On March 18, 2024, a federal court entered a preliminary injunction order enjoining the Illinois Department of Labor (IDOL) from taking any actions to enforce the “equivalent benefits” provisions of Section 42 of the more recently amended Illinois Day and Temporary Labor Services Act (the “Act”). The “equivalent pay” provisions of Section 42 of the Act were not subject to the injunction and went into effect on April 1, 2024.
Background
On November 17, 2023, Illinois House Bill (HB) 3641 further amended the Act by delaying the implementation of Section 42— the equal pay and benefits provisions — until April 1, 2024.
On November 22, 2023, several staffing agencies and associations initiated legal action in the U.S. District Court for the Northern District of Illinois, Eastern Division to enjoin the IDOL from enforcing certain Sections of the Act.
On March 11, 2024, the court issued a memorandum opinion and order finding that the plaintiffs had made a showing of the likelihood of success on the merits in their argument that the “equivalent benefits” provisions of Section 42 of the DTLSA were preempted by ERISA. Staffing Services Association of Illinois v. Flanagan, Case No. 23-CV-16208.
On March 18, 2024, the court issued the preliminary injunction order prohibiting the IDOL from enforcing Section 42, which requires agencies to pay temporary laborers either “equivalent benefits” as the lowest paid, comparable, directly hired employee at the third-party client or “the hourly cash equivalent of the actual cost of benefits” after 90 days of assignment at the same worksite. 820 ILCS 175/42. The court did not enjoin Sections 11 and 67.
On March 25, 2024, the IDOL filed a notice of appeal with the United States Court of Appeals for the Seventh Circuit. On April 3, 2024, the district court stayed any further proceedings pending the appeal.
What does this mean for employers?
The current order prohibits both civil and enforcement actions, including the issuance of any letters authorizing the right to sue in connection with claims of benefits provision violations.
The rest of the Act remains in effect. This means that, although the court’s decision enjoins the requirement for employers to provide “equivalent benefits,” temporary laborers who are assigned to a third-party client for more than 90 days after April 1, 2024, will remain entitled to receive “equivalent pay” of a comparable directly hired employee.
Please contact a member of the Labor and Employment Group at AGHL with any questions: Jim Pirages, Eileen Caver, Evan Bonnett, or Maryjo Pirages Reynolds.
