102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB1569

 

Introduced 2/26/2021, by Sen. Robert F. Martwick

 

SYNOPSIS AS INTRODUCED:
 
New Act
30 ILCS 105/5.935 new

    Creates the Independent Contractor Payment Protection Act and amends the State Finance Act. Provides that the agreed work terms between an independent contractor and a client shall be: (1) reduced to writing; (2) sufficiently detailed in describing how compensation earned and payable shall be calculated; (3) signed by the independent contractor; (4) signed by the client; and (5) kept on file by the client for a period of not less than 6 years. Provides that an independent contractor shall be paid the compensation earned in accordance with the agreed work terms not later than the last day of the month following the month in which the compensation is earned. Provides that an independent contractor may file a complaint with the Department of Labor alleging a violation of the Act. Provides for enforcement of the Act by the Department. Establishes civil and criminal penalties. Creates the Independent Contractor Compensation Theft Enforcement Fund as a special fund in the State treasury and specifies the uses of the Fund.


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CORRECTIONAL BUDGET AND IMPACT NOTE ACT MAY APPLY
FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning employment.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Independent Contractor Payment Protection Act.
 
6    Section 5. Definitions. As used in this Act:
7    "Agreed work terms" or "work terms" means an agreement
8between an independent contractor and a client describing the
9work to be done and the compensation to be paid that complies
10with Section 10.
11    "Client" includes a corporation, limited liability
12company, partnership, association, non-profit organization, or
13natural person contracting with an independent contractor in
14any occupation, industry, trade, business, or service for
15compensation equal to or greater than $600. "Client" does not
16include the federal or State government, any unit of local
17government or school district, or any agency or
18instrumentality thereof. "Client" also does not include owners
19of owner-occupied single-family residences, or owners of
20owner-occupied multi-family residences of 6 units or less, if
21the work to be done, as specified in the agreed work terms, is
22upon such owner-occupied residence or the land adjacent
23thereto.

 

 

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1    "Compensation" means the earnings of an independent
2contractor, including reimbursement for expenses.
3    "Department" means the Department of Labor.
4    "Director" means the Director of Labor.
5    "Independent contractor" means a sole proprietor who is
6not an employee and who is hired or retained by a client for an
7amount equal to or greater than $600.
 
8    Section 10. Agreed work terms; requirements. The agreed
9work terms between an independent contractor and a client
10shall be:
11        (1) reduced to writing;
12        (2) sufficiently detailed in describing how
13    compensation earned and payable shall be calculated;
14        (3) signed by the independent contractor;
15        (4) signed by the client;
16        (5) kept on file by the client for a period of not less
17    than 6 years.
 
18    Section 15. Payment of independent contractors. An
19independent contractor shall be paid the compensation earned
20in accordance with the agreed work terms not later than the
21last day of the month following the month in which the
22compensation is earned.
 
23    Section 20. Department of Labor; duties; powers.

 

 

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1    (a) It shall be the duty of the Department to inquire
2diligently for any violations of this Act, to institute the
3actions for penalties herein provided, and to enforce
4generally the provisions of this Act.
5    (b) An independent contractor may file a complaint with
6the Department alleging violations of this Act by submitting a
7signed, completed independent contractor compensation claim
8application on the form provided by the Department and by
9submitting copies of all supporting documentation. The
10supporting documentation must include the agreed work terms
11that are alleged to have been violated. Complaints shall be
12filed within 6 years after the compensation was due.
13    (c) Applications shall be reviewed by the Department to
14determine whether there is cause for investigation. If the
15Department finds there is cause for an investigation, it shall
16have the following powers:
17        (1) To investigate and attempt equitably to adjust
18    controversies between independent contractors and clients
19    in respect of compensation claims arising under this Act,
20    and, to that end, the Department through the Director or
21    any other person in the Department designated by the
22    Director, shall have the power to administer oaths,
23    subpoena and examine witnesses, to issue subpoenas duces
24    tecum requiring the production of such books, papers,
25    records, and documents as may be evidence of any matter
26    under inquiry and to examine and inspect the same as may

 

 

