(820 ILCS 305/4) (from Ch. 48, par. 138.4)

(Text of Section from P.A. 101-40 and 102-37)
Sec. 4.

(a) Any employer, including but not limited to general contractors
and their subcontractors, who shall come within the provisions of
Section 3 of this Act, and any other employer who shall elect to provide
and pay the compensation provided for in this Act shall:

(1) File with the Commission annually an application for approval as a self-insurer

which shall include a current financial statement, and annually, thereafter, an application for renewal of self-insurance, which shall include a current financial statement.  Said application and financial statement shall be signed and sworn to by the president or vice president and secretary or assistant secretary of the employer if it be a corporation, or by all of the partners, if it be a copartnership, or by the owner if it be neither a copartnership nor a corporation. All initial applications and all applications for renewal of self-insurance must be submitted at least 60 days prior to the requested effective date of self-insurance.  An employer may elect to provide and pay compensation as provided for in this Act as a member of a group workers' compensation pool under Article V 3/4 of the Illinois Insurance Code.  If an employer becomes a member of a group workers' compensation pool, the employer shall not be relieved of any obligations imposed by this Act.

If the sworn application and financial statement of any such employer does not satisfy

the Commission of the financial ability of the employer who has filed it, the Commission shall require such employer to,

(2) Furnish security, indemnity or a bond guaranteeing the payment by the employer of

the compensation provided for in this Act, provided that any such employer whose application and financial statement shall not have satisfied the commission of his or her financial ability and who shall have secured his liability in part by excess liability insurance shall be required to furnish to the Commission security, indemnity or bond guaranteeing his or her payment up to the effective limits of the excess coverage, or

(3) Insure his entire liability to pay such compensation in some insurance carrier

authorized, licensed, or permitted to do such insurance business in this State.  Every policy of an insurance carrier, insuring the payment of compensation under this Act shall cover all the employees and the entire compensation liability of the insured: Provided, however, that any employer may insure his or her compensation liability with 2 or more insurance carriers or may insure a part and qualify under subsection 1, 2, or 4 for the remainder of his or her liability to pay such compensation, subject to the following two provisions:

Firstly, the entire compensation liability of the employer to employees working at

or from one location shall be insured in one such insurance carrier or shall be self-insured, and

Secondly, the employer shall submit evidence satisfactorily to the Commission that

his or her entire liability for the compensation provided for in this Act will be secured.  Any provisions in any policy, or in any endorsement attached thereto, attempting to limit or modify in any way, the liability of the insurance carriers issuing the same except as otherwise provided herein shall be wholly void.

Nothing herein contained shall apply to policies of excess liability carriage secured by

employers who have been approved by the Commission as self-insurers, or

(4) Make some other provision, satisfactory to the Commission, for the securing of the

payment of compensation provided for in this Act, and

(5) Upon becoming subject to this Act and thereafter as often as the Commission may in

writing demand, file with the Commission in form prescribed by it evidence of his or her compliance with the provision of this Section.

(a-1) Regardless of its state of domicile or its principal place of
business, an employer shall make payments to its insurance carrier or group
self-insurance fund, where applicable, based upon the premium rates of the
situs where the work or project is located in Illinois if:

(A) the employer is engaged primarily in the building and
construction industry; and

(B) subdivision (a)(3) of this Section applies to the employer or the employer is a

member of a group self-insurance plan as defined in subsection (1) of Section 4a.

The Illinois Workers' Compensation Commission shall impose a penalty upon an employer
for violation of this subsection (a-1) if:

(i) the employer is given an opportunity at a hearing to present evidence of its

compliance with this subsection (a-1); and

(ii) after the hearing, the Commission finds that the employer failed to make payments

upon the premium rates of the situs where the work or project is located in Illinois.

The penalty shall not exceed $1,000 for each day of work for which
the employer failed to make payments upon the premium rates of the situs where
the
work or project is located in Illinois, but the total penalty shall not exceed
$50,000 for each project or each contract under which the work was
performed.

