103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB2279

 

Introduced 2/10/2023, by Sen. Robert F. Martwick

 

SYNOPSIS AS INTRODUCED:
 
New Act
30 ILCS 105/5.992 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.


LRB103 27795 DTM 54173 b

 

 

A BILL FOR

 

SB2279LRB103 27795 DTM 54173 b

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 the terms of an
8agreement between an independent contractor and a client that
9describes the work to be done and the compensation to be paid
10and that complies with 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 is to be performed, under the agreed work terms, on
22the owner-occupied residence or the land adjacent to the
23residence.

 

 

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1    "Compensation" means the earnings of an independent
2contractor under the applicable agreed work terms, including
3reimbursement for expenses.
4    "Department" means the Department of Labor.
5    "Director" means the Director of Labor.
6    "Independent contractor" means a sole proprietor who is
7not an employee and who is hired or retained by a client for an
8amount greater than or equal to $600.
 
9    Section 10. Agreed work terms; requirements. The agreed
10work terms between an independent contractor and a client
11shall be
12        (1) reduced to writing;
13        (2) sufficiently detailed in describing how
14    compensation earned and payable shall be calculated;
15        (3) signed by the independent contractor;
16        (4) signed by the client; and
17        (5) kept on file by the client for a period of not less
18    than 6 years.
 
19    Section 15. Payment of independent contractors. If a
20client and independent contractor have agreed to work terms,
21the independent contractor shall be paid the compensation
22earned in accordance with those terms not later than the last
23day of the month following the month in which the compensation
24is earned.
 

 

 

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1    Section 20. Department of Labor; duties; powers.
2    (a) The Department shall inquire diligently regarding any
3violations of this Act, institute actions for the penalties
4provided in this Act, and enforce 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 date upon which compensation
13was due.
14    (c) The Department shall review submitted claim
15applications to determine whether there is cause for
16investigation. If the Department finds there is cause for an
17investigation, the department shall have the following powers:
18        (1) It shall have the power to investigate and attempt
19    to adjust equitably controversies between independent
20    contractors and clients in respect of compensation claims
21    arising under this Act, and, through the Director or any
22    other person in the Department designated by the Director,
23    to administer oaths, subpoena and examine witnesses, to
24    issue subpoenas duces tecum requiring the production of
25    such books, papers, records, and documents as may be

 

 

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

 

 

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1    defendant, the court shall assess as part of that judgment
2    the costs of the proceeding. Upon collection of the
3    judgments, the Department shall pay from the proceeds of
4    the judgment the costs to the independent contractor who
5    is by law entitled to the same. The Department may join in
6    a single proceeding any number of compensation claims
7    against the same client, but the court shall have
8    discretionary power to order a severance or separate trial
9    for hearings.
10        (3) It shall have the power to make complaint in any
11    court of competent jurisdiction for violations of this
12    Act.
13        (4) It shall have the power, subject to appropriation,
14    to establish an administrative procedure to adjudicate
15    compensation claims and to issue final and binding
16    administrative decisions on such compensation claims
17    subject to the terms of the Administrative Review Law,
18    which are hereby expressly adopted. To establish such a
19    procedure, the Director or her or his authorized
20    representative may adopt rules. The adoption, amendment,
21    or rescission of rules for such a procedure shall be in
22    conformity with the requirements of the Illinois
23    Administrative Procedure Act.
24    (d) If the Department institutes any proceedings that
25require a hearing in the circuit court or through an
26administrative procedure, the Department shall notify the

 

 

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1independent contractor of the date, time, and location of the
2hearing.
3    (e) Nothing in this Act shall be construed to prevent any
4independent contractor from making complaint or prosecuting
5the independent contractor's own claim for compensation
6against a client. Any independent contractor aggrieved by a
7violation of this Act or any rule adopted under this Act may
8file suit in circuit court of the county in which the alleged
9violation occurred or in which any client who is party to the
10action resides, without regard to exhaustion of any
11alternative administrative remedies provided in this Act.
12Actions may be brought by one or more independent contractors
13for and on behalf of themselves and other independent
14contractors similarly situated. Complaints filed in accordance
15with this subsection shall be filed within 6 years after the
16compensation was due.
17    (f) Nothing in this Act shall be construed to limit the
18authority of the State's Attorney of any county to prosecute
19actions for violation of this Act or to enforce the provisions
20of this Act independently and without specific direction of
21the Department.
22    (g) The failure of a client to keep adequate records shall
23not bar an independent contractor or the Director from
24investigating or filing a complaint. In such a case, the
25client shall have the burden of proving, by clear and
26convincing evidence, that the independent contractor was paid

 

 

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

 

 

