An Illinois law that would have required staffing agencies to provide some 650,000 temporary employees the same wages and equivalent benefits as their clients’ comparable employees has been temporarily blocked.
The United States District Court for the Northern District of Illinois last week issued a preliminary injunction prohibiting the Illinois Department of Labor (IDOL) from enforcing the equal pay requirements of the Illinois Day and Temporary Labor Services Act (IDTLSA).
The equal pay requirements originally had been slated to take effect in July 2023 and were later postponed to April 2024.
In November, a coalition of industry groups sued the IDOL on the grounds that the equal pay requirements would cause them irreparable harm. Among other things, they said the equal pay requirements were causing their clients to stop hiring temporary workers for longer-term needs because they feared that compliance is “impossible and the legal consequences of non-compliance are potentially catastrophic.”
Because they would have required staffing agencies to “make judgment calls about employees’ eligibility and level of benefits on an individualized and ongoing basis,” the equal pay requirements are preempted by the federal Employee Retirement Income Security Act (ERISA), the court held. It noted:
Initially, agencies must identify employees that have worked more than 90 days at a particular client in the last year. Because that 90 days would include an employee’s work for any number of agencies, and any number of clients, each agency has to collect data about each employee’s historical work assignments and make an individualized determination of eligibility. Next, to identify the comparable employee at the client site, agencies must engage in qualitative assessments about seniority and the similarity of work and working conditions. … To provide “equivalent benefits,” agencies must determine the value of the benefits given to a directly comparable employee and the value of the benefits given to its own employees. That appraisal is complex and particularized, as is the determination of how the benefits stack up to each other.
Although the court agreed that the coalition was likely to succeed with its lawsuit and that it would suffer irreparable harm without the injunction, it did not fully block the equal pay requirements. It left intact a provision requiring third-party clients to provide in a timely fashion information related to job duties, pay and benefits of directly hired employees necessary to comply with the equal pay requirement when requested by a staffing agency.
The IDOL may appeal the injunction. The agency had not responded to a request for comment as of the time of publication.
