Temporary staffing agencies seek to block new state labor law

SPRINGFIELD – A group of temporary staffing agencies and their trade associations are asking a federal court to block enforcement of a new state law that governs how day laborers and temp workers are managed and paid.

The lawsuit, filed earlier this month in Chicago, challenges several changes enacted this year to the Illinois Day and Temporary Labor Services Act, a law originally passed in 2006 to bring those staffing agencies under state regulation.

That act applies to an estimated 650,000 workers in Illinois who are employed by companies that provide short-term labor in blue collar industries such as warehousing, light manufacturing and distribution facilities. Professional and clerical staffing services are exempt from the law.

Since its 2006 enactment, the law has required those staffing agencies to register with the Illinois Department of Labor. It also established minimum protections for employees of those firms such as a guarantee of at least four hours of pay whenever they are sent to an assignment.

During this year’s spring legislative session, state lawmakers enacted sweeping amendments to the law that imposed new mandates on staffing agencies and extended new protections to short-term workers.

One of the biggest changes is a requirement that after 90 days on an assignment, a temp worker is entitled to pay and benefits that are “not less than” those offered to comparable employees who are directly hired by the client company.

Another change requires staffing agencies to disclose to their workers the existence of any strikes or other labor disputes at a work site and gives those workers the right to refuse such an assignment without being penalized by the staffing agency.

Additionally, the new law empowers any “interested party” – 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” – to sue a staffing agency if it believes the agency is violating any part of the law.

State Sen. Robert Peters, D-Chicago, who chairs the Senate Labor Committee and was the legislation’s chief sponsor, said in an interview Tuesday that there has been an “explosion” in recent years of employers using temp labor to drive down the cost of wages and benefits for other workers.

“They have different rights than everybody else,” he said of temp workers. “And so there’s more use of temp workers, but they don’t get equal pay for equal work. They’d be put into these situations called perma-temping, where they’d be repeatedly left in a temporary position, even though they were technically working permanently, and never offered the permanent job.”

Read more: State high court to hear case against staffing agencies accused of suppressing wages

The new provisions took effect immediately after Gov. JB Pritzker signed the legislation on Aug. 4. However, lawmakers passed a follow-up measure during the recent fall veto session delaying implementation of the equal pay provision until April 1, 2024. Pritzker signed that measure Nov. 17.

Meanwhile, the Illinois Department of Labor is already enforcing other provisions of the new law through the adoption of emergency, temporary administrative rules and is in the process of taking public comment as it works toward adopting permanent rules.

Plaintiffs in the lawsuit, however, are asking a federal judge to block any enforcement of the new law, arguing that the requirements are overly burdensome, impossible to comply with, and in conflict with already-existing federal laws.

“Reasonable minds can differ as to the parameters for reasonable regulations, but no reasonable debate can be had about the crippling impact of the amendments to the (statute) and related regulations,” the lawsuit argues. “They impose extraordinary burden, cost, and compliance risk in violation of federal law. The amendments and related regulations essentially guarantee non-compliance because compliance is literally impossible.”

For example, regarding the equal pay provision of the law, the plaintiffs argue it is impossible to calculate the value of benefits such as life and health insurance or retirement contributions being provided to other employees because the value of those benefits can vary from one employee to the next.

They also argue that any state laws regarding health and retirement benefits are preempted by federal laws such as the Affordable Care Act and the Employee Retirement Income Security Act, or ERISA.

The plaintiffs also object to allowing any “interested party” to sue and recover damages for alleged violations of the law, arguing that such a provision leaves staffing agencies open to an infinite number of lawsuits, regardless of whether the entity suing them has suffered any damages.

“Temporary staffing agencies therefore face loss of licensure, substantial and potentially catastrophic statutory penalties, and civil actions by a potentially infinite number of uninjured third parties for perceived violations of (the law),” the lawsuit claimed.