101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB3332

 

Introduced 2/14/2020, by Sen. Robert F. Martwick

 

SYNOPSIS AS INTRODUCED:
 
New Act
30 ILCS 105/5.930 new

    Creates the Independent Contractor Payment Protection Act and amends the State Finance Act. Provides that the agreed work terms between an independent contractor and a client shall be: (1) reduced to writing; (2) sufficiently detailed in describing how compensation earned and payable shall be calculated; (3) signed by the independent contractor; (4) signed by the client; (5) kept on file by the client for a period of not less than 6 years. Provides that an independent contractor shall be paid the compensation earned in accordance with the agreed work terms not later than the last day of the month following the month in which the compensation is earned. Provides that an independent contractor may file a complaint with the Department of Labor alleging a violation of the Act. Provides for enforcement of the Act by the Department. Establishes civil and criminal penalties. Creates the Independent Contractor Compensation Theft Enforcement Fund as a special fund in the State treasury and specifies the uses of the Fund.


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CORRECTIONAL BUDGET AND IMPACT NOTE ACT MAY APPLY
FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3332LRB101 19613 JLS 69093 b

1    AN ACT concerning employment.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Independent Contractor Payment Protection Act.
 
6    Section 5. Definitions.As used in this Act:
7    "Agreed work terms" or "work terms" means an agreement
8between an independent contractor and a client describing the
9work to be done and the compensation to be paid that complies
10with Section 10.
11    "Client" includes a corporation, limited liability
12company, partnership, association, non-profit organization, or
13natural person contracting with an independent contractor in
14any occupation, industry, trade, business, or service for
15compensation equal to or greater than $600. "Client" does not
16include the federal or State government, any unit of local
17government or school district, or any agency or instrumentality
18thereof. "Client" also does not include owners of
19owner-occupied single-family residences, or owners of
20owner-occupied multi-family residences of 6 units or less, if
21the work to be done, as specified in the agreed work terms, is
22upon such owner-occupied residence or the land adjacent
23thereto.

 

 

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1    "Compensation" means the earnings of an independent
2contractor, including reimbursement for expenses.
3    "Department" means the Department of Labor.
4    "Director" means the Director of Labor.
5    "Independent contractor" means a sole proprietor who is not
6an employee and who is hired or retained by a client for an
7amount equal to or greater than $600.
 
8    Section 10. Agreed work terms; requirements. The agreed
9work terms between an independent contractor and a client shall
10be:
11        (1) reduced to writing;
12        (2) sufficiently detailed in describing how
13    compensation earned and payable shall be calculated;
14        (3) signed by the independent contractor;
15        (4) signed by the client;
16        (5) kept on file by the client for a period of not less
17    than 6 years.
 
18    Section 15. Payment of independent contractors. An
19independent contractor shall be paid the compensation earned in
20accordance with the agreed work terms not later than the last
21day of the month following the month in which the compensation
22is earned.
 
23    Section 20. Department of Labor; duties; powers.

 

 

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1    (a) It shall be the duty of the Department to inquire
2diligently for any violations of this Act, to institute the
3actions for penalties herein provided, and to enforce generally
4the provisions of this Act.
5    (b) An independent contractor may file a complaint with the
6Department alleging violations of this Act by submitting a
7signed, completed independent contractor compensation claim
8application on the form provided by the Department and by
9submitting copies of all supporting documentation. The
10supporting documentation must include the agreed work terms
11that are alleged to have been violated. Complaints shall be
12filed within 6 years after the compensation was due.
13    (c) Applications shall be reviewed by the Department to
14determine whether there is cause for investigation. If the
15Department finds there is cause for an investigation, it shall
16have the following powers:
17        (1) To investigate and attempt equitably to adjust
18    controversies between independent contractors and clients
19    in respect of compensation claims arising under this Act,
20    and, to that end, the Department through the Director or
21    any other person in the Department designated by the
22    Director, shall have the power to administer oaths,
23    subpoena and examine witnesses, to issue subpoenas duces
24    tecum requiring the production of such books, papers,
25    records and documents as may be evidence of any matter
26    under inquiry and to examine and inspect the same as may

 

 

