Construction contractors who regularly engage independent contractors to perform some or all of their contracts with customers should review their independent contractor agreements to ensure they comply with the Illinois Employee Classification Act (“Act”), which became effective January 1, 2008. The Act applies to all private and public construction performed within the State of Illinois, including moving construction-related materials to or from a job site. The term “construction” includes the alteration, improvement, renovation, repair, maintenance or addition to any building, structure, highway, road, bridge, parking facility or real property.
The Act presumes all individuals working for a contractor are employees unless: (1) the individual is free from the contractor’s control or direction over the performance of the services provided, (2) the services performed are 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. Subcontractors, as defined in the Act, are also exempt from compliance.
The Act includes fines of up to $1,500 per day for each violation found in an audit by the Illinois Department of Labor, which enforces the Act. Fines can be increased to $2,500 for repeat violations in a five year period. A willful violation of the Act can result in the doubling of fines, punitive damages and criminal prosecution. Finally, a private cause of action may be filed by an individual damaged by a violation of the Act and such a party may recover compensatory damages and up to $500 for each violation of the Act, and in the case of unlawful retaliation, all legal and equitable relief and attorney’s fees and costs.
If you have any questions about the application of the Act, or if you need assistance auditing independent contractor agreements, please telephone a member of the Firm.