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Illinois AG Brings A No-Poaching Suit Against Temp Agencies

 |  June 7, 2022

Temporary staffing agencies in Illinois and a client colluded to strike  “no-poach” agreements to avoid hiring each other’s employees in order to suppress wages, the Illinois attorney general alleged in a complaint. 

The agreements, facilitated by the agencies’ common client Vee Pak, a health and beauty product manufacturer, are a per se violation of the Illinois Antitrust Act, the complaint in Cook County Circuit Court alleged. 

Illinois AG Kwame Raoul’s lawsuit comes after the US Justice Department largely failed in its attempts to prosecute companies in two separate labor competition cases.

According to Raoul’s office, the temporary staffing agencies normally compete with one another to recruit and hire workers for temporary employment at third-party locations. Vee Pak, which manufactures and packages beauty products, had used all six companies to hire temporary workers at its facilities in Countryside, Ill., and Hodgkins, Ill. 

Prosecutors said the staffing agencies had entered into an agreement to not recruit, solicit, hire or poach each other’s temporary workers employed at Vee Pak’s facilities from early 2016 until at least late 2019. The agreement helped Vee Pak and the agencies at the expense of temporary workers, as it stopped any need for the staffing agencies to compete for workers by offering better wages, benefits and conditions of employment. 

Through the alleged no-poach agreeement, Raoul said the staffing agencies would monitor for temporary Vee Pak workers switching from one participating staffing agency to another. If a staffing agency noticed a worker switching to another of the participating staffing agencies, the temporary worker would be returned to their original staffing agency or fired. Prosecutors said Vee Pak helped with agreement enforcement by notifying the agency out of compliance with the agreement, ensuring the agreement continued to be enforced. 

“No-poach agreements allow employers to take advantage of workers by trapping them in low-paying jobs and limiting their ability to seek better employment opportunities,” Raoul said. “I am committed to holding companies accountable when they engage in unlawful employment practices that prevent employees from seeking opportunities that allow them to better support themselves and provide for their families.”

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