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1    relate to the question in dispute. Upon the request of the
2    Department, through a subpoena duces tecum or otherwise,
3    the client shall produce a copy of the written work terms
4    to the Department within 5 business days of the request.
5    Failure of the client to timely remit the work terms to the
6    Department shall create a presumption that the work terms
7    submitted by the independent contractor are the agreed
8    terms. Service of any such subpoenas shall be made by any
9    sheriff or any person. Any court in this State, upon the
10    application of the Department may compel attendance of
11    witnesses, the production of books and papers, and the
12    giving of testimony before the Department by attachment
13    for contempt or in any other way as the production of
14    evidence may be compelled before such court.
15        (2) To take assignments of compensation claims in the
16    name of the Director and his or her successors in office
17    and prosecute actions for the collection of compensation
18    for independent contractors financially unable to
19    prosecute such claims when in the judgment of the
20    Department such claims are valid and enforceable in the
21    courts. No court costs or any fees for necessary process
22    and proceedings shall be payable in advance by the
23    Department for prosecuting such actions. In the event
24    there is a judgment rendered against the defendant, the
25    court shall assess as part of such judgment the costs of
26    such proceeding. Upon collection of such judgments the

 

 

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1    Department shall pay from the proceeds of such judgment
2    such costs to such independent contractor who is by law
3    entitled to same. The Department may join in a single
4    proceeding any number of compensation claims against the
5    same client but the court shall have discretionary power
6    to order a severance or separate trial for hearings.
7        (3) To make complaint in any court of competent
8    jurisdiction of violations of this Act.
9        (4) In addition to the aforementioned powers, subject
10    to appropriation, the Department may establish an
11    administrative procedure to adjudicate compensation claims
12    and to issue final and binding administrative decisions on
13    such compensation claims subject to the Administrative
14    Review Law. To establish such a procedure, the Director or
15    her or his authorized representative may adopt rules. The
16    adoption, amendment, or rescission of rules for such a
17    procedure shall be in conformity with the requirements of
18    the Illinois Administrative Procedure Act.
19    (d) If the Department institutes any proceedings that
20require a hearing in the circuit court or through an
21administrative procedure, the Department shall notify the
22independent contractor of the date, time, and location of the
23hearing.
24    (e) Nothing herein shall be construed to prevent any
25independent contractor from making complaint or prosecuting
26his or her own claim for compensation against a client. Any

 

 

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1independent contractor aggrieved by a violation of this Act or
2any rule adopted under this Act may file suit in circuit court
3of Illinois, in the county where the alleged violation
4occurred or where any client who is party to the action
5resides, without regard to exhaustion of any alternative
6administrative remedies provided in this Act. Actions may be
7brought by one or more independent contractors for and on
8behalf of themselves and other independent contractors
9similarly situated. Complaints filed in accordance with this
10subsection shall be filed within 6 years after the
11compensation was due.
12    (f) Nothing herein shall be construed to limit the
13authority of the State's Attorney of any county to prosecute
14actions for violation of this Act or to enforce the provisions
15thereof independently and without specific direction of the
16Department.
17    (g) The failure of a client to keep adequate records shall
18not bar an independent contractor or the Director from
19investigating or filing a complaint. In such a case, the
20client shall have the burden of proving, by clear and
21convincing evidence, that the independent contractor was paid
22all the compensation owed to him or her by the client under the
23agreed work terms.
 
24    Section 25. Penalties; recovery.
25    (a) Any independent contractor not timely paid

 

 

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1compensation by a client as required by this Act shall be
2entitled to recover through a claim filed with the Department
3or in a civil action, but not both, the amount of any such
4underpayments and damages of 2% of the amount of any such
5underpayments for each month following the date of payment
6during which such underpayments remain unpaid. In a civil
7action, such independent contractor shall also recover costs
8and all reasonable attorney's fees.
9    (b) Any client who has been demanded or ordered by the
10Department or ordered by the court to pay compensation due an
11independent contractor shall be required to pay a non-waivable
12administrative fee to the Department in the amount of $250 if
13the amount ordered by the Department as compensation owed is
14$3,000 or less; $500 if the amount ordered by the Department as
15compensation owed is more than $3,000, but less than $10,000;
16and $1,000 if the amount ordered by the Department as
17compensation owed is $10,000 or more. Any client who has been
18so demanded or ordered by the Department or ordered by a court
19to pay such compensation and who fails to seek timely review of
20such a demand or order as provided for under this Act and who
21fails to comply within 15 calendar days after such demand or
22within 35 days of an administrative or court order is entered
23shall also be liable to pay a penalty to the Department of 20%
24of the amount found owing and a penalty to the independent
25contractor of 1% per calendar day of the amount found owing for
26each day of delay in paying such compensation to the

 

 

