On May 24, 2024, the Illinois General Assembly passed Senate Bill (SB) 3650, which amends the Day and Temporary Labor Services Act (DTLSA). The amendments focus mainly on refining the equal pay and equal benefits provisions of the DTLSA. Governor J.B. Pritzker is expected to sign the legislation into law and the amendments will become effective on the date of his signature.

Quick Hits

• Governor Pritzker is expected to sign SB3650, legislation amending Illinois’s Day and Temporary Labor Services Act (DTLSA).
• Third-party clients would not be required to provide comparator pay information until the worker has worked for the same third-party client for more than 720 hours within a twelve-month period and the temporary agency requests this information.
• SB3650 revises the DTLSA’s “equivalent benefits” language to provide for “substantially similar benefits.”

Overview of SB3650’s Equal Pay for Equal Work Amendments

Under SB3650, the “equal pay for equal work” provision has been modified in multiple ways.

First, equal pay will be required if a temporary laborer is assigned to work and performs work at the same third-party client for more than 720 hours in a twelve-month period. This replaces the “90 calendar days” period.

Calculation of equal pay can be made in one of two ways:

• by paying “not less than the straight-time hourly rate of pay or hourly equivalent of the lowest paid directly hired comparator employee of the third party client who is entitled to overtime under the Fair Labor Standards Act … with the same or substantially similar level of seniority at the company and performing the same or substantially similar work,” or, if there is no directly hired comparator employee, “not less than the straight-time hourly rate of pay or hourly equivalent of the lowest paid directly hired employee of the third party client who is entitled to overtime under the Fair Labor Standards Act”; or
• “[a]t the sole discretion of the third party client,” employers may use U.S. Bureau of Labor Statistics (BLS) data as the basis for compensation for workers with the same or substantially similar job classifications.

Second, third-party clients are not required to provide comparator pay information until the worker has worked for more than 720 hours within a twelve-month period and the temporary labor service agency requests this information.

Third, the legislation reduces the former “equivalent benefits” provision to “substantially similar benefits” and clarifies that temporary labor service agencies may pay “the hourly average cash equivalent of the actual cost of the benefits” the third-party client provides to its directly hired employees.

Despite SB3650’s modifications, a preliminary injunction order entered by the U.S. District Court for the Northern District of Illinois, Eastern Division, enjoining the director of the Illinois Department of Labor (IDOL) from taking any action to enforce the “equivalent benefits” provisions of the DTLSA, currently remains in effect.

Analysis

Section 42 of the DTLSA provides that, effective April 1, 2024, temporary laborers assigned to a third-party client for more than ninety calendar days must receive equal pay and equal benefits as the third-party client’s directly hired comparative employees. If enacted as proposed, SB3650 will replace the ninety-calendar-day requirement with a requirement of “more than 720 hours [of work performed at the same third-party client] within a twelve-month period,” beginning on or after April 1, 2024. Additionally, third-party clients will not be required to disclose comparator pay information until after both the temporary labor service agency requests this information and the temporary laborer has worked more than 720 hours in a twelve-month period.

The amendments set forth in SB3650 also provide much needed clarification as to the determination of what is equal pay. SB3650 provides two methods for providing equal pay: (1) the temporary laborer receives the straight-time hourly rate of pay “of the lowest paid directly hired comparator employee of the third party client who is entitled to overtime under the FLSA,” (or, where there is no comparator, the lowest paid directly hired employee of the third-party client who is entitled to overtime under the FLSA); or (2) at the third party client’s sole discretion, using BLS data. Using this second system, the worker would be paid not less than the median base hourly rate (or hourly equivalent, if paid on a salary basis) of workers with the same or a substantially similar job classification as reflected in the Standard Occupational Classification System published by BLS. In order to assist employers using this method, the IDOL will provide a link on its website to the referenced classification system and the U.S. Department of Labor’s guidance on determining standard occupational classifications. Under SB3650, a temporary labor service agency must disclose to the temporary laborer which calculation method it uses when the worker is entitled to equal pay.

With respect to equal benefits, the legislation clarifies that beginning on or after April 1, 2024, a temporary laborer who has worked the requisite “more than 720 hours” will receive “substantially similar benefits to the job classification of employees performing the same or substantially similar work on jobs … performed under similar working conditions.” SB3650’s amendments further clarify that in lieu of providing the benefits, the temporary labor service agency may pay “the hourly average cash equivalent of the actual cost of the benefits.” However, the amendments do not provide clarification as to what are “substantially similar benefits.” Importantly, the district court’s preliminary injunction against this equivalent benefits section remains in place.

SB3650 also creates an exception to the equal pay requirements where the directly hired comparator employees at third-party client sites are subject to a collective bargaining agreement.

In addition to these substantial changes to the DTLSA’s equal pay and equal benefits provisions, SB3650 places additional obligations on temporary labor staffing agencies to provide employees with an employment notice. Temporary labor staffing agencies have long been required to provide an employment notice to a temporary laborer when assigning work. This notice must now include a list of basic job duties (instead of just the name and nature of work to be performed) and the county name where the work is located (in addition to the name and address). If a temporary laborer is entitled to the equal pay requirements of Section 42, the temporary staffing agency must inform the laborer of either “the seniority and hourly wage of the comparator being used to determine the wage” or “the standard occupational classification used [to determine the wage].”

SB3650 creates a new obligation on temporary labor staffing agencies to provide applicants with an application receipt. If an applicant seeks a work assignment and is not placed to work for that day, the temporary labor staffing agency must provide the applicant with a written confirmation that the applicant sought work. The legislation calls for the IDOL to provide a form that must be used to provide the receipt. The receipt “shall include”: (1) the agency name and location where the applicant applied; (2) the applicant’s name and address; (3) the date and time of the applicant’s inquiry; (4) “the manner in which the applicant sought the work assignment”; and (5) “the specific work sites or type of jobs sought by the applicant.”

SB3650 also provides clarification on a temporary labor service agency’s obligation to provide information to a temporary laborer about a labor dispute at the third-party client so that the temporary laborer can decide whether to refuse the assignment. A temporary labor service agency would be required to notify temporary laborers when they are being assigned to a third-party client where a strike, lockout, or work stoppage exists because of a labor dispute, or where there is picketing, bannering, or handbilling due to a labor dispute.