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Public Act 095-0026
Public Act 0026 95TH GENERAL ASSEMBLY
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Public Act 095-0026 |
HB1795 Enrolled |
LRB095 08260 RLC 28432 b |
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| 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 | Employee Classification Act. | Section 3. Purpose. This Act is intended to address the | practice of misclassifying employees as independent | contractors. | Section 5. Definitions. As used in this Act: | "Construction" means any constructing, altering, | reconstructing, repairing, rehabilitating, refinishing, | refurbishing, remodeling, remediating, renovating, custom | fabricating, maintenance, landscaping, improving, wrecking, | painting, decorating, demolishing, and adding to or | subtracting from any building, structure, highway, roadway, | street, bridge, alley, sewer, ditch, sewage disposal plant, | water works, parking facility, railroad, excavation or other | structure, project, development, real property or improvement, | or to do any part thereof, whether or not the performance of | the work herein described involves the addition to, or | fabrication into, any structure, project, development, real | property or improvement herein described of any material or |
| article of merchandise. Construction shall also include moving | construction related materials on the job site to or from the | job site.
| "Contractor" means any sole proprietor, partnership, firm, | corporation, limited liability company, association or other | legal entity permitted by law to do business within the State | of Illinois who engages in construction as defined in this Act. | "Contractor" includes a general contractor and a | subcontractor.
| "Department" means the Department of Labor.
| "Director" means the Director of the Department of Labor.
| "Employer" means any contractor that employs individuals | deemed employees under Section 10 of this Act; however, | "employer" does not include (i) the State of Illinois or its | officers, agencies, or political subdivisions or (ii) the | federal government.
| "Entity" means any contractor for which an individual is | performing services and is not classified as an employee under | Section 10 of this Act; however, "entity" does not include (i) | the State of Illinois or its officers, agencies, or political | subdivisions or (ii) the federal government.
| "Interested party" means a person with an interest in | compliance with this Act. | "Performing services" means the performance of any | constructing, altering, reconstructing, repairing, | rehabilitating, refinishing, refurbishing, remodeling, |
| remediating, renovating, custom fabricating, maintenance, | landscaping, improving, wrecking, painting, decorating, | demolishing, and adding to or subtracting from any building, | structure, highway, roadway, street, bridge, alley, sewer, | ditch, sewage disposal plant, water works, parking facility, | railroad, excavation or other structure, project, development, | real property or improvement, or to do any part thereof, | whether or not the performance of the work herein described | involves the addition to, or fabrication into, any structure, | project, development, real property or improvement herein | described of any material or article of merchandise. | Construction shall also include moving construction related | materials on the job site to or from the job site. | Section 10. Applicability; status of individuals | performing service. | (a) For the purposes of this Act, an individual performing | services for a contractor is deemed to be an employee of the | employer except as provided in subsections (b) and (c) of this | Section. | (b) An individual performing services for a contractor is | deemed to be an employee of the contractor unless it is shown | that: | (1) the individual has been and will continue to be | free from control or direction over the performance of the | service for the contractor, both under the individual's |
| contract of service and in fact; | (2) the service performed by the individual is outside | the usual course of services performed by the contractor; | and
| (3) the individual is engaged in an independently | established trade, occupation, profession or business; or
| (4) the individual is deemed a legitimate sole | proprietor or partnership under subsection (c) of this | Section. | (c) The sole proprietor or partnership performing services | for a contractor as a subcontractor is deemed legitimate if it | is shown that: | (1) the sole proprietor or partnership is performing | the service free from the direction or control over the | means and manner of providing the service, subject only to | the right of the contractor for whom the service is | provided to specify the desired result;
| (2) the sole proprietor or partnership is not subject | to cancellation or destruction upon severance of the | relationship with the contractor;
| (3) the sole proprietor or partnership has a | substantial investment of capital in the sole | proprietorship or partnership beyond ordinary tools and | equipment and a personal vehicle;
| (4) the sole proprietor or partnership owns the capital | goods and gains the profits and bears the losses of the |
| sole proprietorship or partnership;
| (5) the sole proprietor or partnership makes its | services available to the general public or the business | community on a continuing basis;
| (6) the sole proprietor or partnership includes | services rendered on a Federal Income Tax Schedule as an | independent business or profession;
| (7) the sole proprietor or partnership performs | services for the contractor under the sole | proprietorship's or partnership's name;
| (8) when the services being provided require a license | or permit, the sole proprietor or partnership obtains and | pays for the license or permit in the sole proprietorship's | or partnership's name;
| (9) the sole proprietor or partnership furnishes the | tools and equipment necessary to provide the service;
| (10) if necessary, the sole proprietor or partnership | hires its own employees without contractor approval, pays | the employees without reimbursement from the contractor | and reports the employees' income to the Internal Revenue | Service;
| (11) the contractor does not represent the sole | proprietorship or partnership as an employee of the | contractor to its customers; and
| (12) the sole proprietor or partnership has the right | to perform similar services for others on whatever basis |
| and whenever it chooses. | (d) Where a sole proprietor or partnership performing | services for a contractor as a subcontractor is deemed not | legitimate under subsection (c) of this Section, the sole | proprietorship or partnership shall be deemed an individual for | purposes of this Act.