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1    relate to the question in dispute. Upon the request of the
2    Department, through a subpoena duces tecum or otherwise,
3    the client shall produce a copy of the written work terms
4    to the Department within 5 business days of the request.
5    Failure of the client to timely remit the work terms to the
6    Department shall create a presumption that the work terms
7    submitted by the independent contractor are the agreed
8    terms. Service of any such subpoenas shall be made by any
9    sheriff or any person. Any court in this State, upon the
10    application of the Department may compel attendance of
11    witnesses, the production of books and papers, and the
12    giving of testimony before the Department by attachment for
13    contempt or in any other way as the production of evidence
14    may be compelled before such court.
15        (2) To take assignments of compensation claims in the
16    name of the Director and his or her successors in office
17    and prosecute actions for the collection of compensation
18    for independent contractors financially unable to
19    prosecute such claims when in the judgment of the
20    Department such claims are valid and enforceable in the
21    courts. No court costs or any fees for necessary process
22    and proceedings shall be payable in advance by the
23    Department for prosecuting such actions. In the event there
24    is a judgment rendered against the defendant, the court
25    shall assess as part of such judgment the costs of such
26    proceeding. Upon collection of such judgments the

 

 

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1    Department shall pay from the proceeds of such judgment
2    such costs to such independent contractor who is by law
3    entitled to same. The Department may join in a single
4    proceeding any number of compensation claims against the
5    same client but the court shall have discretionary power to
6    order a severance or separate trial for hearings.
7        (3) To make complaint in any court of competent
8    jurisdiction of violations of this Act.
9        (4) In addition to the aforementioned powers, subject
10    to appropriation, the Department may establish an
11    administrative procedure to adjudicate compensation claims
12    and to issue final and binding administrative decisions on
13    such compensation claims subject to the Administrative
14    Review Law. To establish such a procedure, the Director or
15    her or his authorized representative may adopt rules. The
16    adoption, amendment, or rescission of rules for such a
17    procedure shall be in conformity with the requirements of
18    the Illinois Administrative Procedure Act.
19    (d) If the Department institutes any proceedings that
20require a hearing in the circuit court or through an
21administrative procedure, the Department shall notify the
22independent contractor of the date, time, and location of the
23hearing.
24    (e) Nothing herein shall be construed to prevent any
25independent contractor from making complaint or prosecuting
26his or her own claim for compensation against a client. Any

 

 

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1independent contractor aggrieved by a violation of this Act or
2any rule adopted under this Act may file suit in circuit court
3of Illinois, in the county where the alleged violation occurred
4or where any client who is party to the action resides, without
5regard to exhaustion of any alternative administrative
6remedies provided in this Act. Actions may be brought by one or
7more independent contractors for and on behalf of themselves
8and other independent contractors similarly situated.
9Complaints filed in accordance with this paragraph shall be
10filed within 6 years after the compensation was due.
11    (f) Nothing herein shall be construed to limit the
12authority of the State's attorney of any county to prosecute
13actions for violation of this Act or to enforce the provisions
14thereof independently and without specific direction of the
15Department.
16    (g) The failure of a client to keep adequate records shall
17not bar an independent contractor or the Director from
18investigating or filing a complaint. In such a case, the client
19shall have the burden of proving, by clear and convincing
20evidence, that the independent contractor was paid all the
21compensation owed to him or her by the client under the agreed
22work terms.
 
23    Section 25. Penalties; recovery.
24    (a) Any independent contractor not timely paid
25compensation by a client as required by this Act shall be

 

 

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1entitled to recover through a claim filed with the Department
2or in a civil action, but not both, the amount of any such
3underpayments and damages of 2% of the amount of any such
4underpayments for each month following the date of payment
5during which such underpayments remain unpaid. In a civil
6action, such independent contractor shall also recover costs
7and all reasonable attorney's fees.
8    (b) Any client who has been demanded or ordered by the
9Department or ordered by the court to pay compensation due an
10independent contractor shall be required to pay a non-waivable
11administrative fee to the Department in the amount of $250 if
12the amount ordered by the Department as compensation owed is
13$3,000 or less; $500 if the amount ordered by the Department as
14compensation owed is more than $3,000, but less than $10,000;
15and $1,000 if the amount ordered by the Department as
16compensation owed is $10,000 or more. Any client who has been
17so demanded or ordered by the Department or ordered by a court
18to pay such compensation and who fails to seek timely review of
19such a demand or order as provided for under this Act and who
20fails to comply within 15 calendar days after such demand or
21within 35 days of an administrative or court order is entered
22shall also be liable to pay a penalty to the Department of 20%
23of the amount found owing and a penalty to the independent
24contractor of 1% per calendar day of the amount found owing for
25each day of delay in paying such compensation to the
26independent contractor. All moneys recovered as fees and civil