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1within 35 days of an administrative or court order is entered
2shall also be liable to pay a penalty to the Department of 20%
3of the amount found owing and a penalty to the independent
4contractor of 1% per calendar day of the amount found owing for
5each day of delay in paying such compensation to the
6independent contractor. All moneys recovered as fees and civil
7penalties under this Act, except those owing to the affected
8independent contractor, shall be deposited into the
9Independent Contractor Compensation Theft Enforcement Fund, a
10special fund that is created in the State treasury. Moneys in
11the Fund may be used only by the Department for enforcement of
12this Act.
13    (c) Any client, or any agent of a client, who in any manner
14discriminates against any independent contractor because that
15independent contractor has made a complaint to the client, to
16the Director or his or her authorized representative in a
17public hearing, or to a community organization that the
18independent contractor has not been paid in accordance with
19the provisions of this Act, or because that independent
20contractor has caused to be instituted any proceeding under or
21related to this Act, or because that independent contractor
22has testified or is about to testify in an investigation or
23proceeding under this Act is guilty, upon conviction, of a
24Class C misdemeanor. An independent contractor who has been
25unlawfully retaliated against shall be entitled to recover
26through a claim filed with the Department or in a civil action,

 

 

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1but not both, all legal and equitable relief as may be
2appropriate. In a civil action, such independent contractor
3shall also recover costs and all reasonable attorney's fees.
4    (d) In addition to the remedies provided in subsections
5(a), (b), and (c) of this Section, any client or any agent of a
6client, who, being able to pay compensation to an independent
7contractor and being under a duty to pay, willfully refuses to
8pay as provided in this Act, or falsely denies the amount or
9validity thereof or that the same is due, with intent to secure
10for himself or other person any underpayment of such
11indebtedness or with intent to annoy, harass, oppress, hinder,
12delay, or defraud the independent contractor to whom such
13indebtedness is due, upon conviction, is guilty of:
14        (1) a Class B misdemeanor for unpaid compensation in
15    the amount of $5,000 or less; or
16        (2) a Class A misdemeanor for unpaid compensation in
17    the amount of more than $5,000.
18    Each day during which any violation of this Act continues
19shall constitute a separate and distinct offense.
20    Any client or any agent of a client who violates this
21Section of the Act a subsequent time within 2 years of a prior
22criminal conviction under this Section is guilty, upon
23conviction, of a Class 4 felony.
24    In addition to an individual who is deemed to be a client
25pursuant to Section 5 of this Act, any officers of a
26corporation or agents of a client who knowingly permit such

 

 

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1client to violate the provisions of this Act shall be deemed to
2be the client of the independent contractor.
3    (e) Penalties and fees under this Section may be assessed
4by the Department and recovered in a civil action brought by
5the Department in any circuit court or in any administrative
6adjudicative proceeding under this Act. In any such civil
7action or administrative adjudicative proceeding under this
8Act, the Department shall be represented by the Attorney
9General.
 
10    Section 30. Departmental compensation recovery; remittance
11to aggrieved independent contractor.
12    (a) Upon the recovery of unpaid compensation from a client
13that has violated this Act, the Department shall conduct a
14good faith search to find the aggrieved independent
15contractor. If, after conducting a good faith search for the
16aggrieved independent contractor, the Department is unable to
17find the aggrieved independent contractor, the Department
18shall deposit the amount recovered into the Independent
19Contractor Compensation Theft Enforcement Fund.
20    (b) An aggrieved independent contractor may make a request
21to the Department in order to recover unpaid compensation that
22has been deposited into the Independent Contractor
23Compensation Theft Enforcement Fund. The Department shall not
24require the independent contractor to present a Social
25Security number or proof of United States citizenship. For the

 

 

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1purpose of paying claims under this Section from the
2Independent Contractor Compensation Theft Enforcement Fund to
3aggrieved independent contractors, the Comptroller shall
4assign a vendor payment number to the Department. When an
5aggrieved independent contractor makes a valid request for
6payment to the Department, the Department shall use the vendor
7payment number to process payment on behalf of the aggrieved
8independent contractor.
 
9    Section 35. Rulemaking authority. The Director or his or
10her authorized representatives shall administer and enforce
11this Act. In order to accomplish the objectives of this Act and
12to carry out the duties prescribed by this Act, the Director or
13his or her authorized representative shall, within one year
14after the effective date of this Act, adopt rules necessary to
15administer and enforce the provisions of this Act including
16the procedures that shall be followed for hearings under
17Section 20. The adoption, amendment, or rescission of rules
18shall be in conformity with the requirements of the Illinois
19Administrative Procedure Act.
 
20    Section 90. The State Finance Act is amended by adding
21Section 5.992 as follows:
 
22    (30 ILCS 105/5.992 new)
23    Sec. 5.992. The Independent Contractor Compensation Theft

 

 

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1Enforcement Fund.