Any penalty under this subsection (a-1) must be imposed not later
than one year after the expiration of the applicable limitation period
specified in subsection (d) of Section 6 of this Act.  Penalties imposed under
this subsection (a-1) shall be deposited into the Illinois Workers' Compensation Commission
Operations Fund, a special fund that is created in the State treasury.  Subject
to appropriation, moneys in the Fund shall be used solely for the operations
of the Illinois Workers' Compensation Commission, the salaries and benefits of the Self-Insurers Advisory Board employees, the operating costs of the Self-Insurers Advisory Board, and by the Department of Insurance for the purposes authorized in subsection (c) of Section 25.5 of this Act.

(a-2) Every Employee Leasing Company (ELC), as defined in Section 15 of the Employee Leasing Company Act, shall at a minimum provide the following information to the Commission or any entity designated by the Commission regarding each workers' compensation insurance policy issued to the ELC:

(1) Any client company of the ELC listed as an additional named insured.
(2) Any informational schedule attached to the master policy that identifies any

individual client company's name, FEIN, and job location.

(3) Any certificate of insurance coverage document issued to a client company specifying

its rights and obligations under the master policy that establishes both the identity and status of the client, as well as the dates of inception and termination of coverage, if applicable.

(b) The sworn application and financial statement, or security,
indemnity or bond, or amount of insurance, or other provisions, filed,
furnished, carried, or made by the employer, as the case may be, shall
be subject to the approval of the Commission.

Deposits under escrow agreements shall be cash, negotiable United
States government bonds or negotiable general obligation bonds of the
State of Illinois.  Such cash or bonds shall be deposited in
escrow with any State or National Bank or Trust Company having trust
authority in the State of Illinois.

Upon the approval of the sworn application and financial statement,
security, indemnity or bond or amount of insurance, filed, furnished or
carried, as the case may be, the Commission shall send to the employer
written notice of its approval thereof.  The certificate of compliance
by the employer with the provisions of subparagraphs (2) and (3) of
paragraph (a) of this Section shall be delivered by the insurance
carrier to the Illinois Workers' Compensation Commission within five days after the
effective date of the policy so certified.  The insurance so certified
shall cover all compensation liability occurring during the time that
the insurance is in effect and no further certificate need be filed in case
such insurance is renewed, extended or otherwise continued by such
carrier.  The insurance so certified shall not be cancelled or in the
event that such insurance is not renewed, extended or otherwise
continued, such insurance shall not be terminated until at least 10
days after receipt by the Illinois Workers' Compensation Commission of notice of the
cancellation or termination of said insurance; provided, however, that
if the employer has secured insurance from another insurance carrier, or
has otherwise secured the payment of compensation in accordance with
this Section, and such insurance or other security becomes effective
prior to the expiration of the 10 days, cancellation or termination may, at
the option of the insurance carrier indicated in such notice, be effective
as of the effective date of such other insurance or security.

(c) Whenever the Commission shall find that any corporation,
company, association, aggregation of individuals, reciprocal or
interinsurers exchange, or other insurer effecting workers' compensation
insurance in this State shall be insolvent, financially unsound, or
unable to fully meet all payments and liabilities assumed or to be
assumed for compensation insurance in this State, or shall practice a
policy of delay or unfairness toward employees in the adjustment,
settlement, or payment of benefits due such employees, the Commission
may after reasonable notice and hearing order and direct that such
corporation, company, association, aggregation of individuals,
reciprocal or interinsurers exchange, or insurer, shall from and after a
date fixed in such order discontinue the writing of any such workers'
compensation insurance in this State.  Subject to such modification of
the order as the Commission may later make on review of the order,
as herein provided, it shall thereupon be unlawful for any such
corporation, company, association, aggregation of individuals,
reciprocal or interinsurers exchange, or insurer to effect any workers'
compensation insurance in this State.  A copy of the order shall be served
upon the Director of Insurance by registered mail.  Whenever the Commission
finds that any service or adjustment company used or employed
by a self-insured employer or by an insurance carrier to process,
adjust, investigate, compromise or otherwise handle claims under this
Act, has practiced or is practicing a policy of delay or unfairness
toward employees in the adjustment, settlement or payment of benefits
due such employees, the Commission may after reasonable notice and
hearing order and direct that such service or adjustment company shall
from and after a date fixed in such order be prohibited from processing,
adjusting, investigating, compromising or otherwise handling claims
under this Act.

