SB2041 103RD GENERAL ASSEMBLY

LRB103 30684 SPS 57150 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB2041

Introduced 2/9/2023, by Sen. Cristina H. Pacione-Zayas

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 and signed by both parties. 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 enforcement; civil enforcement; public policy and intent; public awareness; reports; coordination; and rulemaking by the Department of Labor. Effective July 1, 2024.

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:

"Department" means the Department of Labor.

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

"Freelance worker" means a natural person who is hired or retained as an independent contractor by a hiring party to provide products or services in Illinois or for a hiring party located in Illinois in exchange for an amount equal to or greater than $500, either by itself or when aggregated with all contracts for products or services between the same hiring party and the freelance worker during the immediately preceding 120 days. "Freelance worker" does not include an individual performing services as an employee under Section 10 of the Employee Classification Act or an employee as defined in Section 2 of the Wage Payment and Collection Act.

"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;

(3) a unit of local government; or

(4) any foreign government.

"Natural person" means an individual human being.

"Person" means any natural person, individual, corporation, business enterprise or other legal entity, either public or private, and any legal successor, representative, agent or agency of that individual, corporation, business enterprise, or legal entity.

Section 10. Payment of compensation for freelance workers.

(a) Except as otherwise provided by law, a freelance worker shall be paid the contracted compensation amount no later than 30 days after the freelance worker provides the product or completes the services under the contract.

(b) Once a freelance worker has commenced preparation of the product or 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. Contract for products and services of freelance workers.

(a) Whenever a hiring party retains a freelance worker, the contract for such products or services shall be reduced to writing and signed by the freelance worker and the hiring party. The hiring party shall 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 thereof.

(b) The written contract for the product and service of a freelance worker 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 products and services to be provided by the freelance worker, the value of the products and 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 such date will be determined; and

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

(c) The Department may adopt rules as necessary to enforce this Act, including, but not limited to, requiring additional terms to ensure that the freelance worker and the hiring party understand their obligations under the contract.

(d) The hiring party shall retain the contract for the service of a freelance worker for no less than 6 years and shall make such contract available to the Department upon request. The failure of the hiring party to produce such contract within 5 business days upon the request of the Department shall give rise to a presumption that the terms the freelance worker has presented are the agreed upon terms.

(e) The Department shall make available model contracts on its website for use by the general public at no cost. Such model contracts shall be made available in English and in the 8 languages most commonly spoken by limited English proficient individuals in the State.

Section 20. Nondiscrimination. No hiring party shall threaten, intimidate, discipline, harass, deny a freelance opportunity to, 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 by this Act, or from obtaining any future work opportunity because the freelance worker has done so.

Section 25. Enforcement.

(a) It shall be the duty of the Department to inquire diligently for any violations of this Act, and to institute the actions for penalties provided by this Act, and to enforce generally the provisions of this Act.

(b) A freelance worker may file a complaint with the Department alleging violations of the Act by submitting a signed, completed compensation claim application on the form provided by the Department and by submitting copies of all supporting documentation. The form provided by the Department shall include requests for information to facilitate its report making requirements under Section 50, including, (1) the general sector or occupation of the freelance worker submitting a claim under this Act, (2) the county where the work by the freelance worker was performed, and (3) the demographic data of the freelance worker submitting a claim under this Act, to be provided by the freelance worker on a voluntary basis. Complaints alleging violation of Section 15 shall be filed within 2 years after the date the final compensation was due. Complaints alleging violation of Section 10 shall be filed within 3 years after the date the final compensation was due. Applications shall be reviewed by the Department to determine whether there is cause for investigation. Failure of a hiring party to keep adequate records or provide written contract as required by this Act shall not operate as a bar to a freelance worker filing a complaint. The Department shall keep the names of freelance workers who are the subject of an investigation confidential until such time that disclosure is necessary for resolution of an investigation or complaint.

(c) Each freelance worker who files a completed compensation claim application alleging a violation of this Act or a rule adopted thereunder 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. 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. Each freelance worker and his or her authorized representative shall be notified in writing of any award and collection of civil penalties.

(d) The Department shall have the power to investigate and attempt equitably to adjust controversies between freelance workers and hiring entities in respect of compensation claims arising under this Act and to that end the Department through the Director or any other person in the Department designated by him or her, shall have the power to administer oaths, subpoena and examine witnesses, to issue subpoenas duces tecum requiring the production of such books, papers, records and documents as may be evidence of any matter under inquiry and to examine and inspect the same as may relate to the question in dispute. Service of such subpoenas shall be made by any sheriff or any person. Any court in this State, upon the application of the Department may compel attendance of witnesses, the production of books and papers, and the giving of testimony before the Department by attachment for contempt or in any other way as the production of evidence may be compelled before such court. The Department may initiate a mediation conference.

(e) 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. The Attorney General may receive injunctive relief, civil penalties, and any other relief deemed appropriate by the court.

(f) Nothing in this Act shall be construed to prevent any freelance worker from making complaint or prosecuting his or her own claim for compensation. Any freelance worker aggrieved by a violation of this Act or any rule adopted under this Act may file suit in circuit court of Illinois, in the county where the alleged violation occurred or where any freelance worker who is party to the action resides, without regard to exhaustion of any alternative administrative remedies provided in this Act. Actions may be brought by one or more freelance workers for and on behalf of themselves and other freelance workers similarly situated.

