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Illinois Amends Nurse Agency Licensing Act to Bar Non-Competes, Add Reporting, Contract Obligations

Amendments to the Illinois Nurse Agency Licensing Act (HB 4666) aim to promote transparency and protections for healthcare workers, but, in practice, they make it more difficult for nurse staffing agencies to retain employees.

Under the new law, staffing agencies doing business in Illinois can no longer enter into covenants not-to-compete with nurses or certified nursing assistants. Similarly, nurse staffing agencies are prohibited from requiring any “buy-out” fee, placement fee, or other form of compensation if the nurse is hired by a healthcare facility. The law applies only to agreements entered into after the law’s effective date of July 1, 2022, so prior existing agreements need not be modified.

In addition to barring non-competes between nurse staffing agencies and nurses, HB 4666 also imposes significant reporting and compliance obligations on staffing agencies. Contracts between staffing agencies and healthcare facilities must include a schedule of all hourly bill rates per employee category, which may consist of “hourly pay rate, shift differential, weekend differential, hazard pay, charge nurse add-on, overtime, holiday pay, and travel or mileage pay.” Contracts also must provide a “full description of administrative charges” and, most significantly, include a provision that no less than 100 percent of the hourly rate should be paid to the contract nurse.

All such contracts must be submitted to the Illinois Department of Labor within five business days of execution. Copies of all supporting invoices to healthcare services personnel also must be maintained and submitted to the Department upon request.

Further, on a quarterly basis, nurse staffing agencies must submit comprehensive reports to the Illinois Department of Labor classified by county and provider type. The reports must include:

A list of the average amount charged to the healthcare facility for each individual employee category;
A list of the average amount paid by the nursing agency to employees in each individual employee category; and A list of the average amount of labor-related costs paid by nursing agency for each employee category, including payroll taxes, workers’ compensation insurance, professional liability coverage, credentialing and testing, and other employee-related costs.

The Illinois Department of Labor will publish reports on its website of a compilation of the information reported.

HB 4666 is the latest in a series of steps making it more difficult for Illinois employers to restrict and retain employees. In 2021, Illinois amended the Freedom to Work Act and placed restrictions, including a $75,000 salary minimum, on all non-compete agreements (in every industry) within the state.

We encourage all nurse staffing companies with business in Illinois to reach out for guidance regarding how to implement a comprehensive plan to comply with the new law. This includes reviewing and updating employment and facility agreements and removing restrictive covenants, setting and documenting pay in a way that complies with the complexities of the new law, and establishing necessary recordkeeping and reporting practices.

Jackson Lewis P.C. © 2022National Law Review, Volume XII, Number 249

About this Author

Julia Argentieri Employment Attorney Jackson Lewis

Julia P. Argentieri is an Associate in the Chicago, Illinois, office of Jackson Lewis P.C. Her practice focuses on representing employers in a broad range of workplace law matters, including both counseling as well as litigation. Ms. Argentieri has significant experience with training and counseling as well as defending administrative charges before the EEOC and IDHR, and handling all phases of litigation at the state and federal level.

During law school, Ms. Argentieri was an editor for the Elder Law Journal at the University of Illinois College of...

Michaelle L. Baumert Human Resources Lawyer Jackson Lewis

Michaelle L. Baumert is a Principal in the Omaha, Nebraska, office of Jackson Lewis P.C. She is a seasoned litigator and has extensive experience in human resources counseling. Ms. Baumert’s practice also has an emphasis on labor and employment issues and concerns in the franchise context. 

Ms. Baumert concentrates her practice on employment law, class action, franchise vicarious liability, and traditional labor. She provides day-to-day preventive counseling and assistance to employers regarding the full spectrum of labor and employment matters, including...