Whenever the Commission finds that any self-insured employer has
practiced or is practicing delay or unfairness toward employees in the
adjustment, settlement or payment of benefits due such employees, the
Commission may, after reasonable notice and hearing, order and direct
that after a date fixed in the order such self-insured employer shall be
disqualified to operate as a self-insurer and shall be required to
insure his entire liability to pay compensation in some insurance
carrier authorized, licensed and permitted to do such insurance business
in this State, as provided in subparagraph 3 of paragraph (a) of this
Section.

All orders made by the Commission under this Section shall be subject
to review by the courts, said review to be taken in the same manner and
within the same time as provided by Section 19 of this Act for review of
awards and decisions of the Commission, upon the party seeking the
review filing with the clerk of the court to which said review is taken
a bond in an amount to be fixed and approved by the court to which the
review is taken, conditioned upon the payment of all compensation awarded
against the person taking said review pending a decision thereof and
further conditioned upon such other obligations as the court may impose.
Upon the review the Circuit Court shall have power to review all questions
of fact as well as of law.  The penalty hereinafter provided for in this
paragraph shall not attach and shall not begin to run until the final
determination of the order of the Commission.

(d) Whenever a Commissioner, with due process and after a hearing, determines an employer has knowingly failed to provide coverage as required by paragraph (a) of this Section, the failure shall be deemed an immediate serious danger to public health, safety, and welfare sufficient to justify service by the Commission of a work-stop order on such employer, requiring the cessation of all business operations of such employer at the place of employment or job site. If a business is declared to be extra hazardous, as defined in Section 3, a Commissioner may issue an emergency work-stop order on such an employer ex parte, prior to holding a hearing, requiring the cessation of all business operations of such employer at the place of employment or job site while awaiting the ruling of the Commission. Whenever a Commissioner issues an emergency work-stop order, the Commission shall issue a notice of emergency work-stop hearing to be posted at the employer's places of employment and job sites. Any law enforcement agency in the State shall, at the request of the Commission, render any assistance necessary to carry out the provisions of this Section, including, but not limited to, preventing any employee of such employer from remaining at a place of employment or job site after a work-stop order has taken effect.  Any work-stop order shall be lifted upon proof of insurance as required by this Act. Any orders under this Section are appealable under Section 19(f) to the Circuit Court.

Any individual employer, corporate officer or director of a corporate employer, partner of an employer partnership, or member of an employer limited liability company who knowingly fails to provide coverage as required by paragraph (a) of this Section is guilty of a Class 4 felony.  This provision shall not apply to any corporate officer or director of any publicly-owned corporation. Each day's violation constitutes a separate offense.  The State's Attorney of the county in which the violation occurred, or the Attorney General, shall bring such actions in the name of the People of the State of Illinois, or may, in addition to other remedies provided in this Section, bring an action for an injunction to restrain the violation or to enjoin the operation of any such employer.

Any individual employer, corporate officer or director of a corporate employer, partner of an employer partnership, or member of an employer limited liability company who negligently fails to provide coverage as required by paragraph (a) of this Section is guilty of a Class A misdemeanor.  This provision shall not apply to any corporate officer or director of any publicly-owned corporation. Each day's violation constitutes a separate offense.  The State's Attorney of the county in which the violation occurred, or the Attorney General, shall bring such actions in the name of the People of the State of Illinois.

The criminal penalties in this subsection (d) shall not apply where

there exists a good faith dispute as to the existence of an
employment relationship. Evidence of good faith shall
include, but not be limited to, compliance with the definition
of employee as used by the Internal Revenue Service.