(g) Nothing in this Act shall be construed to limit the authority of the State's attorney of any county to prosecute actions for violation of this Act or to enforce the provisions thereof independently and without specific direction of the Department.

Section 30. Civil enforcement.

(a) Any freelance worker not timely paid final compensation by a hiring party as required by Section 10 shall be entitled to recover through a claim filed with the Department or in a civil action, but not both, double the amount of any such underpayments, injunctive relief, and other such remedies as may be appropriate. In a civil action for violation of Section 10, such freelance worker shall also recover costs and all reasonable attorney's fees. Civil complaints alleging violation of Section 10 shall be filed within 3 years after the date the final compensation was due.

(b) Any freelance worker who was retained in violation of Section 15 despite the freelance worker's request for a written contract prior to commencing the contracted work as required by Section 15 shall be entitled to recover through a claim filed with the Department or in a civil action, but not both, statutory damages of $500. However, a freelance worker who prevails on a claim alleging violation of Section 15 and on one or more claims under other Sections shall be awarded statutory damages equal to the value of the underlying contract or $500, whichever is greater, in addition to the other remedies provided. Civil complaints alleging violation of Section 15 shall be filed within 2 year after the date the final compensation was due.

(c) Any freelance worker who is threatened, intimidated, disciplined, harassed, denied a freelance opportunity, or penalized by a hiring party in violation of Section 20 of this Act shall be entitled to recover through a claim filed with the Department or in a civil action, but not both, statutory damages equal to the value of the underlying contract for each violation of Section 20. In a civil action for violation of Section 20, such freelance worker shall also recover costs and all reasonable attorney's fees.

Section 35. Criminal penalties. In addition to the other remedies provided in this Act, any hiring party or any agent of a hiring party, who, being able to pay final compensation and being under a duty to pay, wilfully refuses to pay as provided in this Act, or falsely denies the amount or validity thereof or that the same is due, with intent to secure for the hiring party or other person any underpayment of such indebtedness or with intent to annoy, harass, oppress, hinder, delay, or defraud the freelance worker to whom such indebtedness is due, upon conviction, is guilty of:

(1) for unpaid final compensation in the amount of $5,000 or less, a Class B misdemeanor; or

(2) for unpaid final compensation in the amount of more than $5,000, a Class A misdemeanor.

Each day during which any violation of this Act continues shall constitute a separate and distinct offense.

Any hiring party or any agent of a hiring party who violates this Act a subsequent time within 2 years of a prior criminal conviction under this Section is guilty, upon conviction, of a Class 4 felony.

Section 40. Public policy and intent.

(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 are intended to supplement, and do not diminish or replace, any other basis of liability, remedy, or requirement established by statute or common law.

(c) Failure to comply with this Section does not render any contract between a hiring party and a freelance worker void in total, voidable, or otherwise impair any obligation, claim, or right related to the contract, nor does it constitute a defense to any action or proceeding to enforce, or for breach of, such 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 45. Public awareness. Subject to appropriation, the Department may 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 natural person through phone or email.

Section 50. Reports. One year after the effective date of this Act, and by November 1 every 5 years thereafter, the Department shall submit to the General Assembly and publish on its website a report regarding the effectiveness of this Act at improving freelance contracting and payment practices. The report shall include, but is not limited to:

(1) the number of complaints received;

(2) the value of the contracts disaggregated into ranges of $500 and by the Section of this Act the associated hiring party is alleged to have violated;

(3) the numbers of responses and non-responses received by the Department disaggregated by contract value into ranges of $500 and by the Section of this Act the associated hiring party is alleged to have violated;

(d) the number of freelance workers that pursue their claims of violation of this Act through civil action or an alternative dispute resolution process, and a summary of the outcomes, if known;

(4) the general sector or occupation of the freelance workers submitting claims pursuant to this Act;

(5) the counties where violations of this Act are alleged to have occurred, including the number of violations from each county;

(6) to the extent available, demographic data of the freelance workers who allege violations of this Act; and

(7) legislative recommendations, including consideration of whether certain occupations should be exempted from the scope of the definition of freelance worker.

Section 55. Coordination.

(a) The Department is authorized to coordinate enforcement efforts with other agencies and combine claims under this Act with claims under other Acts.

(b) The Department is authorized to enter into agreements with other states to collect unpaid compensation from out-of-state hiring entities and to perform reciprocal services for such states in the State of Illinois.

Section 60. Rulemaking. The Director, or his authorized representatives, shall administer and enforce the provisions of this Act. In order to accomplish the objectives of this Act and to carry out the duties prescribed by this Act, the Director, or his authorized representative, shall adopt rules necessary to administer and enforce the provisions of this Act, including the procedures that shall be followed for hearings under Section 25. The adoption, amendment, or rescission of rules shall be in conformity with the requirements of the Illinois Administrative Procedure Act.

Section 99. Effective date. This Act takes effect July 1, 2024.