Evaluating Your Independent Contractor Agreement Under the Illinios Employee Classification Act

Evaluating your Independent Contractor Agreement Under the Illinois Employee Classification Act (Formerly HB 1795 - Now Public Act 95-0026)

DOING A SELF-AUDIT: The first step in doing a "self-audit" of your independent contractor agreement is to study Section 10 of this new law. Section 10 defines when a worker in a construction or construction-related field, or a truck driver who has a connection to construction, is an independent contractor and when they are an employee under this new law. If a construction worker or truck driver is found to be misclassified as an independent contractor under this new law, severe penalties can be levied against the company who has misclassified this worker. Therefore, it is important to do everything possible to comply with the strict, rigid, and punitive provisions of this new law.

YOUR AGREEMENT SHOULD NOT CONFLICT WITH SECTION 10: The next step in doing a self-audit of your independent contractor agreement is to carefully read over your independent contractor agreement word for word and line by line and make sure nothing conflicts with Section 10.
TWO TESTS: Section 10 contains two tests - one is a three-part test and the other is a twelve-part test.

If an independent contractor meets all three parts of the three-part test, that independent contractor is properly classified as an independent contractor for purposes of the Illinois Employee Classification Act.

If an alleged independent contractor cannot meet all three parts of the three-part test of Section 10, there is still a hope-if the alleged independent contractor can pass the twelve-part test of Section 10, then the alleged independent contractor would be found to be properly classified under the Illinois Employee Classification Act.

IF ANYTHING CONFLICTS WITH THE FACTORS, CHANGE YOUR AGREEMENT AND THE WAY YOU INTERACT WITH THE INDEPENDENT CONTRACTORS TO ENSURE CONSISTENCY WITH SECTION 10: If there is anything in your independent contractor agreement which conflicts with any of the factors of Section 10, consider changing your independent contractor agreement, and, if necessary, the way you interact with your independent contractors on an ongoing basis.

For example, Section 10 says that the alleged independent contractor must obtain and pay for all licenses and permits. The words of your independent contractor agreement should be consistent with that factor. Additionally, the way you actually operate with the independent contractor should be consistent with that factor.

In order to properly conduct this self-audit, it is always a good idea to work with an attorney who is deeply involved with this new law and is very experienced in the independent contractor issue in general.

FREE INFORMATION: Readers can contact Legal Assistant Tammy Nelson at 630-377-1554 or tanelson@wesselssherman.com for a free copy of the Illinois Employee Classification Act. Keep your eye on the Wessels Sherman Joerg Liszka Laverty Seneczko P.C. website (http://www.wesselssherman.com/) where we will have frequent updates and articles about the Illinois Employee Classification Act.

Questions about this topic or other management-side labor and employment law issues? Please contact WS Shareholder and Senior Attorney Nancy E Joerg at 630-377-1554, najoerg@wesselssherman.com, or visit our website.