On May 22, a Chicago federal court rejected a request brought by ASA, an Illinois staffing trade association, and several Illinois staffing agencies to prevent the Illinois Department of Labor from enforcing legislation requiring Illinois staffing agencies to provide temporary employees with certain minimum employee benefits. At issue was the Employee Benefits Provision of Section 42 of the state’s Day and Temporary Labor Services Act, which requires staffing agencies to either provide temporary employees who work 720 hours within a 12-month period for a single client benefits that are substantially similar to the benefits provided to the full-time employees equivalent to the specific temporary employee, or pay those temporary employees the hourly average cash equivalent of the actual cost of the benefits provided to full-time employees.

The court previously entered a preliminary injunction against the Employee Benefits Provision in March 2024 after finding it violated the federal Employee Retirement Income Security Act. Following the court’s March 2024 decision, the Illinois General Assembly attempted to bring the Employee Benefits Provision into compliance with Erisa by adopting amendments that both the staffing industry plaintiffs and state Department of Labor agreed were immaterial. In September 2024, the court rejected the staffing industry plaintiffs’ and Department of Labor’s request to amend the March 2024 order to cover the General Assembly’s amendments to the Employee Benefits Provision. The court instead ordered the parties to engage in a complete analysis of whether the Employee Benefits Provision, as amended, still violated Erisa. During this time, the Illinois Department of Labor announced that it would not enforce Employee Benefits Provision pending the litigation.

The parties thereafter fully briefed and argued the issue of Erisa pre-emption for a second time, wherein the staffing industry plaintiffs were supported with amicus briefs written by employee benefit experts the Erisa Industry Committee, the American Benefits Council, the National Retail Federation, the U.S. Chamber of Commerce, the National Alliance of Healthcare Coalitions, the Society for Human Resource Management, the HR Policy Association, the Business Group on Health, and the Business Roundtable. The court heard oral arguments in early March 2025 and issued its decision denying the staffing industry plaintiffs’ request on May 22. In denying the staffing industry plaintiffs’ request, the court acknowledged that its assessment of the situation changed since March 2024 and the case presented a close question of whether the Employee Benefits Provision was pre-empted by Erisa.

The Illinois Department of Labor has not said whether the current nonenforcement of the Employee Benefits Provision will be maintained. The staffing industry plaintiffs are continuing to evaluate their options. Staffing firms with questions about the current effectiveness or obligations imposed by the Employee Benefits Provision should consult counsel.