All investigative actions must be acted upon within 90 days of the issuance of the complaint. Employers who are subject to and who knowingly fail to comply with this Section shall not be entitled to the benefits of this Act during the period of noncompliance, but shall be liable in an action under any other applicable law of this State.  In the action, such employer shall not avail himself or herself of the defenses of assumption of risk or negligence or that the injury was due to a co-employee.  In the action, proof of the injury shall constitute prima facie evidence of negligence on the part of such employer and the burden shall be on such employer to show freedom of negligence resulting in the injury.  The employer shall not join any other defendant in any such civil action.  Nothing in this amendatory Act of the 94th General Assembly shall affect the employee's rights under subdivision (a)3 of Section 1 of this Act. Any employer or carrier who makes payments under subdivision (a)3 of Section 1 of this Act shall have a right of reimbursement from the proceeds of any recovery under this Section.

An employee of an uninsured employer, or the employee's dependents in case death ensued, may, instead of proceeding against the employer in a civil action in court, file an application for adjustment of claim with the Commission in accordance with the provisions of this Act and the Commission shall hear and determine the application for adjustment of claim in the manner in which other claims are heard and determined before the Commission.

All proceedings under this subsection (d) shall be reported on an annual basis to the Workers' Compensation Advisory Board.

An investigator with the Department of Insurance may issue a citation to any employer that is not in compliance with its obligation to have workers' compensation insurance under this Act. The amount of the fine shall be based on the period of time the employer was in non-compliance, but shall be no less than $500, and shall not exceed $10,000. An employer that has been issued a citation shall pay the fine to the Department of Insurance and provide to the Department of Insurance proof that it obtained the required workers' compensation insurance within 10 days after the citation was issued. This Section does not affect any other obligations this Act imposes on employers.

Upon a finding by the Commission, after reasonable notice and
hearing, of the knowing and willful failure or refusal of an employer to
comply with
any of the provisions of paragraph (a) of this Section, the failure or
refusal of an employer, service or adjustment company, or an insurance
carrier to comply with any order of the Illinois Workers' Compensation Commission pursuant to
paragraph (c) of this Section disqualifying him or her to operate as a self
insurer and requiring him or her to insure his or her liability, or the knowing and willful failure of an employer to comply with a citation issued by an investigator with the Department of Insurance, the
Commission may assess a civil penalty of up to $500 per day for each day of
such failure or refusal after the effective date of this amendatory Act of
1989. The minimum penalty under this Section shall be the sum of $10,000.
Each day of such failure or refusal shall constitute a separate offense.
The Commission may assess the civil penalty personally and individually
against the corporate officers and directors of a corporate employer, the
partners of an employer partnership, and the members of an employer limited
liability company, after a finding of a knowing and willful refusal or failure
of each such named corporate officer, director, partner, or member to comply
with this Section.  The liability for the assessed penalty shall be
against the named employer first, and
if the named employer fails or refuses to pay the penalty to the
Commission within 30 days after the final order of the Commission, then the
named
corporate officers, directors, partners, or members who have been found to have
knowingly and willfully refused or failed to comply with this Section shall be
liable for the unpaid penalty or any unpaid portion of the penalty.  Upon investigation by the Department of Insurance, the Attorney General shall have the authority to prosecute all proceedings to enforce the civil and administrative provisions of this Section before the Commission.  The Commission and the Department of Insurance shall promulgate procedural rules for enforcing this Section relating to their respective duties prescribed herein.

If an employer is found to be in non-compliance with any provisions of paragraph (a) of this Section more than once, all minimum penalties will double. Therefore, upon the failure or refusal of an employer, service or adjustment company, or insurance carrier to comply with any order of the Commission pursuant to paragraph (c) of this Section disqualifying him or her to operate as a self-insurer and requiring him or her to insure his or her liability, or the knowing and willful failure of an employer to comply with a citation issued by an investigator with the Department of Insurance, the Commission may assess a civil penalty of up to $1,000 per day for each day of such failure or refusal after the effective date of this amendatory Act of the 101st General Assembly. The minimum penalty under this Section shall be the sum of $20,000. In addition, employers with 2 or more violations of any provisions of paragraph (a) of this Section may not self-insure for one year or until all penalties are paid.