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1independent contractor. All moneys recovered as fees and civil
2penalties under this Act, except those owing to the affected
3independent contractor, shall be deposited into the
4Independent Contractor Compensation Theft Enforcement Fund, a
5special fund that is created in the State treasury. Moneys in
6the Fund may be used only for enforcement of this Act.
7    (c) Any client, or any agent of a client, who in any manner
8discriminates against any independent contractor because that
9independent contractor has made a complaint to the client, to
10the Director or his or her authorized representative, in a
11public hearing, or to a community organization that he or she
12has not been paid in accordance with the provisions of this
13Act, or because that independent contractor has caused to be
14instituted any proceeding under or related to this Act, or
15because that independent contractor has testified or is about
16to testify in an investigation or proceeding under this Act,
17is guilty, upon conviction, of a Class C misdemeanor. An
18independent contractor who has been unlawfully retaliated
19against shall be entitled to recover through a claim filed
20with the Department or in a civil action, but not both, all
21legal and equitable relief as may be appropriate. In a civil
22action, such independent contractor shall also recover costs
23and all reasonable attorney's fees.
24    (d) In addition to the remedies provided in subsections
25(a), (b), and (c) of this Section, any client or any agent of a
26client, who, being able to pay compensation to an independent

 

 

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1contractor and being under a duty to pay, willfully refuses to
2pay as provided in this Act, or falsely denies the amount or
3validity thereof or that the same is due, with intent to secure
4for himself or other person any underpayment of such
5indebtedness or with intent to annoy, harass, oppress, hinder,
6delay, or defraud the independent contractor to whom such
7indebtedness is due, upon conviction, is guilty of:
8        (1) for unpaid compensation in the amount of $5,000 or
9    less, a Class B misdemeanor; or
10        (2) for unpaid compensation in the amount of more than
11    $5,000, a Class A misdemeanor.
12    Each day during which any violation of this Act continues
13shall constitute a separate and distinct offense.
14    Any client or any agent of a client who violates this
15Section of the Act a subsequent time within 2 years of a prior
16criminal conviction under this Section is guilty, upon
17conviction, of a Class 4 felony.
18    In addition to an individual who is deemed to be a client
19pursuant to Section 5 of this Act, any officers of a
20corporation or agents of a client who knowingly permit such
21client to violate the provisions of this Act shall be deemed to
22be the client of the independent contractor.
23    (e) Penalties and fees under this Section may be assessed
24by the Department and recovered in a civil action brought by
25the Department in any circuit court or in any administrative
26adjudicative proceeding under this Act. In any such civil

 

 

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1action or administrative adjudicative proceeding under this
2Act, the Department shall be represented by the Attorney
3General.
 
4    Section 30. Departmental compensation recovery; remittance
5to aggrieved independent contractor.
6    (a) Upon the recovery of unpaid compensation from a client
7that has violated this Act, the Department shall conduct a
8good faith search to find the aggrieved independent
9contractor. If, after conducting a good faith search for the
10aggrieved independent contractor, the Department is unable to
11find the aggrieved independent contractor, the Department
12shall deposit the amount recovered into the Independent
13Contractor Compensation Theft Enforcement Fund.
14    (b) An aggrieved independent contractor may make a request
15to the Department in order to recover unpaid compensation that
16has been deposited into the Independent Contractor
17Compensation Theft Enforcement Fund. The Department shall not
18require the independent contractor to present a Social
19Security number or proof of United States citizenship. For the
20purpose of paying claims under this Section from the
21Independent Contractor Compensation Theft Enforcement Fund to
22aggrieved independent contractors, the Comptroller shall
23assign a vendor payment number to the Department. When an
24aggrieved independent contractor makes a valid request for
25payment to the Department, the Department shall use the vendor

 

 

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1payment number to process payment on behalf of the aggrieved
2independent contractor.
 
3    Section 35. Rulemaking authority. The Director or his or
4her authorized representatives shall administer and enforce
5this Act. In order to accomplish the objectives of this Act and
6to carry out the duties prescribed by this Act, the Director or
7his or her authorized representative shall, within one year
8after the effective date of this Act, adopt rules necessary to
9administer and enforce the provisions of this Act including
10the procedures that shall be followed for hearings under
11Section 20. The adoption, amendment, or rescission of rules
12shall be in conformity with the requirements of the Illinois
13Administrative Procedure Act.
 
14    Section 90. The State Finance Act is amended by adding
15Section 5.935 as follows:
 
16    (30 ILCS 105/5.935 new)
17    Sec. 5.935. The Independent Contractor Compensation Theft
18Enforcement Fund.