Parallel Employment Group laying off nearly 500 employees and cites state's high cost of workers'
Parallel Employment Group laying off nearly 500 employees and cites state's high cost of workers' compensation
A Milwaukee-based temporary staffing company has laid off nearly 500 employees in Illinois, blaming the high cost of the state's workers' compensation system.
An executive of Parallel Employment Group said Tuesday that the company cut jobs in Illinois because it wanted to lower its workers' compensation costs.
Kirk La Du, executive vice president of operations, said the company, which also operates in Wisconsin and New York, incurred 87 percent of its total workers' compensation costs in Illinois. The state accounts for about 35 percent of its revenues, he said.
"The only reason we are downsizing is competitive issues related to workers' compensation," La Du said. "It seems foolish to us to continue operating in a state where workers' comp made it difficult to make money."
Illinoisis one of the most expensive states for workers' compensation insurance and medical costs, according to statistics provided in the 2010 annual report of the Illinois Workers' Compensation Commission. The state's medical costs per claim, according to the most recent available data, are 29 percent above the median among the 50 states, but the injury rate in Illinois is 17 percent below the median.
Businesses in Illinois have long complained that the system to protect injured workers is too pricey and rife with abuse. In the summer, Gov. Pat Quinn approved legislation that lowered payments to doctors and other medical providers and instituted other reforms.
The National Council on Compensation Insurance estimates that the legislative changes will reduce overall costs in the Illinois workers' compensation system by 8.8 percent.
Parallel Employment is not sold on the projected savings.
"We saw the legislation as possibly being a positive move, but we're not convinced the legislation has any real teeth to it," La Du said.
Parallel Employment, formerly known as P.A. Staffing Service, provides labor to clients involved in light manufacturing and packaging. These industries generally have lower workers' compensation costs compared with foundries, auto companies and other heavy manufacturers
Parallel Employment closed branches in Chicago, Wheeling, Elgin and Crystal Lake. It plans to keep its Naperville branch open, La Du said. The reduction of 483 employees represents about 15 percent of the company's total workforce, La Du said.
The last day for Parallel's affected workers was Friday. The vast majority of the laid-off workers will be rehired by Andrews & Staff Force Inc., a Schaumburg-based staffing company, La Du said. A phone call to Andrews & Staff Force was not returned.
Parallel Employment notified the state of the job losses late last month. It was one of 11 Illinois employers In November to warn of planned job cuts under the Illinois Worker Adjustment and Retraining Notification Act.
Parallel's job losses were one-third of the 1,435 cuts reported by Illinois employers. The number of jobs cuts is about double what business reported in October.