Staffing agencies sued by Illinois attorney general say they are exempt from antitrust laws

The Illinois Supreme Court today 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 Chicago- and suburban-based companies already have lost twice in lower court. But they contend those decisions are a new interpretation of Illinois’ decades-old antitrust law.Today’s 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.”No-poach agreements allow employers to take advantage of low-wage workers by trapping them in low-paying jobs and limiting their opportunities for advancement,” Raoul said in a news release at the time.The three companies — Elite Staffing Inc., based in Chicago, Midway Staffing Inc. and Metro Staffing Inc., both headquartered in Chicago suburbs — 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’s workforce is temporary. According to court records, at any given time the company “employs approximately 75 to 100 full-time employees,” compared with “between 200 to 1,000 temporary workers,” the original complaint alleged.The staffing agencies’ 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.”For example, many Midway employees wanted to switch to Elite because they were ‘not happy working for Midway’; they cited ‘pay issues’ and a lack of communication and support from their employer,” according to court records.In response, Midway Staffing allegedly asked Colony for assistance in “squashing” the transfer of employees, resulting in Colony informing Elite Staffing that hiring other agencies’ employees was “bad practice” and wasn’t 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’s office.”As this incident shows, the no-poach conspiracy eliminated competition among (the staffing agencies) … which resulted in a lower quality of employment for the workers,” lawyers for the attorney general’s office wrote in a brief this summer.As a result, “the workers could not seek better wages, on-time payment, improved communication from supervisors, or other benefits” 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’s office.”At one point, for instance, the fixed wage was $10 per hour but, according to a survey done by Elite, the ‘fair wage’ was $13 per hour,” according to court records.For their part, the staffing agencies claim their business models preclude them from the state’s Antitrust Act, basing their legal arguments on a 1980s update to a key definition in the law. The law prohibits “restraint of trade” that decreases competition between “persons engaged in commerce and trade,” and then further defines commerce and trade as “all economic activity involving or relating to any commodity or service.”