The national trend to protect temporary Laborers continues. This past August, Illinois passed legislation that expanded its Day and Temporary Labor Services Act. The amendment became effective on August 4, 2023 (immediately upon its signing).
The Trend
New Jersey, California, and Illinois have all passed laws that provide protections to temporary Laborers. Among the varied purported goals of these statutes, all the laws have one thing in common: they disincentivize temporary work arrangements in favor of long-term employment options.
The Illinois Day and Temporary Labor Services Act
The Illinois Day and Temporary Labor Services Act (the “Act”), which applies to all temporary laborers except for those in clerical or professional roles (“Laborers”), originally passed over twenty years ago. Since then, the Act has undergone a series of amendments that have slowly expanded the Act’s reach. This most recent amendment takes another large step towards removing the pay advantage of using temps.
The Act grants “Day or Temporary Laborer[s]” a series of rights that limit the pay advantages of using temps and increase the administrative burden of using temps. Some of those rights are new and some are old. Here are the key provisions:
- Employment Notices (eff. 6/1/18)
When a day and temporary labor service agency (the “Agency”) sends Laborers to jobs, they must give each Laborer a statement with specific information. This includes the Laborer’s name, details about the job (such as their function and what equipment is needed), the wages offered, the job location, transportation terms, and whether meals or equipment are provided. If a Laborer is on the same job for more than one day, the Agency only needs to provide this information on the first day or if there are changes.
If a Laborer is not assigned a job for the day, upon request the Agency must provide a confirmation, signed by the Agency, stating that the Laborer sought work.
- Right to Refuse Assignment to a Labor Dispute (eff. 7/1/2023)
An Agency cannot send a Laborer to a place where there is a strike, lockout, or other labor dispute unless they give the Laborer written notice in a language the Laborer understands. This statement must inform the Laborer about the labor dispute and let them know they have the right to refuse the job placement without any negative consequences.
If the Agency fails to provide this information, it is considered a violation, and each missing piece of information at each required time is a separate violation. This means violations (and the penalties they carry) can quickly rack up. If the Agency claims to have provided the notice electronically, they must prove it if there is a dispute.
- Recordkeeping Requirements (eff. 1/1/2006)
This statute requires Agencies to keep certain records when they send Laborers to jobs. Here is a breakdown:
- Client Information – the Agency must keep details of the third-party clients (companies where Laborers are sent) including names, addresses, phone numbers, and transaction dates.
- Laborer Information – for each Laborer, the Agency needs to record their name, address, work location, type of work, hours worked, hourly pay rate, and the date they were sent. The third-party client must provide this information to the Agency within 7 days after the work week ends.
- Transaction Details – the Agency should document the names and titles of individuals at the client’s place of business responsible for the transaction.
- Qualifications and Contracts – any specific qualifications requested by the client for Laborers, along with copies of contracts and invoices, should be kept on record.
- Employment Notices and Deductions – copies of employment notices provided to Laborers, and details of deductions from a Laborer’s pay for transportation, food, equipment, taxes, and other expenses must be maintained.
- Equipment and Meal Costs – the actual cost of equipment or meals charged to a Laborer must be verified and recorded.
- Demographic Information – the Agency needs to record the race and gender of each Laborer, as provided by the Laborer.
- Additional Requirements – any other information required by the Department of Labor’s (“Department”) rules should also be documented.
The Agency must keep these records for 3 years and allow the Department to inspect them during business hours. Certain records must be available for review or copying by Laborers within 5 days of a written request.
- Meals (eff. 8/14/1999)
An Agency and a third-party client can only charge for meals if the following conditions are met:
- The Laborer ate the meal;
- The charge of the meal is capped at the actual cost of the meal; and
- The purchase of the meal is not a condition of employment. In other words, the Laborer must be able to freely turn down the meal.
- Transportation (eff. 1/1/2006)
An Agency that provides transportation for Laborers must meet the following requirements. These requirements do NOT apply if the Laborers transport themselves to the work location, whether they take their own car, public transportation, or any other self-arranged transportation.
- No Fees for Transportation – the Agency, client, or anyone involved cannot charge Laborers for transportation to or from the work site.
- Responsibility for Transportation – the Agency is responsible for the behavior of anyone transporting a Laborer, except in specific cases like public transportation, personal vehicles, or if the Laborer chooses the transport.
- Safe Vehicles – if the Agency provides transportation, the vehicles must be safe and meet legal requirements. Unsafe vehicles cannot be used unless they belong to public transportation, a common carrier, the Laborer, or a Laborer’s carpool vehicle.
