HB5060 95TH GENERAL ASSEMBLY

LRB095 18356 WGH 44441 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB5060

Introduced , by Rep. Bill Mitchell

SYNOPSIS AS INTRODUCED:

See Index

Amends the Employee Classification Act. Provides that the term "employee" does not include an individual who performs services as an operator of a truck, truck tractor, or tractor who meets certain conditions. Provides that an employer or entity that violates any of the provisions of the Act or any rule adopted under the Act shall be subject to a civil penalty not to exceed $1,000 (rather than $1,500) for each violation found in the first audit by the Department of Labor. Eliminates provision that in any civil action brought by an interested party for violation of the Act, the circuit court shall award the interested party 10% of the amount recovered. Provides that a prevailing party in any action for violation of the Act is entitled to recover attorney's fees and court costs from the losing party. Repeals provision that whenever it appears that any employer or entity has violated a valid order of the Department issued under the 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. Amends various Acts relating to the sharing of information by 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 concerning any (instead of suspected misclassification) by an employer or entity of one or more of its employees as independent contractors. Effective immediately.

A BILL FOR

AN ACT concerning employment.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The State Comptroller Act is amended by changing Section 9.06 as follows:

(15 ILCS 405/9.06)

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.

(Source: P.A. 95-26, eff. 1-1-08.)

Section 10. The Department of Employment Security Law of the Civil Administrative Code of Illinois is amended by changing Section 1005-160 as follows:

(20 ILCS 1005/1005-160)

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.

(Source: P.A. 95-26, eff. 1-1-08.)

Section 15. The Department of Labor Law of the Civil Administrative Code of Illinois is amended by changing Section 1505-125 as follows:

(20 ILCS 1505/1505-125)

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.

(Source: P.A. 95-26, eff. 1-1-08.)

Section 20. The Department of Revenue Law of the Civil Administrative Code of Illinois is amended by changing Section 2505-750 as follows:

(20 ILCS 2505/2505-750)

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.

(Source: P.A. 95-26, eff. 1-1-08.)

Section 25. The Employee Classification Act is amended by changing Sections 10, 40, 55, 60, and 75 as follows:

(820 ILCS 185/10)

Sec. 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), and (c-5) 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.

(c-5) The term "employee" does not include an individual who performs services as an operator of a truck, truck tractor, or tractor, provided the person or entity to which the individual is contracted for service shows that the individual:

(1) is either:

(i) registered or licensed as a motor carrier of real or personal property by the Illinois Commerce Commission, the Interstate Commerce Commission, or any successor agencies, or

(ii) operating the equipment under an owner operator lease contract with the person or entity, when the person or entity is registered, licensed, or both, as a motor carrier of real or personal property licensed by the Illinois Commerce Commission, the Interstate Commerce Commission, or any successor agencies; and

(2) has the right to terminate the lease contract and thereafter has the right to perform the same or similar services, on whatever basis and whenever he or she chooses, for persons or entities other than the person or entity to which the individual is contracted for services;

(3) is not required by the person or entity to which the individual is contracted for services to perform services, or be available to perform services, at specific times or according to a schedule or for a number of hours specified by the person or entity, provided that pickup or delivery times specified by a shipper or receiver shall not be deemed specified by the person or entity;

(4) either leases the equipment or holds title to the equipment, provided that the individual or entity from which the equipment is leased, or which holds any security or other interest in the equipment, is not:

(i) the person or entity to which the individual is contracted for service; or

(ii) owned, controlled, or operated by or in common with, to any extent, whether directly or indirectly, the person or entity to which the individual is contracted for services or a family member of a shareholder, owner, or partner of the person or entity;

(5) pays all costs of licensing and operating the equipment (except when federal or State law or regulation requires the carrier to pay), and the costs are not separately reimbursed by any other individual or entity; and

(6) maintains a separate business identity, offering or advertising his or her services to the public, by displaying its name and address on the equipment or otherwise.

The definition of "truck owner-operator" under this Section does not apply:

(1) if, as a condition for retaining the individual's services, the person or entity to which the individual is contracted specifies the person or entity from which the equipment is to be leased or purchased; or

(2) to any services that are required to be covered as a condition of approval of this Act by the United States Secretary of Labor under Section 3304(a)(6)(A) of the Federal Unemployment Tax Act.

Nothing in this definition of "truck owner-operator" shall be construed or used to effect the existence or nonexistence of an employment relationship other than for purposes of this Act.

For purposes of this definition of "truck owner-operator":

(1) "Family member" means any parent, sibling, child, sibling of a parent, or any of the foregoing relations by marriage.

(2) "Ownership", "control", or "operation" may be through any one or more natural persons or proxies, powers of attorney, nominees, proprietorships, partnerships, associations, corporations, trusts, joint stock companies, or other entities or devices, or any combination thereof.

(3) "Person or entity" means a sole proprietorship, partnership, association, corporation, or any other legal entity.

(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.

(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/40)

Sec. 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 $1,000 $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.

(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/55)

Sec. 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.

(c) The prevailing party in any action under this Section is entitled to recover attorney's fees and other costs from the losing party.

(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/60)

Sec. 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; and

(3) in the case of unlawful retaliation, all legal or equitable relief as may be appropriate. ; and

(4) (blank) attorney's fees and costs.

(a-5) The prevailing party in any action brought under this Section is entitled to recover attorney's fees and court costs from the losing party.

(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.

(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/75)

Sec. 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.

(Source: P.A. 95-26, eff. 1-1-08.)

(820 ILCS 185/35 rep.)

Section 30. The Employee Classification Act is amended by repealing Section 35.

Section 35. The Workers' Compensation Act is amended by changing Section 26.1 as follows:

(820 ILCS 305/26.1)

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.

(Source: P.A. 95-26, eff. 1-1-08.)

Section 99. Effective date. This Act takes effect upon becoming law.