| (e) Subcontractors or lower tiered contractors are subject | to all provisions of this Act.
| (f) A contractor shall not be liable under this Act for any | subcontractor's failure to properly classify persons | performing services as employees, nor shall a subcontractor be | liable for any lower tiered subcontractor's failure to properly | classify persons performing services as employees.
| Section 15. Notice. | (a) The Department shall post a summary of the requirements | of this Act in English, Spanish, and Polish on its official web | site and on bulletin boards in each of its offices. | (b) An entity for whom one or more individuals perform | services who are not classified as employees under Section 10 | of this Act shall post and keep posted, in a conspicuous place | on each job site where those individuals perform services and | in each of its offices, a notice in English, Spanish, and | Polish, prepared by the Department, summarizing the | requirements of this Act. The Department shall furnish copies | of summaries without charge to entities upon request.
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| Section 20. Failure to properly designate or classify | individuals performing services as employees. It is a violation | of this Act for an employer or entity not to designate an | individual as an employee under Section 10 of this Act unless | the employer or entity satisfies the provisions of Section 10 | of this Act. | Section 25. Enforcement. | (a) Any interested party may file a complaint with the | Department against an entity or employer covered under this Act | if there is a reasonable belief that the entity or employer is | in violation of this Act. It shall be the duty of the | Department to enforce the provisions of this Act. The | Department shall have the power to conduct investigations in | connection with the administration and enforcement of this Act | and any investigator with the Department shall be authorized to | visit and inspect, at all reasonable times, any places covered | by this Act and shall be authorized to inspect, at all | reasonable times, documents related to the determination of | whether an individual is an employee under Section 10 of this | Act. The Director of Labor or his or her representative may | compel, by subpoena, the attendance and testimony of witnesses | and the production of books, payrolls, records, papers, and | other evidence in any investigation and may administer oaths to | witnesses.
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| (b) Whenever the Department believes upon investigation | that there has been a violation of any of the provisions of | this Act or any rules or regulations promulgated under this | Act, the Department may: (i) issue and cause to be served on | any party an order to cease and desist from further violation | of the Act, (ii) take affirmative or other action as deemed | reasonable to eliminate the effect of the violation, (iii) | collect the amount of any wages, salary, employment benefits, | or other compensation denied or lost to the individual, and | (iv) assess any civil penalty allowed by this Act. The civil | penalties assessed by the Department as well as any other | relief requested by the Department shall be recoverable in an | action brought in the name of the people of the State of | Illinois by the Attorney General.
| Section 30. Attorney General; State's Attorneys. Criminal | violations of this Act shall be prosecuted by the Attorney | General or the appropriate State's Attorney. The Department | shall refer matters to the Attorney General and the appropriate | State's Attorney upon determining that a criminal violation may | have occurred. In all other proceedings the Department shall be | represented by the Attorney General's Office. | Section 35. Contempt. Whenever it appears that any employer | or entity has violated a valid order of the Department issued | under this Act, the Director of Labor may commence an action |
| and obtain from the court an order commanding the employer or | entity to obey the order of the Department or be adjudged | guilty of contempt of court and punished accordingly. | Section 40. Penalties. An employer or entity that violates | any of the provisions of this Act or any rule adopted under | this Act shall be subject to a civil penalty not to exceed | $1,500 for each violation found in the first audit by the | Department. Following a first audit, an employer or entity | shall be subject to a civil penalty not to exceed $2,500 for | each repeat violation found by the Department within a 5 year | period. For purposes of this Section, each violation of this | Act for each person and for each day the violation continues | shall constitute a separate and distinct violation. In | determining the amount of a penalty, the Director shall | consider the appropriateness of the penalty to the employer or | entity charged, upon the determination of the gravity of the | violations. The amount of the penalty, when finally determined, | may be recovered in a civil action filed in any circuit court | by the Director of Labor, or a person aggrieved by a violation | of this Act or any rule adopted under this Act. In any civil | action brought by an interested party pursuant to this Section, | the circuit court shall award the interested party 10% of the | amount recovered. In such case, the remaining amount recovered | shall be submitted to the Director of Labor. Any uncollected | amount shall be subject to the provisions of the Illinois State |
| Collection Act of 1986. | Section 42. Debarments. For any second or subsequent | violation determined by the Department which is within 5 years | of an earlier violation, the Department shall add the employer | or entity's name to a list to be posted on the Department's | official website. Upon such notice, the Department shall notify | the violating employer or entity. No state contract shall be | awarded to an employer or entity appearing on the list until 4 | years have elapsed from the date of the last violation. | Section 45. Willful violations. | (a) Whoever willfully violates any of the provisions of | this Act or any rule adopted under this Act or whoever | obstructs the Director of Labor, or his or her representatives, | or any other person authorized to inspect places of employment | under this Act shall be liable for penalties up to double the | statutory amount. | (b) Whoever willfully violates any of the provisions of | this Act or any rule adopted under this Act shall be liable to | the employee for punitive damages in an amount equal to the | penalties assessed in subsection (a) of this Section.
