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| Public Act 095-0026 |
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AN ACT concerning employment.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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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.
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"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.
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"Department" means the Department of Labor.
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"Director" means the Director of the Department of Labor.
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"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.
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"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.
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"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
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(3) the individual is engaged in an independently | ||
established trade, occupation, profession or business; or
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(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;
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(2) the sole proprietor or partnership is not subject | ||
to cancellation or destruction upon severance of the | ||
relationship with the contractor;
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(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;
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(4) the sole proprietor or partnership owns the capital | ||
goods and gains the profits and bears the losses of the | ||
sole proprietorship or partnership;
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(5) the sole proprietor or partnership makes its | ||
services available to the general public or the business | ||
community on a continuing basis;
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(6) the sole proprietor or partnership includes | ||
services rendered on a Federal Income Tax Schedule as an | ||
independent business or profession;
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(7) the sole proprietor or partnership performs | ||
services for the contractor under the sole | ||
proprietorship's or partnership's name;
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(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;
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(9) the sole proprietor or partnership furnishes the | ||
tools and equipment necessary to provide the service;
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(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;
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(11) the contractor does not represent the sole | ||
proprietorship or partnership as an employee of the | ||
contractor to its customers; and
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(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.
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(e) Subcontractors or lower tiered contractors are subject | ||
to all provisions of this Act.
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(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.
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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.
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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.
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(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.
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(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.
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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.
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(b) It is a violation of this Act for an employer or entity | ||
to retaliate against a person for:
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(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;
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(2) causing to be instituted any proceeding under or | ||
related to this Act; or
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(3) testifying or preparing to testify in an | ||
investigation or proceeding under this Act.
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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:
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(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;
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(2) compensatory damages and an amount up to $500 for | ||
each violation of this Act or any rule adopted under this | ||
Act;
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(3) in the case of unlawful retaliation, all legal or | ||
equitable relief as may be appropriate; and
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(4) attorney's fees and costs.
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(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.
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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.
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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)
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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)
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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)
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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)
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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:
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(30 ILCS 500/50-70)
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Sec. 50-70. Additional provisions. This Code is subject
to | ||
applicable provisions of
the following Acts:
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(1) Article 33E of the Criminal Code of 1961;
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(2) the Illinois Human Rights Act;
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(3) the Discriminatory Club Act;
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(4) the Illinois Governmental Ethics Act;
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(5) the State Prompt Payment Act;
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(6) the Public Officer Prohibited Activities Act; and
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(7) the Drug Free Workplace Act; and .
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(8) the Employee Classification Act.
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(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)
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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.
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Section 999. Effective date. This Act takes effect January | ||||||||||||||||||||||||||||||||||||
1, 2008.
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