program to confirm it addresses recognized hazards, provide specific safety training for the worksite, and document and maintain safety training records.

IDOL guidance confirms that the safety training must be provided at no cost to the temporary laborer.

• Expanded enforcement and penalties. The amendments allow any “interested party” to report violations and bring an action against the agency or client company. An interested party may include organizations that monitor compliance with worker safety, wage and hour laws, and other statutory requirements. Violations of the Act may result in penalties up to $18,000 per violation.

Proponents of the amendments to the Act indicate that it is intended to bolster workplace safety and compensation for temporary laborers, in addition to enhancing communication between agencies and their clients. Both agencies and contracting companies should review their policies and procedures related to temporary work to ensure compliance.

Attorneys in LP’s Employment & Executive Compensation Group will share additional information on the new requirements – for both temporary agencies and the company clients that use temporary laborers – at our upcoming Annual Employment Law Webinar.

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