On August 3, 2023, Illinois Governor Pritzker signed into law substantial changes to the Illinois Day and Temporary Labor Act. In this blog post we will discuss the two major changes affecting temporary staffing employers, but all employers who use temporary staffing employees will want to review the changes and understand how they are affected as well.
The major changes to the rule come in the “Equal Pay for Equal Work” section, which was added to the existing law. Under this new rule, staffing employers must match the rate of pay of equivalent permanent employees of their client, and provide “equivalent benefits” as well. This requirement goes into effect once the temporary employee has been on assignment at the same employer for more than 90 calendar days.
Initially this rule seems straightforward – if the client has an equivalent permanent position the staffing employer must match the rate of pay of permanent employees and offer a comparable benefits package. The devil, of course, is in the details, and many questions are still unanswered. For instance, what happens if there is no equivalent “comparator” or position that matches what the temporary employee is filling? What rules will dictate how the client employer will pick an “equivalent” position?
This becomes particularly important because not only will it dictate how much the employee will need to be paid, but also the equivalent benefits package will need to be offered. The definition of “equivalent benefits” is broad:
“Benefits” means health care, vision, dental, life insurance, retirement, leave (paid and unpaid), other similar employee benefits, and other employee benefits as required by State and federal law.
Trying to match every client’s choice of benefits under this broad characterization is a practical impossibility for staffing employers. The good news is that the rules appear to allow staffing employers to design a package that is of an equivalent value of the benefit package being offered by the client employer. So, in theory, the staffing employer can put a single package in place and if the value of that package, measured on a dollar per hour basis, is equivalent to that of the client’s package, the staffing employer will be in compliance with the rule. We are awaiting additional guidance from state regulators on this specific issue.
There are many questions that are still outstanding about this approach – namely, the requirement for the staffing employer to remain compliant with the Affordable Care Act, various DOL and IRS rules on non-discrimination in benefits, COBRA regulations, and more will all have to be addressed within the context of the new Illinois rule. We anticipate supplying more guidance on these topics for our clients once regulators provide additional clarity on the rules.
This rule does not apply to professional temporary employees, or to clerical temporary employees. Due to the nature of the “emergency” status of the rules, they are now in effect, so the 90-day window needs to be tolled as of August 7th, 2023 – the date the emergency rules went into effect.
Reach out to your MMA Midwest team for more information on strategies to handle this new rule. We look forward to working with you!