| (c) The penalty shall be imposed in cases in which an | employer or entity's conduct is proven by a preponderance of | the evidence to be willful. The penalty may be recovered in a | civil action brought by the Director of Labor in any circuit |
| court. In any such action, the Director of Labor shall be | represented by the Attorney General. Any uncollected amount | shall be subject to the provisions of the Illinois State | Collection Act of 1986.
| (d) An entity or employer that willfully violates any | provision of this Act or any rule adopted under this Act | commits a Class C misdemeanor. An entity or employer that | commits a second or subsequent violation within a 5 year period | commits a Class 4 felony.
| Section 50. Employee Classification Fund. All moneys | received by the Department as fees and civil penalties under | this Act shall be deposited into the Employee Classification | Fund and shall be used, subject to appropriation by the General | Assembly, by the Department for administration, investigation, | and other expenses incurred in carrying out its powers and | duties under this Act. The Department shall hire as many | investigators and other personnel as may be necessary to carry | out the purposes of this Act. Any moneys in the Fund at the end | of a fiscal year in excess of those moneys necessary for the | Department to carry out its powers and duties under this Act | shall be available to the Department for the next fiscal year | for any of the Department's duties. | Section 55. Retaliation. | (a) It is a violation of this Act for an employer or |
| entity, or any agent of an employer or entity, to retaliate | through discharge or in any other manner against any person for | exercising any rights granted under this Act. Such retaliation | shall subject an employer or entity to civil penalties pursuant | to this Act or a private cause of action, or both.
| (b) It is a violation of this Act for an employer or entity | to retaliate against a person for:
| (1) making a complaint to an employer or entity, to a | co-worker, to a community organization, before a public | hearing, or to a State or federal agency that rights | guaranteed under this Act have been violated;
| (2) causing to be instituted any proceeding under or | related to this Act; or
| (3) testifying or preparing to testify in an | investigation or proceeding under this Act.
| Section 60. Private right of action. | (a) An interested party or person aggrieved by a violation | of this Act or any rule adopted under this Act by an employer | or entity may file suit in circuit court, in the county where | the alleged offense occurred or where any person 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 persons for and on behalf | of themselves and other persons similarly situated. A person | whose rights have been violated under this Act by an employer |
| or entity is entitled to collect:
| (1) the amount of any wages, salary, employment | benefits, or other compensation denied or lost to the | person by reason of the violation, plus an equal amount in | liquidated damages;
| (2) compensatory damages and an amount up to $500 for | each violation of this Act or any rule adopted under this | Act;
| (3) in the case of unlawful retaliation, all legal or | equitable relief as may be appropriate; and
| (4) attorney's fees and costs.
| (b) The right of an interested party or aggrieved person to | bring an action under this Section terminates upon the passing | of 3 years from the final date of performing services to the | employer or entity. This limitations period is tolled if an | employer or entity has deterred a person's exercise of rights | under this Act.
| Section 65. Rulemaking. The Department may adopt | reasonable rules to implement and administer this Act. For | purposes of this Act, the General Assembly finds that the | adoption of rules to implement this Act is deemed an emergency | and necessary for the public interest and welfare. | Section 70. No waivers. | (a) There shall be no waiver of any provision of this Act.
