August 31, 2023: Written by David Frankel, Esq. Staffing Team Member Becker LLC
On August 4, 2023, Governor Pritzker signed into law amendments to the Day and Temporary Labor Services Act (PA 103-437) (the “Act”), along with the amendment came Proposed Permanent Rules (56 Ill. Adm. Code 260 et seq.). The comment period for the Proposed Permanent Rules (the “Rules”) runs through October 2, 2023, and we recommend that those affected provide comments to the Illinois Department of Labor (the “Department”).
New Jersey also recently enacted the New Jersey Temporary Workers’ Bill of Rights (the “NJ TWBR”), which went into full effect on August 5, 2023. The NJ Department of Labor and Workforce Development recently proposed regulations to the NJ TWBR, providing necessary guidance. Refer to our website for a summary of the NJ TWBR’s proposed regulations.
Below is a non-exhaustive summary of changes and obligations imposed by the Rules. For purposes of this summary, the term “temporary laborer” includes both day and temporary laborers.
Definitions Affecting Applicability for Agencies and Clients:
· Agencies: The terms “Day and Temporary Labor Service Agency” or “Agency” mean “any person or entity engaged in the business of employing day and temporary laborers to provide services, for a fee, to or for any third party client pursuant to a contract with the day and temporary labor service agency and the third party client, and which is located, operates, or transacts business within the State of Illinois.”
Agencies should be aware that the Act and Rules include agencies that transact business in Illinois and are not limited to those physically located within the state.
· Clients: The Act’s reach also broadly extends to clients of these agencies, as "Third Party Client" or "Client" means “any person that contracts with a day and temporary labor service agency for obtaining day or temporary laborers.”
The Act and Rules impose duties and responsibilities on clients.
Registration and Fees:
· Registration: Agencies must register with the Department before employing temporary laborers to provide services to or for any third-party clients. Agencies must annually register each location or branch office from which it will be operated.
· Fees: The initial and renewal application fees are $3,000 for each agency and $750 for each branch office or other location where the agency regularly contracts with laborers for services.
Employment Notice:
· At the time of dispatch, agencies must provide a statement to temporary laborers that includes items pertinent to their work (the “Employment Notice”).
Refer to Section 260.400 for a list of items the Employment Notice must include.
Notably, the Rules have added new required items:
Information regarding safety hazards and concerns at the client company, the representative of the client company to whom a temporary laborer should report safety concerns, and a statement that such safety hazards and concerns may be reported to the Department; and
If a strike, lockout, or other labor dispute exists, then a written statement in the temporary laborer’s primary language notifying them of the relevant labor dispute and the laborer’s right to refuse the assignment.
Labor Disputes:
· Duty to Inquire and Inform: An agency must inquire whether a strike, lockout, or other labor dispute exists at a client site before sending a temporary laborer to work there. An agency must include information about such labor disputes in the Employment Notice.
· Right of Refusal: Temporary laborers may refuse assignments to a place where such labor disputes exist, without prejudice, and have the right to receive another assignment. Retaliation by an agency or client for refusing such an assignment is prohibited.
· NJ TWBR Equivalent:The NJ TWBR requires that an agency provide written notice to temporary laborers, at the time of dispatch, of a labor dispute on the client’s premises and the laborer’s right to refuse the assignment.
Mandatory Training:
· General Safety Training: An agency must provide general safety training on or before a temporary laborer’s first day working at a client company each year, and such training is required for each client company that the laborer is dispatched to.
· No Fee/Reimbursement Required: This training must be provided at no expense to the laborer, or the laborer must be compensated for the time spent in training.
· Contents: Refer to Section 260.405 for the required contents.
Recordkeeping Requirements:
· Inspection: Agencies must keep certain records available for inspection by the Department during regular business hours. Refer to Section 260.410 for the specific requirements.
· Additional Required Items: New required items include:
All records pertaining to the safety hazard training and disclosure required by the Act, including documentation signed by each temporary laborer indicating that the laborer has received the training required by the Act, including dates, and any reports of hazards received from temporary laborers;
All records, including information provided by clients, used to determine compensation and benefits; and
Records related to any notice of a labor dispute provided to an agency, and documentation signed by each temporary laborer who is assigned to the site of a labor dispute acknowledging that the laborer was informed about the dispute and their right to refuse the assignment.
Equal Pay for Equal Work:
· Equal Pay and Benefits: A temporary laborer assigned to work for a third party client must be paid at the same (or greater) rate of pay and receive the equivalent benefits as a directly hired employee of the third party client, under the following conditions:
90 Day Rule: This rule applies when the temporary laborer is assigned to work for a third party client for more than 90 calendar days within any 12-month period, whether consecutively or intermittently. The requirement starts the 91st day of performing work for the third party client.
