Illinois Legislature Amends Effective Date of Equal Pay Provisions of Day and Temporary Labor Services Act

It is expected that Governor J.B. Pritzker will sign the amendment into law. This will provide much-needed time for staffing agencies, and the companies that use them, to receive clarification from the Illinois Department of Labor (IDOL) about Section 42 before it becomes effective.

Quick Hits

• Illinois Governor Pritzker is expected to sign legislation that would delay until April 1, 2024, the implementation of the equal pay provisions of the Day and Temporary Labor Services Act.
• The amendment gives time for staffing agencies and the companies that use them to receive clarification regarding the Illinois Department of Labor’s interpretation of “equivalent benefits.”

Section 42 of the Day and Temporary Labor Services Act, titled, “Equal Pay for Equal Work,” provides that labor service agencies must pay temporary laborers assigned to a third-party client for more than ninety calendar days at least the rate of pay and equivalent benefits as the lowest-paid directly hired employee of the third-party client performing at the same level of seniority and the same or substantially similar work. If there is not a directly hired comparative employee of the third-party client, the agency must pay the worker at 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. This provision generated a host of questions from staffing agencies and employers as to what “equivalent benefits” meant.

The IDOL attempted to provide clarification with emergency and proposed rules, elaborating that benefits include “health care, vision, dental, life insurance, retirement, leave (paid and unpaid), other similar employee benefits, and other employee benefits as required by State or federal law.” But this elaboration only raised additional questions, including whether all of the options in a healthcare or retirement plan had to be exactly the same in order for such benefits to be considered equivalent, and how to evaluate required payment for differences, if they existed.

In September 2023, the Joint Committee on Administrative Rules (JCAR) objected to the IDOL’s rulemaking as too vague to provide meaningful guidance to employers looking to comply with the requirements. JCAR noted that “by not using clear standards that are applicable to all sizes of employers for purposes of determining comparators and calculations for hourly cash equivalents of benefits, the Department has created immediate confusion rather than workable standards regulated entities can use to demonstrate compliance.” Although JCAR objected to the proposed rules, the emergency rules remain in effect.

Under the DTLSA, equivalent pay and benefits are due to temporary workers after ninety days of work with a third-party client. In any twelve-month period, workdays would count toward the ninety-day total without limitation based on how many hours were worked in a day or whether the days worked were consecutive. Employers were to begin counting the ninety days on August 5, 2023, the day after the amendments became effective. Thus, some temporary employees would have become eligible for these equivalent pay benefits in November 2023. With HB3641, the calculation of the ninety calendar days is delayed until April 1, 2024.

Ogletree Deakins’ Chicago office will continue to monitor developments and will provide updates on the Illinois and Pay Equity blogs as additional information becomes available.

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