On Aug. 4, 2023, Illinois Gov. J.B. Pritzker signed House Bill 2862 / Public Act 103-437 (the amendment), making significant changes to Illinois’ Day and Temporary Labor Services Act. Illinois’ Department of Labor (DOL) followed by filing emergency and proposed rules to implement the amendment. Staffing agencies and businesses that utilize staffing agencies should take note, as the changes yield additional legal requirements and enhanced potential consequences for violation.
Changes as a Result of the Amendment
The amendment alters the Day and Temporary Labor Services Act’s notice, pay, civil action, safety, training, documentation, fee and penalty provisions in the following significant ways.
- Labor Dispute Provisions
The amendment provides that no day and temporary labor service agency (i.e., a staffing agency) may send a day or temporary laborer (worker) to a place where a strike, a lockout or other labor dispute exists without providing, at or before the time of dispatch, an understandable written statement that informs the worker of the labor dispute and the worker’s right to refuse the assignment. Notably, failure to adhere to any of these notice requirements will constitute separate and distinct violations.
- Pay Provisions
The amendment further provides that a worker assigned to a staffing agency client for more than 90 days must be compensated with at least the same pay and benefits (or an hourly cash equivalent) as the client’s lowest-paid direct employee of the same or closest level of seniority and work. To allow staffing agencies to comply, the amendment also requires clients to provide the information regarding comparable employees’ pay and benefits upon request from staffing agencies. If clients fail to provide this information, the impacted staffing agency can immediately file a civil action against the client for up to $500 per violation as well as fees and costs.
- Worker Notice, Safety and Documentation Requirements
Also new are the following safety requirements, to which staffing agencies must adhere before assigning workers to sites. Staffing agencies must now:
- Inquire about the client's safety and health practices and hazards at the assignment site (which may include a site visit), make the client aware of any safety concerns that the staffing agency learns of during the assignment, remove the worker from the site if these concerns are not corrected and document these efforts.
- Provide free general industry safety training to the worker. Notably, this is in addition to any training the client may provide and must be provided in the worker’s preferred language, and the date and content must be documented, maintained and provided to the worker.
- Transmit a general description of the safety training program to the client.
- Provide the worker with a work-site contact and the DOL's hotline number, which is (877) 314-7052, so the worker can report any safety concerns.
The amendment also requires clients to adhere to similar enhanced notice, safety and documentation requirements. The amendment further details that workers or staffing agencies have the right to refuse new tasks if the safety and health awareness training for the new task has not been reviewed or the worker has not received appropriate training for the new task.
- Other Civil Action Provisions
Civil actions may now also be initiated by an “Interested Party” with a reasonable belief that a staffing agency or its client is in violation of the Day and Temporary Labor Services Act. “Interested Party” is defined as “an organization that monitors or is attentive to compliance with public or worker safety laws, wage and hour requirements, or other statutory requirements.” However, prior to filing suit, the Interested Party must submit a complaint to the Illinois DOL, which will send notice to the accused party. The accused staffing agency or client will then have 30 days after receiving the DOL’s notice to contest or cure the alleged violation. Regardless of whether the accused contests or cures the alleged violation, it seems that:
- The DOL will, after an undefined period, eventually issue a right-to-sue notice.
- Even if the DOL does not issue a right to sue, after 180 days of service of the notice of the violation to the parties, the Interested Party may file suit.
Suits by Interested Parties must be brought within three years of the alleged violation, though this limitation will be tolled by the 180-day period and any mutually agreed-upon extension of that 180-day period. While these civil suits may garner the full amount of the increased statutory penalties discussed below, an Interested Party is entitled to receive only 10% of the penalties, plus fees and costs. The remaining 90% of the penalties will be deposited into Illinois’ Child Labor and Day and Temporary Labor Services Enforcement Fund.
- Other Penalty and Fee Provisions
Lastly, the amendment adjusts applicable fees and penalties as follows.
- Statutory penalties for general violations of the Day and Temporary Labor Services Act are now between $100 and $1,500 per violation for violations found in an audit by the DOL or as awarded in any civil action brought by an Interested Party or the Illinois Attorney General. Repeat violations within three years of an initial violation will now subject staffing agencies or clients to a penalty of between $250 and $7,500 per violation. It remains that separate and distinct violations will be construed for each worker and each day that violations continue.
- Additionally, clients who fail to:
- Meet the Day and Temporary Labor Services Act’s Work Verification Form requirements may now be subject to civil penalties between $100 and $1,500 per initial violation and between $500 and $7,500 for subsequent violations.
- Verify a staffing agency’s state registration prior to contracting with the agency may now by subject to civil penalties between $100 and $1,500 per day that the contract exists.
- Registration fees are likewise increased — up to $3,000 annually per agency and up to $750 per branch.
Actions by the Illinois Department of Labor
Following the Governor’s signature, on Aug. 7, the Illinois DOL filed Emergency Rules and Proposed Permanent Rules to implement the amendment. The Emergency Rules became effective Aug. 7, and the DOL has indicated that the required public comment period for the Proposed Permanent Rules is likely to run through Oct. 2. The DOL also announced that it will post new guidance on its webpage regarding the amendment in short order, though as of the date of this publication, guidance has yet to be posted.
Next Steps for Staffing Agencies and Their Clients
Given the significant changes and increased consequences for violation presented by the amendment, staffing agencies with a presence in Illinois and businesses that utilize staffing agencies should review their current practices to see what, if any, changes are necessary to comply with the revised Day and Temporary Labor Services Act. For further information or questions about the information contained in this legal alert, please contact the authors, your McGuireWoods contact, or a member of the firm’s labor and employment team.