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| (b) It is a Class C misdemeanor for an employer to attempt | to induce any individual to waive any provision of this Act.
| Section 75. Cooperation. The Department of Labor, the | Department of Employment Security, the Department of Revenue, | and the Illinois Workers' Compensation Commission shall | cooperate under this Act by sharing information concerning any | suspected misclassification by an employer or entity of one or | more of its employees as independent contractors. Upon | determining that an employer or entity has misclassified | employees as independent contractors in violation of this Act, | the Department shall notify the Department of Employment | Security, the Department of Revenue, the Office of the State | Comptroller, and the Illinois Workers' Compensation Commission | who shall be obliged to check such employer or entity's | compliance with their laws, utilizing their own definitions, | standards, and procedures. | Section 80. Effect of Final Order. Any finding made | pursuant to this Act is for the purpose of enforcing this Act | and may not be admissible or binding against a party in any | other proceeding. | Section 900. The State Comptroller Act is amended by adding | Section 9.06 as follows: |
| (15 ILCS 405/9.06 new)
| Sec. 9.06. Misclassification of employees as independent | contractors. The Department of Labor, the Department of | Employment Security, the Department of Revenue, the Office of | the State Comptroller, and the Illinois Workers' Compensation | Commission shall cooperate under the Employee Classification | Act by sharing information concerning any suspected | misclassification by an employer or entity, as defined in the | Employee Classification Act, or one or more employees as | independent contractors. | Section 901. The Department of Employment Security Law of | the Civil Administrative Code of Illinois is amended by adding | Section 1005-160 as follows: | (20 ILCS 1005/1005-160 new)
| Sec. 1005-160. Misclassification of employees as | independent contractors. The Department of Labor, the | Department of Employment Security, the Department of Revenue, | the Office of the State Comptroller, and the Illinois Workers' | Compensation Commission shall cooperate under the Employee | Classification Act by sharing information concerning any | suspected misclassification by an employer or entity, as | defined in the Employee Classification Act, of one or more | employees as independent contractors. |
| Section 905. The Department of Labor Law of the Civil | Administrative Code of Illinois is amended by adding Section | 1505-125 as follows: | (20 ILCS 1505/1505-125 new)
| Sec. 1505-125. Misclassification of employees as | independent contractors. The Department of Labor, the | Department of Employment Security, the Department of Revenue, | the Office of the State Comptroller and the Illinois Workers' | Compensation Commission shall cooperate under the Employee | Classification Act by sharing information concerning any | suspected misclassification by an employer or entity, as | defined in the Employee Classification Act, of one or more | employees as independent contractors. | Section 910. The Department of Revenue Law of the Civil | Administrative Code of Illinois is amended by adding Section | 2505-750 as follows: | (20 ILCS 2505/2505-750 new)
| Sec. 2505-750. Misclassification of employees as | independent contractors. The Department of Labor, the | Department of Employment Security, the Department of Revenue, | the Office of the State Comptroller, and the Illinois Workers' | Compensation Commission shall cooperate under the Employee | Classification Act by sharing information concerning any |
| suspected misclassification by an employer or entity, as | defined in the Employee Classification Act, of one or more | employees as independent contractors. | Section 915. The State Finance Act is amended by adding | Section 5.675 as follows: | (30 ILCS 105/5.675 new) | Sec. 5.675. The Employee Classification Fund. | Section 920. The Illinois Procurement Code is amended by | changing Section 50-70 as follows:
| (30 ILCS 500/50-70)
| Sec. 50-70. Additional provisions. This Code is subject
to | applicable provisions of
the following Acts:
| (1) Article 33E of the Criminal Code of 1961;
| (2) the Illinois Human Rights Act;
| (3) the Discriminatory Club Act;
| (4) the Illinois Governmental Ethics Act;
| (5) the State Prompt Payment Act;
| (6) the Public Officer Prohibited Activities Act; and
| (7) the Drug Free Workplace Act ; and .
| (8) the Employee Classification Act.
| (Source: P.A. 90-572, eff. 2-6-98.)
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| Section 925. The Workers' Compensation Act is amended by | adding Section 26.1 as follows: | (820 ILCS 305/26.1 new)
| Sec. 26.1. Misclassification of employees as independent | contractors. The Department of Labor, the Department of | Employment Security, the Department of Revenue, the Office of | the State Comptroller, and the Illinois Workers' Compensation | Commission shall cooperate under the Employee Classification | Act by sharing information concerning any suspected | misclassification by an employer or entity, as defined in the | Employee Classification Act, of one or more employees as | independent contractors. | Section 990. Severability. The provisions of this Act are | severable under Section 1.31 of the Statute on Statutes.
| Section 999. Effective date. This Act takes effect January | 1, 2008.
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INDEX
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Statutes amended in order of appearance
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| New Act |
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| 15 ILCS 405/9.06 new |
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| 20 ILCS 1005/1005-160 new |
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| 20 ILCS 1505/1505-125 new |
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| 20 ILCS 2505/2505-750 new |
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| 30 ILCS 105/5.675 new |
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| 30 ILCS 500/50-70 |
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| 820 ILCS 305/26.1 new |
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Effective Date: 1/1/2008
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