- Referrals for Transportation – the Agency can only refer Laborers to transportation if the transportation is public transportation or free transportation services. An Agency can recommend carpooling, but if the Agency also discusses costs of carpooling, it is considered an illegal referral.
- Driver Requirements – drivers must have a valid license, and the vehicle must have proper insurance as per state rules. Violations are reported to law enforcement.
- Seat and Safety Belt Requirement – vehicles used for transporting Laborers must have a seat and safety belt for each passenger. Violations are reported to authorities.
- Return Transportation – if the Agency provides transportation to the worksite, they must also provide a way back to the starting point, unless the Laborer agrees to an alternative location in advance.
- Equipment (eff. 8/14/1999)
For any safety equipment, clothing, accessories, or any other items required for working, either by law, custom, or as a requirement of the third-party client, the Agency or the third-party client may charge the Laborer the market value of the item if the Laborer fails to return such items to the third party client or the Agency.
- Wage Payment and Notice (eff. 1/1/2006)
This statute has several requirements for wage payment to Laborers. Those requirements are highlighted below.
- Detailed Pay Statements – when Laborers are paid, the Agency must give a detailed statement on the paycheck stub or an approved form. It should include the client’s name, work hours, pay rate, total earnings, deductions (for such things as transportation or food), and any additional information required by the Department.
- Annual Earnings Summary – agencies must provide Laborers with an annual summary of earnings by February 1 of each year, and they need to inform Laborers about this at each payment or post a notice.
- Flexible Payment Schedule – Laborers can direct the Agency to hold daily wages and pay them weekly, bi-weekly, or semi-monthly. Payments must be in a negotiable form, and Laborers must be notified of their payment options.
- No Fees for Cashing Checks – the Agency can’t charge Laborers for cashing their paychecks.
- No Charges for Checks or Background Checks – the Agency or client cannot charge Laborers for checks or any background checks, including criminal background checks or drug tests.
- Minimum Wage and Deductions – Laborers must be paid at least the stated wage rate, and deductions for meals, equipment, and transportation should not make their hourly wage fall below the state or federal minimum wage.
- Payment for Unutilized Time – if a Laborer is contracted but not used by the client, the Agency must pay for a minimum of 4 hours of work. If the Laborer is assigned to another location during the same shift, they must be paid for a minimum of two extra hours of pay.
- Client Payment Responsibilities – clients must pay wages and related taxes to the Agency according to the agreed terms. Failure to comply results in penalties. The Department reviews complaints and checks records to ensure proper payment to the Agency and the Laborer.
- Permanent Placement Restrictions (eff. 6/1/2018)
Agencies have an affirmative duty to help place Laborers in permanent positions with a client when the client informs the Agency of its desire to hire a permanent employee if the permanent employee is being hired for the job the Laborer performs.
Additionally, Agencies cannot restrict the rights of Laborers to accept permanent position with clients. Agencies may charge a placement fee, which is limited to: the equivalent of the total daily commission rate the Agency would have received over a 60-day period, reduced by the equivalent of the daily commission rate the Agency would have received for each day the Laborer has performed work for the Agency in the preceding 12 months.
- Public Access Area (eff. 8/14/1999)
The Agency must have a public access area of its office that has ample seating, restrooms, and water. All mandated postings must be posted in the public access area.
- Equal Pay (eff. 7/1/2023)
Most controversially, the most recent amendments require Agencies to pay Laborers assigned to a client for more than 90 days to be paid at least as much as the lowest-paid full time employee doing similar work and with similar seniority at the Client’s company. If there is no direct comparison at the company, then the comparison is made with the lowest-paid employee at the Client company who has similar seniority.
Additionally, Laborers assigned for more than 90 days must receive the same benefits as the full-time employee counterparts. The staffing Agency has the option to pay the equivalent of benefits in cash instead of providing actual benefits.
If the temporary Laborer has been with a company for more than 90 days, the company must provide necessary information about job duties, pay, and benefits of their regular employees when asked by the staffing Agency. If the company fails to provide this information, it is considered a violation.
- Registration Requirements (1/1/2006)
Agencies must register with the Department. In addition, third-party clients must verify that any Agency they use is registered. The Department will maintain a website accessible to the public that will state whether an Agency is registered.
Conclusion
There is nationwide push to turn temporary Laborers into full-time employees. There is also a push to remove the pay advantages of hiring temps rather than regular employees. As a result, laws like this one are likely to continue popping up across the country. Providers and utilizers of temporary Laborers should keep their eyes peeled. If you are in Illinois and utilize temporary Laborers, you should seek competent counsel to help you navigate the new amendments to this law.
Brody and Associates regularly advises management on complying with the latest local, state, and federal employment laws. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560