Lowest Paid Comparator Employee: The rate of pay and equivalent benefits must be the same, or greater, than the lowest paid directly hired employee with the same level of seniority at the third party client and performing the same or substantially similar work on jobs, the performance of which requires substantially similar skill, effort, and responsibility, and which are performed under similar working conditions.
No Comparator Employee: If there is not a comparative directly hired employee of the third party client, the temporary laborer must be paid not less than the rate of pay and equivalent benefits of the lowest paid directly hired employee of the third party client with the closest level of seniority at the third party client.
· Cash in Lieu of Benefits: An agency may pay the hourly cash equivalent of the actual cost of benefits instead of providing benefits (unless otherwise prohibited by law).
· NJ TWBR Equivalent: The NJ TWBR includes a similar requirement for agencies but does not include a 90-day rule.
Wage Payment and Notice:
· Placement Fee Notice: Generally, at the time of the payment of wages, agencies must provide specific information to a temporary laborer on the laborer’s paycheck or on a form approved by the Department. Refer to Section 260.450 for the requirements.
Placement Fee: Agencies must now include the calculation of the placement fee that could be charged in order for the third party client to hire the laborer, if the agency charges such a placement fee, and the number of work days remaining before the agency cannot charge any client a placement fee to hire that laborer.
· Non-Utilization: A temporary laborer who is contracted by an agency to work at a third party client’s work site, but is not utilized by the third party client for a minimum of 4 hours, must be paid by the agency for a minimum of 4 hours of pay at the agreed upon rate of pay. However, if the agency can place the laborer at another worksite during the same shift, the laborer shall be paid by the agency a minimum of 2 hours of pay at the agreed upon rate of pay, in addition to all hours worked by the laborer during that shift.
Placement Fees:
· Maximum Fee: An agency may charge a placement fee to a third party client, but the fee cannot exceed the total daily commission rate the agency would have received over a 60 day period reduced by the total amount of the daily commission rate the agency has received each day the laborer has performed work for the agency in the preceding 12 months.
Third Party Client Obligations:
· Compensation Information for Equal Pay: Upon request, a third party client to which a temporary laborer has been assigned for more than 90 calendar days must timely provide the agency with all necessary information related to job duties, pay, and benefits of directly hired employees necessary for the agency to comply with the Act’s equal pay requirements. Timely means before the beginning of the laborer’s next pay period.
· Safety Hazards: Prior to an agency assigning or dispatching a temporary laborer to a worksite, the third-party company must notify the agency of all of the client’s safety and health practices and disclose all known hazards at the actual location where the temporary laborer will be working in order for the agency to assess safety conditions, workers’ tasks, and the company’s safety programs.
New Information: If the agency becomes aware of additional safety or health practices, or hazards at the worksite, then the agency must notify the client as soon as possible.
Remediation Before Assignment: An agency cannot ask a laborer to work at a worksite with a job hazard known by the agency unless the hazard has been fixed or addressed by the third party client prior to assignment.
· Labor Disputes: Clients must notify the agency if a strike, lockout, or other labor dispute exists at the location where the agency is dispatching the laborer
· Recordkeeping Requirements: Clients must keep the following records available for inspection by the Department during regular business hours at every location where a temporary laborer is sent to work:
Contracts for the employment of temporary laborers, including documentation that all contracted agencies hold a valid certificate of registration issued by the Department;
Personnel records for each laborer sent to work for that third party client, including hours worked, type of work performed, and any deductions charged to the laborer;
All records related to all known safety hazards, including documentation of steps taken to mitigate or control the hazards; and
Records relating to compensation of directly hired employees for comparison purposes necessary for compliance with the Equal Pay provisions of the Act (and the associated duties for third party clients).
· Agency Registration: It is a violation of the Act for a third party client to enter into a contract for the employment of temporary laborers with an agency that is not registered. A client has a duty to verify the agency’s status with the Department before entering into a contract with such an agency, and on March 1 and September 1 of each year. Refer to 820 ILCS 175/85 for further information.
Potential Penalties for Violations:
· Financial Penalties: Staffing agencies and third party clients that are found to have violated any provision of the Act may be subject to a civil penalty between $100 and $18,000 for the first violation, and between $250 and $7,500 for subsequent violations. The Department may issue a separate violation for each day or temporary laborer that is found to be affected by a violation of the Act.
· Registration Penalties: An agency’s registration may be suspended, revoked or denied for violations of the Act. Refer to Section 260.600 for additional information.
· Complaints by Interested Parties: Refer to Section 260.220 for details about complaints by interested parties.
The Act and Rules may affect your business in numerous ways, and violations of the Act can result in both financial penalties and the suspension, revocation, or denial of an agency’s registration. If you need any assistance regarding the Act and Rules, please reach out to the Staffing Team at Becker LLC and we will be happy to offer some guidance.