Upon the failure or refusal of any employer, service or adjustment
company or insurance carrier to comply with the provisions of this Section
and with the orders of the Commission under this Section, or the order of
the court on review after final adjudication, the Commission may bring a
civil action to recover the amount of the penalty in Cook County or in
Sangamon County in which litigation the Commission shall be represented by
the Attorney General.  The Commission shall send notice of its finding of
non-compliance and assessment of the civil penalty to the Attorney General.
It shall be the duty of the Attorney General within 30 days after receipt
of the notice, to institute prosecutions and promptly prosecute all
reported violations of this Section.

Any individual employer, corporate officer or director of a corporate employer, partner of an employer partnership, or member of an employer limited liability company who, with the intent to avoid payment of compensation under this Act to an injured employee or the employee's dependents, knowingly transfers, sells, encumbers, assigns, or in any manner disposes of, conceals, secretes, or destroys any property belonging to the employer, officer, director, partner, or member is guilty of a Class 4 felony.

Penalties and fines collected pursuant to this paragraph (d) shall be deposited upon receipt into a special fund which shall be designated the Injured Workers' Benefit Fund, of which the State Treasurer is ex-officio custodian, such special fund to be held and disbursed in accordance with this paragraph (d) for the purposes hereinafter stated in this paragraph (d), upon the final order of the Commission.  The Injured Workers' Benefit Fund shall be deposited the same as are State funds and any interest accruing thereon shall be added thereto every 6 months.  The Injured Workers' Benefit Fund is subject to audit the same as State funds and accounts and is protected by the general bond given by the State Treasurer.  The Injured Workers' Benefit Fund is considered always appropriated for the purposes of disbursements as provided in this paragraph, and shall be paid out and disbursed as herein provided and shall not at any time be appropriated or diverted to any other use or purpose.  Moneys in the Injured Workers' Benefit Fund shall be used only for payment of workers' compensation benefits for injured employees when the employer has failed to provide coverage as determined under this paragraph (d) and has failed to pay the benefits due to the injured employee.  The Commission shall have the right to obtain reimbursement from the employer for compensation obligations paid by the Injured Workers' Benefit Fund.  Any such amounts obtained shall be deposited by the Commission into the Injured Workers' Benefit Fund.  If an injured employee or his or her personal representative receives payment from the Injured Workers' Benefit Fund, the State of Illinois has the same rights under paragraph (b) of Section 5 that the employer who failed to pay the benefits due to the injured employee would have had if the employer had paid those benefits, and any moneys recovered by the State as a result of the State's exercise of its rights under paragraph (b) of Section 5 shall be deposited into the Injured Workers' Benefit Fund.  The custodian of the Injured Workers' Benefit Fund shall be joined with the employer as a party respondent in the application for adjustment of claim. After July 1, 2006, the Commission shall make disbursements from the Fund once each year to each eligible claimant.  An eligible claimant is an injured worker who has within the previous fiscal year obtained a final award for benefits from the Commission against the employer and the Injured Workers' Benefit Fund and has notified the Commission within 90 days of receipt of such award.  Within a reasonable time after the end of each fiscal year, the Commission shall make a disbursement to each eligible claimant.  At the time of disbursement, if there are insufficient moneys in the Fund to pay all claims, each eligible claimant shall receive a pro-rata share, as determined by the Commission, of the available moneys in the Fund for that year.  Payment from the Injured Workers' Benefit Fund to an eligible claimant pursuant to this provision shall discharge the obligations of the Injured Workers' Benefit Fund regarding the award entered by the Commission.

(e) This Act shall not affect or disturb the continuance of any
existing insurance, mutual aid, benefit, or relief association or
department, whether maintained in whole or in part by the employer or
whether maintained by the employees, the payment of benefits of such
association or department being guaranteed by the employer or by some
person, firm or corporation for him or her: Provided, the employer contributes
to such association or department an amount not less than the full
compensation herein provided, exclusive of the cost of the maintenance
of such association or department and without any expense to the
employee.  This Act shall not prevent the organization and maintaining
under the insurance laws of this State of any benefit or insurance
company for the purpose of insuring against the compensation provided
for in this Act, the expense of which is maintained by the employer.
This Act shall not prevent the organization or maintaining under the
insurance laws of this State of any voluntary mutual aid, benefit or
relief association among employees for the payment of additional
accident or sick benefits.

