HB1122 103RD GENERAL ASSEMBLY

LRB103 04895 SPS 49905 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB1122

Introduced 1/12/2023, by Rep. Will Guzzardi

SYNOPSIS AS INTRODUCED:

New Act

Creates the Freelance Worker Protection Act. Provides that freelance workers must be compensated by hiring parties for their services in a timely manner. Provides that whenever a hiring party retains the services of a freelance worker, the contract between the hiring party and the freelance worker shall be reduced to writing. Provides that no hiring party shall threaten, intimidate, discipline, harass, deny a work opportunity to, or discriminate against a freelance worker, or take any other action that penalizes a freelance worker for, or is reasonably likely to deter a freelance worker from, exercising or attempting to exercise any right guaranteed under the Act. Contains provisions concerning complaints to the Director of Labor; the powers and duties of the Director; civil actions brought by freelance workers; civil actions brought by the State; the scope of freelance worker contracts; a public awareness campaign; and surveys, information collection, and reporting requirements. Effective immediately.

A BILL FOR

AN ACT concerning employment.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Freelance Worker Protection Act.

Section 5. Definitions. As used in this Act:

"Construction contractor" means any person, sole proprietor, partnership, firm, corporation, limited liability company, association, or other legal entity that by itself or through others offers to undertake, holds itself out as being able to undertake, or does undertake a construction project.

"Construction project" means the providing of any labor or services, and the use of any materials or equipment in order to alter, build, excavate, add to, subtract from, improve, repair, maintain, renovate, move, wreck, or demolish any bridge, building, highway, road, railroad, land, tunnel, sewer, drainage, or other structure, project, development, or improvement, or the doing of any part thereof, including the erection of scaffolding or other structures or works in connection with the construction project.

"Department" means the Department of Labor.

"Director" means the Director of Labor, or his or her designee.

"Freelance worker" means any person or organization composed of no more than one person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for an amount equal to or greater than $250, either by itself or when aggregated with all contracts for services between the same hiring party and freelance worker during the immediately preceding 120 days. "Freelance worker" does not include:

(1) any person who is a sales representative under the terms of the contract at issue;

(2) any person engaged in the practice of law under the terms of the contract at issue and who is a member in good standing of the bar of the highest court of any state, district, or territory and who is not under any order of court suspending, enjoining, restraining, disbarring, or otherwise restricting such person in the practices of law;

(3) any person who is a licensed medical professional; or

(4) any person who is a construction contractor.

"Hiring party" means any person who retains a freelance worker to provide any service, other than:

(1) the United States government;

(2) the State of Illinois, including any office, Department, agency, or other body of the State, including the General Assembly and the judiciary;

(3) a municipality, including any office, Department, agency, or other body of a municipality; or

(4) any foreign government.

Section 10. Guarantee of compensation to freelance workers.

(a) Except as otherwise provided by law, the contracted compensation shall be paid to a freelance worker either:

(1) on or before the date such compensation is due under the terms of the contract; or

(2) if the contract does not specify when the hiring party must pay the contracted compensation or the mechanism by which the date will be determined, no later than 30 days after the completion of the freelance worker's services under the contract.

(b) Once a freelance worker has commenced performance of the services under the contract, the hiring party shall not require as a condition of timely payment that the freelance worker accept less compensation than the amount of the contracted compensation.

Section 15. Required contracts between hiring parties and freelance workers.

(a) Whenever a hiring party retains the services of a freelance worker, the contract between the hiring party and the freelance worker shall be reduced to writing. The hiring party must furnish a copy of the written contract, either physically or electronically, to the freelance worker and each party to the written contract shall retain a copy.

(b) The written contract shall include, at a minimum, the following information:

(1) the name and mailing address of both the hiring party and the freelance worker;

(2) an itemization of all services to be provided by the freelance worker, the value of the services to be provided under the terms of the contract, and the rate and method of compensation;

(3) the date on which the hiring party must pay the contracted compensation or the mechanism by which the date will be determined; and

(4) the date by which a freelance worker must submit a list of services rendered under the contract to the hiring party in order to meet any internal processing deadlines of the hiring party for the purposes of compensation being timely rendered by the agreed-upon date as described in paragraph (3).

(c) The Department may adopt rules requiring additional terms to a written contract to ensure that the freelance worker and the hiring party understand their obligations under the written contract.

(d) The hiring party shall be required to keep the written contract for a period of no less than 6 years and shall make the contract available to the Director upon request. The failure of a hiring party to produce a contract upon request of the Director shall give rise to a presumption that the terms that the freelance worker has presented are the agreed upon terms.

(e) The Director shall make available model contracts on the Department's website for use by the general public at no cost. The model contracts shall be made available in English, Spanish, and the next 4 most commonly used languages in the State.

Section 20. Prohibition on coercive acts by hiring parties. No hiring party shall threaten, intimidate, discipline, harass, deny a work opportunity to, or discriminate against a freelance worker, or take any other action that penalizes a freelance worker for, or is reasonably likely to deter a freelance worker from, exercising or attempting to exercise any right guaranteed under this Act, or from obtaining any future work opportunity because the freelance worker has exercised or attempted to exercise any right guaranteed under this Act.

Section 25. Complaints.

(a) Any freelance worker or his or her authorized representative may file with the Director a complaint claiming a violation of this Act and the Director shall investigate the complaint. The Director shall keep the names of freelance workers who are the subject of an investigation confidential until the time that disclosure is necessary for the resolution of the complaint. Failure of a hiring party to keep adequate records or provide a written contract as required under this Act, in addition to exposing the hiring party to penalties authorized under this Act, shall not operate as a bar to the filing of a complaint by a freelance worker. If the hiring party fails to keep accurate records in violation of this Act, the hiring party shall bear the burden of proving that the complaining freelance worker was paid in accordance with this Act.

(b) Each freelance worker who files a complaint regarding a violation of this Act or a rule or regulation adopted in accordance with this Act, shall be provided with a written description of the anticipated processing of the complaint, including investigation, case conference, potential civil and criminal penalties, and collection procedures.

(c) Each freelance worker and his or her authorized representative shall be notified in writing of any case conference before it is held and given the opportunity to attend.

(d) Each freelance worker and his or her authorized representative shall be notified in writing of any award and collection of civil penalties.

Section 30. Powers and duties of the Director.

(a) The Director shall have the following powers and duties:

(1) The Director shall investigate and attempt to adjust equitably controversies between freelance workers and hiring parties relating to the provisions of this Act.

(2) The Director may take assignments of claims for wages under this Act from freelance workers or third parties in trust for such freelance workers or for the benefit of various funds for such freelance workers. All such assignments shall run to the Director and his or her successor in office. The Director may sue hiring parties on wage claims assigned to it, with the benefits and subject to the provisions of existing law applying to actions by freelance workers for the collection of wages. The Director may join in a single action any number of wage claims against the same hiring party.

(b)(1) The Director is authorized and empowered to enter into reciprocal agreements with the labor department or corresponding agency of any other state or with the person, board, officer, or commission authorized to act on behalf of the department or agency, for the collection in the other state of claims and judgments for wages based upon claims assigned to the Director.

(2) The Director may, to the extent provided for by any reciprocal agreement entered into by law or with any agency of another state as provided in paragraph (1), maintain actions in the courts of the other state for the collection of claims and judgments for wages and may assign the claims and judgments to the labor department or agency of the other state for collection to the extent that an assignment may be permitted or provided for by the law of the other state or by reciprocal agreement.

(3) The Director may, upon the written consent of the labor department or other corresponding agency of any other state or of any person, board, officer, or commission of the state authorized to act on behalf of the labor department or corresponding agency, maintain actions in the courts of this State upon assigned claims and judgments for wages arising in the other state in the same manner and to the same extent that the actions by the Director are authorized when arising in this State. Actions may be maintained only in cases where the other state by law or reciprocal agreement extends a like comity to cases arising in this State.

(c) Nothing in this Section shall be construed as requiring the Director in every instance to investigate and attempt to adjust controversies, or to take assignments of wage claims.

Section 35. Civil actions brought by freelance workers.

(a) A freelance worker alleging a violation of this Act may bring an action in any court of competent jurisdiction for damages as follows:

(1) Any action alleging a violation of Section 15 shall be brought within 2 years after the acts alleged to have violated this Act occurred. A freelance worker who solely alleges a violation of Section 15 must prove that he or she requested a written contract before the contracted work began.

(2) Any action alleging a violation of Section 10 or Section 20 shall be brought within 6 years after the acts alleged to have violated this Act occurred.

(b) Within 10 days after having commenced a civil action under this Section, a freelance worker shall serve a copy of the complaint upon an authorized representative of the Director. Failure to serve a copy of the complaint to the Director does not adversely affect any freelance worker's cause of action.

(c)(1) A freelance worker who prevails on a claim alleging a violation of Section 10 shall be awarded damages equal to twice the amount of the contracted compensation, injunctive relief, reasonable attorney fees and costs, and other remedies as may be appropriate.

(2) A freelance worker who prevails on a claim alleging a violation of Section 15 shall be awarded statutory damages of $250.

(3) A freelance worker who prevails on a claim alleging a violation of Section 20 shall be awarded statutory damages equal to the value of the underlying contract for each violation.

(4) A freelance worker who prevails on a claim alleging a violation of this Act and one or more claims alleging a violation of any other State law regarding wage payment shall be awarded statutory damages equal to the value of the underlying contract for the violation of this Act in addition to the remedies specified for the other wage payment violations.

Section 40. Civil actions brought by the State.

(a) Where reasonable cause exists to believe that a hiring party is engaged in a pattern or practice of violations of this Act, the Attorney General may commence a civil action on behalf of the State in a court of competent jurisdiction. A civil action brought by the Attorney General under this paragraph shall be commenced by filing a complaint setting forth facts relating to such pattern or practice and requesting relief, which may include injunctive relief, civil penalties, and any other appropriate relief.

(b) Nothing in this Section prohibits:

(1) a person alleging a violation of this Act from filing a civil action based on the same facts as a civil action commenced by the Attorney General under this Section; or

(2) the Director from sending a notice of complaint, unless otherwise barred from doing so.

(c) In any civil action commenced under this Section, the trier of fact may impose a civil penalty of not more than $25,000 for a finding that a hiring party has engaged in a pattern or practice of violations of this Act. Any civil penalty so recovered shall be paid into the General Revenue Fund.

Section 45. Scope of contracts.

(a) Except as otherwise provided by law, any provision of a contract purporting to waive rights under this Act is void as against public policy.

(b) The provisions of this Act supplement, and do not diminish or replace, any other basis of liability or requirement established by statute or common law.

(c) Failure to comply with the provisions of this Act does not render any contract between a hiring party and a freelance worker void or voidable or otherwise impair any obligation, claim, or right related to the contract or constitute a defense to any action or proceeding to enforce, or for breach of, the contract.

(d) No provision of this Act relating to freelance workers shall be construed as providing a determination about the legal classification of any such worker as an employee or independent contractor.

Section 50. Public awareness campaign. The Department shall conduct a public awareness campaign, that shall include making information available on its website, otherwise informing hiring parties of the provisions of this Act, and establishing a means for assistance by a person through phone and email.

Section 55. Surveys; information collection; reporting requirements.

(a) No later than 6 months after the Director sends to a freelance worker either a hiring party's response and accompanying materials or a notice of non-response in accordance with this Act, the Director shall send the freelance worker a survey requesting additional information about the resolution of the freelance worker's claims. The survey shall ask whether or not the freelance worker pursued any such claims in court or through an alternative dispute resolution process and whether or not the hiring party ultimately paid any or all of the compensation the freelance worker alleged was due or if the matter was resolved in a different manner. The survey shall state clearly that response to the survey is voluntary.

(b) The Director shall collect and track information about complaints alleging violations of this Act. The information collected shall include, at minimum:

(1) the identity of the hiring party alleged to have violated this Act;

(2) the freelance worker's occupation;

(3) the Section of this Act that was alleged to have been violated;

(4) the value of the contract;

(5) the response or non-response from the hiring party; and

(6) information from a completed survey identified in subsection (a).

(c) One year after the effective date of this Act, and every 5 years thereafter by November 1, the Director shall submit to the General Assembly and publish on its website a report regarding the effectiveness of the provisions of this Act at improving freelance contracting and payment practices. Such report shall include, at a minimum:

(1) the number of complaints the Director has received in accordance with the provisions of this Act;

(2) the value of the contracts disaggregated into ranges of $500 and by the Section of this Act allegedly violated;

(3) the numbers of responses and non-responses received by the Director disaggregated by contract value into ranges of $500 and by the Section of this Act allegedly violated;

(4) the proportion of surveys received from freelance workers that indicate that they pursued their claims in court and the proportion of surveys received from freelance workers that indicate that they pursued their claims through an alternative dispute resolution process and a summary of the outcomes of such cases; and

(5) legislative recommendations, including consideration of whether certain occupations should be exempted from the scope of the definition of "freelance worker" in this Act.

Section 99. Effective date. This Act takes effect upon becoming law.