The Illinois Supreme Court on Wednesday will hear arguments from three staffing agencies that say their industry is exempt from state antitrust laws in a case claiming the firms conspired to hold down wages for their workers.
The Chicagoland-based companies have already lost twice in lower court. But they contend those decisions are a new interpretation of Illinois鈥� decades-old antitrust law.
Wednesday鈥檚 oral arguments come after Attorney General Kwame Raoul sued the companies in 2020, alleging they used their mutual client to coordinate no-poach agreements, which created a secondary agreement to pay less than the market rate.
鈥淣o-poach agreements allow employers to take advantage of low-wage workers by trapping them in low-paying jobs and limiting their opportunities for advancement,鈥� Raoul said at the time.
The three companies 鈥� Elite Staffing Inc., based in Chicago, Midway Staffing Inc. and Metro Staffing Inc., both headquartered in Chicago suburbs 鈥� all had contracted with a construction company also located in the suburbs.
Elgin-based Colony Display LLC designs and builds display models and custom furniture for commercial properties like motels, grocery stores and restaurants. While the company operates in seven states, Colony manufactures, assembles and houses most of their furniture in three Illinois warehouses.
The vast majority of Colony鈥檚 workforce is temporary. According to court records, at any given time the company 鈥渆mploys approximately 75 to 100 full-time employees,鈥� compared with 鈥渂etween 200 to 1,000 temporary workers,鈥� the alleged.
The staffing agencies鈥� contracts with Colony gave the company sole discretion over hiring, firing and assigning workers. And, the lawsuit alleged, the staffing agencies began to take advantage of that setup as early as 2018, communicating with each other via Colony.
鈥淔or example, many Midway employees wanted to switch to Elite because they were 鈥榥ot happy working for Midway鈥�; they cited 鈥榩ay issues鈥� and a lack of communication and support from their employer,鈥� according to court records.
In response, Midway Staffing allegedly asked Colony for assistance in 鈥渟quashing鈥� the transfer of employees, resulting in Colony informing Elite Staffing that hiring other agencies鈥� employees was 鈥渂ad practice鈥� and wasn鈥檛 allowed. Elite Staffing then produced its own policy to Colony, which the company then forwarded on to Midway Staffing, thus enforcing the no-poaching policy, according to Raoul鈥檚 office.
鈥淎s this incident shows, the no-poach conspiracy eliminated competition among (the staffing agencies)...which resulted in a lower quality of employment for the workers,鈥� lawyers for the attorney general鈥檚 office this summer.
As a result, 鈥渢he workers could not seek better wages, on-time payment, improved communication from supervisors, or other benefits鈥� by switching to another of the staffing agencies.
The staffing agencies also used Colony as a medium to set wages lower than the market rate, according to Raoul鈥檚 office.
鈥淎t one point, for instance, the fixed wage was $10 per hour but, according to a survey done by Elite, the 鈥榝air wage鈥� was $13 per hour,鈥� according to court records.
For their part, the staffing agencies claim their business models preclude them from the state鈥檚 , arguments on a 1980s update to a key definition in the law.
The law prohibits 鈥渞estraint of trade鈥� that decreases competition between 鈥減ersons engaged in commerce and trade,鈥� and then further defines commerce and trade as 鈥渁ll economic activity involving or relating to any commodity or service.鈥�
But the staffing agencies point to that 1980s-era update that defines service as anything that isn鈥檛 a commodity. The definition also stipulates that 鈥渟ervice鈥� doesn鈥檛 include 鈥渓abor which is performed by natural persons as employees of others.鈥�
In an appellate court opinion last year, Judge Thomas Hoffman that 鈥渟ervices provided by staffing agencies are generally not excluded from the Act鈥檚 coverage.鈥� He also said the agencies are attempting to broaden the law鈥檚 exceptions by distinguishing the 鈥渓abor鈥� of its temp workers from the 鈥渟ervice鈥� the agencies provide.
In June, three workers鈥� rights groups 鈥� the National Legal Advocacy Network, the National Employment Law Project, and the Raise the Floor Alliance 鈥� filed an in support of the Attorney General鈥檚 claim, writing that "temporary staffing jobs, including those working in warehouse and manufacturing facilities like those operated by Colony, often do the same work as direct-hire employees, but for less pay, worse benefits, increased health and safety risks, and no job security.鈥�
It went on to argue that temporary workers are 鈥渄isproportionately people of color鈥� and such conditions 鈥渁re contributing to the racial wealth gap and economic insecurity for communities of color.鈥�
A second related case was also scheduled for oral arguments Wednesday morning, but an attorney for Colony confirmed the case was recently settled with Raoul鈥檚 office and would not be heard. That case was filed directly against Colony and concerned more granular aspects of the state鈥檚 antitrust laws.
The attorney indicated the settlement was confidential and declined to comment.
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