(f) No existing insurance, mutual aid, benefit or relief association
or department shall, by reason of anything herein contained, be
authorized to discontinue its operation without first discharging its
obligations to any and all persons carrying insurance in the same or
entitled to relief or benefits therein.

(g) Any contract, oral, written or implied, of employment providing
for relief benefit, or insurance or any other device whereby the
employee is required to pay any premium or premiums for insurance
against the compensation provided for in this Act shall be null and
void.  Any employer withholding from the wages of any employee any
amount for the purpose of paying any such premium shall be guilty of a
Class B misdemeanor.

In the event the employer does not pay the compensation for which he or
she is liable, then an insurance company, association or insurer which may
have insured such employer against such liability shall become primarily
liable to pay to the employee, his or her personal representative or
beneficiary the compensation required by the provisions of this Act to
be paid by such employer.  The insurance carrier may be made a party to
the proceedings in which the employer is a party and an award may be
entered jointly against the employer and the insurance carrier.

(h) It shall be unlawful for any employer, insurance company or
service or adjustment company to interfere with, restrain or coerce an
employee in any manner whatsoever in the exercise of the rights or
remedies granted to him or her by this Act or to discriminate, attempt to
discriminate, or threaten to discriminate against an employee in any way
because of his or her exercise of the rights or remedies granted to
him or her by this Act.

It shall be unlawful for any employer, individually or through any
insurance company or service or adjustment company, to discharge or to
threaten to discharge, or to refuse to rehire or recall to active
service in a suitable capacity an employee because of the exercise of
his or her rights or remedies granted to him or her by this Act.

(i) If an employer elects to obtain a life insurance policy on his
employees, he may also elect to apply such benefits in satisfaction of all
or a portion of the death benefits payable under this Act, in which case,
the employer's compensation premium shall be reduced accordingly.

(j) Within 45 days of receipt of an initial application or application
to renew self-insurance privileges the Self-Insurers Advisory Board shall
review and submit for approval by the Chairman of the Commission
recommendations of disposition of all initial applications to self-insure
and all applications to renew self-insurance privileges filed by private
self-insurers pursuant to the provisions of this Section and Section 4a-9
of this Act.  Each private self-insurer shall submit with its initial and
renewal applications the application fee required by Section 4a-4 of this Act.

The Chairman of the Commission shall promptly act upon all initial
applications and applications for renewal in full accordance with the
recommendations of the Board or, should the Chairman disagree with any
recommendation of disposition of the Self-Insurer's Advisory Board, he
shall within 30 days of receipt of such recommendation provide to the Board
in writing the reasons supporting his decision.  The Chairman shall also
promptly notify the employer of his decision within 15 days of receipt of
the recommendation of the Board.

If an employer is denied a renewal of self-insurance privileges pursuant
to application it shall retain said privilege for 120 days after receipt of
a notice of cancellation of the privilege from the Chairman of the Commission.

All orders made by the Chairman under this Section shall be subject to
review by the courts, such review to be taken in the same manner and within
the same time as provided by subsection (f) of Section 19 of this Act for
review of awards and decisions of the Commission, upon the party seeking
the review filing with the clerk of the court to which such review is taken
a bond in an amount to be fixed and approved by the court to which the
review is taken, conditioned upon the payment of all compensation awarded
against the person taking such review pending a decision thereof and
further conditioned upon such other obligations as the court may impose.
Upon the review the Circuit Court shall have power to review all questions
of fact as well as of law.

(Source: P.A. 101-40, eff. 1-1-20; 102-37, eff. 7-1-21.)

(Text of Section from P.A. 101-384 and 102-37)

Sec. 4.

(a) Any employer, including but not limited to general contractors
and their subcontractors, who shall come within the provisions of
Section 3 of this Act, and any other employer who shall elect to provide
and pay the compensation provided for in this Act shall: