Illinois General Assembly - Full Text of SB1623

LRB104 11975 SPS 22069 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB1623

Introduced 2/4/2025, by Sen. Cristina Castro

SYNOPSIS AS INTRODUCED:

820 ILCS 185/5
820 ILCS 185/10
820 ILCS 185/20
820 ILCS 185/25
820 ILCS 185/35
820 ILCS 185/40
820 ILCS 185/42
820 ILCS 185/45
820 ILCS 185/55
820 ILCS 185/60
820 ILCS 185/63

Amends the Employee Classification Act. Provides that a developer, general contractor, and subcontractor are jointly and severally liable for any subcontractor's failure to properly classify persons performing services as employees unless specified conditions are satisfied. Provides that it is a violation for a developer or a general contractor to utilize a subcontractor at any tier who commits a violation of the Act unless specified conditions are satisfied. Makes conforming and other changes. Defines terms.

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 Employee Classification Act is amended by changing Sections 5, 10, 20, 25, 35, 40, 42, 45, 55, 60, 63, and 990 as follows:

(820 ILCS 185/5)

Sec. 5. Definitions. As used in this Act:

"Construction" means any constructing, altering, reconstructing, repairing, rehabilitating, refinishing, refurbishing, remodeling, remediating, renovating, custom fabricating, maintenance, landscaping, improving, wrecking, painting, decorating, demolishing, and adding to or subtracting from any building, structure, highway, roadway, street, bridge, alley, sewer, ditch, sewage disposal plant, water works, parking facility, railroad, excavation or other structure, project, development, real property or improvement, or to do any part thereof, whether or not the performance of the work herein described involves the addition to, or fabrication into, any structure, project, development, real property or improvement herein described of any material or article of merchandise. Construction shall also include moving construction related materials on the job site to or from the job site.

"Contractor" means any individual, sole proprietor, partnership, firm, corporation, limited liability company, association or other legal entity permitted by law to do business within the State of Illinois who engages in construction as defined in this Act.

"Contractor" includes a general contractor and a subcontractor.

"Department" means the Department of Labor.

"Developer" means any person that enters into a contract with a contractor providing for the construction or renovation of a structure for commercial purposes.

"Director" means the Director of the Department of Labor.

"Employer" means any contractor that employs individuals deemed employees under Section 10 of this Act; however, "employer" does not include (i) the State of Illinois or its officers, agencies, or political subdivisions or (ii) the federal government.

"Entity" means any contractor for which an individual is performing services and is not classified as an employee under Section 10 of this Act; however, "entity" does not include (i) the State of Illinois or its officers, agencies, or political subdivisions or (ii) the federal government.

"Interested party" means a person with an interest in compliance with this Act and includes, without limitation, any labor union, worker center, or employee association that represents employees in the industry where the misclassification has occurred.

"Performing services" means the performance of any constructing, altering, reconstructing, repairing, rehabilitating, refinishing, refurbishing, remodeling, remediating, renovating, custom fabricating, maintenance, landscaping, improving, wrecking, painting, decorating, demolishing, and adding to or subtracting from any building, structure, highway, roadway, street, bridge, alley, sewer, ditch, sewage disposal plant, water works, parking facility, railroad, excavation or other structure, project, development, real property or improvement, or to do any part thereof, whether or not the performance of the work herein described involves the addition to, or fabrication into, any structure, project, development, real property or improvement herein described of any material or article of merchandise. Construction shall also include moving construction related materials on the job site to or from the job site.

(Source: P.A. 98-106, eff. 1-1-14.)

(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) 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.

(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) Contractors, subcontractors, Subcontractors or lower tiered contractors at any level, and developers 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.

(g) The developer, general contractor, and subcontractor are jointly and severally liable under this Act for any subcontractor's failure to properly classify persons performing services as employees, except that:

(1) the developer is not liable if the developer demonstrates that the developer was not aware of the misclassification and could not have been aware of the misclassification through the exercise of reasonable diligence and that the developer took all reasonable steps to prevent any misclassification on the job or project; and

(2) the general contractor is not liable if the general contractor demonstrates that the general contractor was not aware of the misclassification and could not have been aware of the misclassification through the exercise of reasonable diligence and that the general contractor took all reasonable steps to prevent any misclassification on the job or project.

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

(820 ILCS 185/20)

Sec. 20. Failure to properly designate or classify individuals performing services as employees.

(a) It is a violation of this Act for an employer or entity not to designate an individual as an employee under Section 10 of this Act unless the employer or entity satisfies the provisions of Section 10 of this Act.

(b) It is a violation of this Act for a developer or a general contractor to utilize a subcontractor at any tier who commits a violation described in subsection (a), except that:

(1) the developer is not deemed to have committed a violation if the developer demonstrates that the developer was not aware of the misclassification and could not have been aware of the misclassification through the exercise of reasonable diligence and that the developer took all reasonable steps to prevent any misclassification on the job or project; and

(2) the general contractor is not deemed to have committed a violation if the developer demonstrates that the developer was not aware of the misclassification and could not have been aware of the misclassification through the exercise of reasonable diligence and that the general contractor took all reasonable steps to prevent any misclassification on the job or project.

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

(820 ILCS 185/25)

Sec. 25. Enforcement.

(a) Any interested party may file a complaint with the Department against an entity or employer covered under this Act if there is a reasonable belief that the entity or employer is in violation of this Act. It shall be the duty of the Department to enforce the provisions of this Act. The Department shall have the power to conduct investigations in connection with the administration and enforcement of this Act and any investigator with the Department shall be authorized to visit and inspect, at all reasonable times, any places covered by this Act and shall be authorized to inspect, at all reasonable times, documents related to the determination of whether an individual is an employee under Section 10 of this Act. The Director of Labor or his or her representative may compel, by subpoena, the attendance and testimony of witnesses and the production of books, payrolls, records, papers, and other evidence in any investigation and may administer oaths to witnesses. Within 120 days of the filing of a complaint, the Department shall notify the employer in writing of the filing of a complaint and provide the employer the location and approximate date of the project or projects, affected contractors, and the nature of the allegations being investigated.

(b) Whenever the Department believes upon investigation that there has been a violation of any of the provisions of this Act or any rules or regulations promulgated under this Act, the Department may: (i) issue and cause to be served on any party an order to cease and desist from further violation of the Act, (ii) take affirmative or other action as deemed reasonable to eliminate the effect of the violation, (iii) collect the amount of any wages, salary, employment benefits, or other compensation denied or lost to the individual, and (iv) assess any civil penalty allowed by this Act.

(c) If, upon investigation, the Department finds cause to believe that Section 20 or Section 55 of this Act has been violated, the Department shall notify the developer, contractor, including general contractor, employer, or entity, in writing, of its finding and any proposed relief due and penalties assessed and that the matter will be referred to an Administrative Law Judge to schedule a formal hearing in accordance with the Illinois Administrative Procedure Act.

(d) The developer, contractor, including general contractor, employer, or entity has 28 calendar days from the date of the Department's findings to answer the allegations contained in the Department's findings. If an employer fails to answer all allegations contained in the Department's findings, any unanswered allegations or findings shall be deemed admitted to be true and shall be found true in the final decision issued by the Administrative Law Judge. If, within 30 calendar days of the final decision issued by the Administrative Law Judge, the employer files a motion to vacate the Administrative Law Judge's final decision and demonstrates good cause for failing to answer the Department's allegations, and the Administrative Law Judge grants the motion, the employer shall be afforded an opportunity to answer and the matter shall proceed as if an original answer to the Department's findings had been filed.

(e) A final decision of an Administrative Law Judge issued pursuant to this Section is subject to the provisions of the Administrative Review Law and shall be enforceable in an action brought in the name of the people of the State of Illinois by the Attorney General.

(Source: P.A. 98-106, eff. 1-1-14.)

(820 ILCS 185/35)

Sec. 35. Contempt. Whenever it appears that any developer, contractor, including general contractor, employer, or entity has violated a valid order of the Department issued under this 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.

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

(820 ILCS 185/40)

Sec. 40. Penalties.

(a) 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 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 $2,000 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.

(b) The amount of the penalty, when finally determined, may be recovered in any administrative proceeding or 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.

(1) The Department shall distribute to all affected employees 10% of the civil penalty recovered as a result of any administrative proceeding or civil action brought by the Department. The remaining 90% of the amount recovered shall be submitted to the Director of Labor.

(2) 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.

(c) Any uncollected amount shall be subject to the provisions of the Illinois State Collection Act of 1986.

(d) This Section applies to subcontractors, general contractors, and developers.

(Source: P.A. 98-106, eff. 1-1-14.)

(820 ILCS 185/42)

Sec. 42. Debarments. For any second or subsequent violation determined by the Department which is within 5 years of an earlier violation, the Department shall add the employer or entity's name to a list to be posted on the Department's official website. Upon such notice, the Department shall notify the violating employer or entity. No state contract shall be awarded to an employer or entity appearing on the list until 4 years have elapsed from the date of the last violation. This Section applies to subcontractors, general contractors, and developers.

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

(820 ILCS 185/45)

Sec. 45. Willful violations.

(a) Whoever willfully violates any of the provisions of this Act or any rule adopted under this Act or whoever obstructs the Director of Labor, or his or her representatives, or any other person authorized to inspect places of employment under this Act shall be liable for penalties up to double the statutory amount.

(b) Whoever willfully violates any of the provisions of this Act or any rule adopted under this Act shall be liable to the employee for punitive damages in an amount equal to the penalties assessed in subsection (a) of this Section.

(c) The penalty shall be imposed in cases in which an employer or entity's conduct is proven by a preponderance of the evidence to be willful. The penalty may be recovered in a civil action brought by the Director of Labor in any circuit court. In any such action, the Director of Labor shall be represented by the Attorney General. Any uncollected amount shall be subject to the provisions of the Illinois State Collection Act of 1986.

(d) Any developer, contractor, including general contractor, An entity, or employer that willfully violates any provision of this Act or any rule adopted under this Act commits a Class C misdemeanor. Any developer, contractor, including general contractor, An entity, or employer that commits a second or subsequent violation within a 5 year period commits a Class 4 felony.

(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 a developer, contractor, including general contractor, an employer, or entity, or any agent of a developer, contractor, including general contractor, 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 a developer, contractor, including general contractor, 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 a developer, contractor, including general contractor, an employer, or entity to retaliate against a person for:

(1) making a complaint to a developer, contractor, including general contractor, 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.

(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 a developer, contractor, including general contractor, 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 interested parties or persons for and on behalf of themselves and other persons similarly situated. An interested party or person aggrieved by a violation of this Act or any rule adopted 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;

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

(4) attorney's fees and costs.

(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 on which any person performed of performing services on the project for 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 185/63)

Sec. 63. Individual liability. In addition to an individual who is an employer pursuant to Section 5 of this Act, any officer of a corporation or agent of a corporation who knowingly permits such employer to violate the provisions of this Act may be held individually liable for all violations and penalties assessed under this Act. This Section shall not apply to an individual who is an officer or agent of a corporation which on the project under investigation satisfies the responsible bidder requirements set forth in the Illinois Procurement Code. An individual officer or agent of an incorporated developer or general contractor who knowingly permits an employer to violate this Act may be held individually liable for all violations and penalties assessed under this Act.

(Source: P.A. 98-106, eff. 1-1-14.)