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Illinois Day and Temporary Labor Services Act – Some Provisions Enjoined

08 May

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Update Applicable to:Effective date
All Illinois employers covered by the DTLSASee details below


What happened?

The U.S. District Court for the Northern District of Illinois (the “District Court”) granted a temporary injunction halting enforcement of certain benefits-related provisions under the Illinois Day and Temporary Labor Services Act (the “DTLSA”), which were supposed to take effect on April 1, 2024.


What are the details?

The case:

Several staffing agencies sued to challenge parts of the Day and Temporary Labor Services Act (DTLSA), especially the “equivalent benefits” rules. They claimed these state laws were overridden by the Employee Retirement Income Security Act of 1974 (ERISA), which supersedes state law when connected to an ERISA plan.


In particular, the group sued to enjoin the following three new provisions:

  • 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.
     
  • Section 11 – which requires an agency to give written notice to a temporary laborer of a “labor dispute” at a third-party client assignment and grants temporary laborers the right to refuse the assignment; and 
     
  • Section 67 – which grants a private right of action to any “interested party” to enforce these and other obligations.


The Decision:

On March 11, 2024, the District Court agreed that ERISA preempted Section 42 of the Act and granted the preliminary injunction prohibiting enforcement of the equivalent benefits provision of Section 42, but did not enjoin Sections 11 and 67. For a breakdown of the court’s reasons, visit the following page.


Key Takeaways:

  • Despite the court’s decision to enjoin the requirement to provide “equivalent benefits,” temporary laborers who are assigned to a third-party client for more than 90 days after April 1, 2024, will still be entitled to receive the same rate of pay as a comparable directly hired employee.


Business Considerations

  • The District Court has granted a preliminary injunction prohibiting IDOL from enforcing the “equivalent benefits” portion of Section 42 of the DTLSA, however, the remainder of the DTLSA becomes enforceable. This means that employers should adjust their policies and practices to comply with the law.
  • Considering the District Court’s ruling, staffing agencies covered by the DTLSA, and employers who are engaged with a covered staffing agency, are recommended to take a “wait and see” approach concerning compliance with the “equivalent benefits” requirements for their workers in Illinois.
  • Given the complexity of the law and the ongoing legal developments, it is recommended that employers consult with legal counsel to ensure compliance with the DTLSA.
  • The court’s decision removes a significant burden from companies in Illinois that would otherwise have to comply with the equivalent benefits rule.


Source References


Resources

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This communication is intended solely for the purpose of conveying information. The present post might incorporate hyperlinks directing readers to websites managed by third-party entities. The inclusion of any links within this communication is meant to serve as points of reference and could encompass opinion articles from various law firms, articles from HR associations, official websites, news releases, and documents of government agencies, and other relevant third-party sources. Vensure has no authority over these external websites and bears no responsibility for their content. Furthermore, Vensure does not endorse the materials present on these websites. The contents of this communication should not be interpreted as legal advice or as a legal standpoint concerning specific facts or scenarios. Nor should it be deemed an exhaustive compilation of facts potentially pertinent to federal, state, or local laws. It is strongly advised that employers solicit legal guidance from an employment attorney when undertaking actions in response to any legal updates provided. This is due to the possibility of future alterations occurring in federal, state, and local laws, regulations, as well as the directives and guidelines issued by governing agencies. These changes may transpire at any given time, potentially rendering certain portions of the content within this update void or inaccurate.

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