Illinois Expands Worker Protection Obligations of Companies Contracting with Day and Temporary Labor Service Agencies

Illinois recently issued legislation expanding the information sharing and safety training obligations of companies that contract with day and temporary labor service agencies.

On August 4, 2023, Illinois enacted House Bill 2862, which amends the Day and Temporary Labor Services Act (the Act), effective July 1, 2023, to strengthen the rights and safety protections of day and temporary workers. On August 7, 2023, the Illinois Department of Labor (IDOL) issued Emergency Rules amending the Act’s implementing regulations, and on August 18, 2023, IDOL published Proposed Permanent Rules that would do the same. The Proposed Rules largely mirror the Emergency Rules, with some additional provisions, including further recordkeeping obligations for third-party clients with respect to day and temporary workers.

NO CHANGE TO DEFINITION OF ‘DAY AND TEMPORARY LABOR’

Importantly, the amendment does not change the Act’s definition of “day and temporary labor,” which specifically excludes “labor or employment of a clerical or professional nature.” “Professional” is defined in the Illinois Administrative Code (Ill. Admin Code. Tit. 56, Sec. 260.100) as “any person who meets the duties test of a professional under 29 CFR 541.3 as of March 30, 2003,” including “any employee engaged in work predominantly intellectual and varied in character, rather than routine mental, manual, mechanical or physical work.”

Notably, the term “clerical” remains undefined, so the scope of the Act is open to interpretation. For example, given the Act’s legislative history, there is a reasonable argument that the Act’s scope is limited to the type of work performed by manual laborers or other “blue collar” workers “involving repetitive operations with their hands, physical skill and energy.” 

PROVIDING COMPENSATION INFORMATION OF DIRECTLY HIRED EMPLOYEES

The amendments require that a day or temporary worker assigned by a day or temporary labor service agency to work at a third-party client for more than 90 calendar days within any 12-month period receive (1) the same or greater pay rate and (2) equivalent benefits, as a directly hired employee comparator of the third-party client. Per the Emergency Rules, the 90-day clock began to run on August 4, 2023 for individuals already working at third-party clients and those assigned to third-party clients thereafter.

The Act defines a comparator as the “lowest paid directly hired employee of the third party client with the same 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.”

To ensure a day and temporary labor service agency can comply with this new “equal pay for equal work” obligation, a third-party client to which a day or temporary labor has been assigned for more than 90 days must, upon request, “timely provide” the day and temporary labor service agency with “all necessary information” related to the job duties, pay, and benefits of directly hired employees. The Proposed Rules defines “timely” as the beginning of the next pay period for the day or temporary laborer.

Failure to “timely provide” any required information constitutes a notice violation entitling a day and temporary labor services agency—as an aggrieved party—to collect from the third-party client up to $500 per violation in compensatory damages, as well as attorney fees and costs.

The amendments also impose additional recordkeeping obligations on third-party clients to ensure their compliance with the statute’s new compensation requirements.

SAFETY AND HAZARD TRAINING

The amendments require that both day and temporary labor services agencies and third-party clients provide safety and hazard training for day and temporary workers related to assigned job sites. The third-party client must assist the day and temporary labor services agency in preparing the agency’s training by:

• documenting and informing the day and temporary labor services agency of anticipated job hazards the day or temporary worker is likely to encounter; and
• reviewing the safety and health awareness training provided by the day and temporary labor services agency to determine if the training addresses the hazards for the client-company’s industry.

Additionally, as set forth in the statute but not in the Emergency or Proposed Rules, the third-party client must:

• provide the day or temporary worker with specific training tailored to the work hazards at the company’s worksite;
• document and maintain records of the site-specific training; and
• provide confirmation that the training occurred to the day and temporary labor services agency within three business days of providing the training.

The Emergency and Proposed Rules state that the day or temporary labor service agency’s training must “be provided at no expense to the day or temporary laborer, or the day or temporary laborer must be compensated for time spent in training.” The statute and Emergency and Proposed Rules, however, are silent on this point with respect to the third-party client’s training, although such time in training would likely be found by a court to be compensable.

LABOR DISPUTE NOTIFICATION

The amendments grant day and temporary workers the right to refuse assignment to a location where there is a labor dispute. They also require day and temporary labor service agencies to inform day and temporary workers in writing at the time of dispatch of any such labor issues at the proposed worksite.

To assist day and temporary service agencies in satisfying their notice obligation, third-party clients must inform an agency if a strike, lockout, or other “labor dispute”—defined as “any controversy concerning wages, hours, terms or conditions of employment”—exists at the location where the agency is dispatching day or temporary workers. This vague definition could be interpreted to cover myriad employment-related “controversies,” including actual or threatened litigation.

ENFORCEMENT AND PENALTIES

The amendments create a process for day or temporary workers and “interested parties” to bring actions for civil penalties against day and temporary service labor agencies and third-party clients. “Interested party” is defined as “an organization that monitors or is attentive to compliance with public or worker safety laws, age and hour requirements, or other statutory requirements.” This broad definition seemingly includes organizations such as labor unions, employee-rights groups, and law firms even if they have not been retained as counsel for a particular worker.

The amendments also set minimum civil penalties and increase the maximum penalties for violation of the Act and regulations. The first violation of the Act or regulations is now subject to a penalty between $100 and $18,000, and subsequent violations are subject to a penalty between $250 and $7,500.

SUGGESTED ACTION ITEMS AND KEY TAKEAWAYS FOR COMPANIES CONTRACTING WITH DAY AND TEMPORARY LABOR SERVICE AGENCIES

Suggested Action Items

• Establish a point of contact at the day and temporary labor service agency with which the company can reliably communicate and share information as required by the Act and regulations.
• Proactively track the number of days each day or temporary worker has been assigned to work at the company and be aware of when the 90-day mark is approaching so that staffing decisions and any compensation adjustments can be made in a timely manner.
• Prepare and maintain updated records of (1) compensation data for directly hired employees, (2) potential worksite hazards and efforts to mitigate or control those hazards, and (3) labor disputes to share with day and temporary labor service agencies if or when necessary.
• Prepare targeted safety training specifically for day or temporary workers about potential hazards at each company worksite, as well as a method to document the provision of such training.
• Be prepared to compensate day or temporary workers for any required training.

Other Key Takeaways

• The Act does not apply to agencies or their third-party clients with respect to workers performing services of "a clerical or professional nature.”
• These new obligations may have significant ramifications with respect to third-party clients’ liability as to employment-related and other claims that day and temporary workers may bring under federal, state, and local laws.
• Third-party companies contracting for day and temporary workers may be subject to increased scrutiny and litigation given the new opportunity for “interested parties” to bring enforcement actions.
• The Emergency and Proposed Rules’ definitions of certain terms and phrases are not entirely clear, and litigation involving the scope of certain provisions is likely to arise.

WHAT COMES NEXT?

The Emergency Rules will remain in effect for 150 days or until the adoption of permanent rules, whichever comes first. The Proposed Rules, published on August 18, will be followed by a minimum 45-day public comment period (through October 2, 2023).