 

 

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1penalties under this Act, except those owing to the affected
2independent contractor, shall be deposited into the
3Independent Contractor Compensation Theft Enforcement Fund, a
4special fund that is created in the State treasury. Moneys in
5the Fund may be used only for enforcement of this Act.
6    (c) Any client, or any agent of a client, who in any manner
7discriminates against any independent contractor because that
8independent contractor has made a complaint to the client, to
9the Director or his or her authorized representative, in a
10public hearing, or to a community organization that he or she
11has not been paid in accordance with the provisions of this
12Act, or because that independent contractor has caused to be
13instituted any proceeding under or related to this Act, or
14because that independent contractor has testified or is about
15to testify in an investigation or proceeding under this Act, is
16guilty, upon conviction, of a Class C misdemeanor. An
17independent contractor who has been unlawfully retaliated
18against shall be entitled to recover through a claim filed with
19the Department or in a civil action, but not both, all legal
20and equitable relief as may be appropriate. In a civil action,
21such independent contractor shall also recover costs and all
22reasonable attorney's fees.
23    (d) In addition to the remedies provided in subsections
24(a), (b), and (c) of this Section, any client or any agent of a
25client, who, being able to pay compensation to an independent
26contractor and being under a duty to pay, willfully refuses to

 

 

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1pay as provided in this Act, or falsely denies the amount or
2validity thereof or that the same is due, with intent to secure
3for himself or other person any underpayment of such
4indebtedness or with intent to annoy, harass, oppress, hinder,
5delay or defraud the independent contractor to whom such
6indebtedness is due, upon conviction, is guilty of:
7        (1) for unpaid compensation in the amount of $5,000 or
8    less, a Class B misdemeanor; or
9        (2) for unpaid compensation in the amount of more than
10    $5,000, a Class A misdemeanor.
11    Each day during which any violation of this Act continues
12shall constitute a separate and distinct offense.
13    Any client or any agent of a client who violates this
14Section of the Act a subsequent time within 2 years of a prior
15criminal conviction under this Section is guilty, upon
16conviction, of a Class 4 felony.
17    In addition to an individual who is deemed to be a client
18pursuant to Section 5 of this Act, any officers of a
19corporation or agents of a client who knowingly permit such
20client to violate the provisions of this Act shall be deemed to
21be the client of the independent contractor.
22    (e) Penalties and fees under this Section may be assessed
23by the Department and recovered in a civil action brought by
24the Department in any circuit court or in any administrative
25adjudicative proceeding under this Act. In any such civil
26action or administrative adjudicative proceeding under this

 

 

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1Act, the Department shall be represented by the Attorney
2General.
 
3    Section 30. Departmental compensation recovery; remittance
4to aggrieved independent contractor.
5    (a) Upon the recovery of unpaid compensation from a client
6that has violated this Act, the Department shall conduct a good
7faith search to find the aggrieved independent contractor. If,
8after conducting a good faith search for the aggrieved
9independent contractor, the Department is unable to find the
10aggrieved independent contractor, the Department shall deposit
11the amount recovered into the Independent Contractor
12Compensation Theft Enforcement Fund.
13    (b) An aggrieved independent contractor may make a request
14to the Department in order to recover unpaid compensation that
15has been deposited into the Independent Contractor
16Compensation Theft Enforcement Fund. The Department shall not
17require the independent contractor to present a Social Security
18number or proof of United States citizenship. For the purpose
19of paying claims under this Section from the Independent
20Contractor Compensation Theft Enforcement Fund to aggrieved
21independent contractors, the Comptroller shall assign a vendor
22payment number to the Department. When an aggrieved independent
23contractor makes a valid request for payment to the Department,
24the Department shall use the vendor payment number to process
25payment on behalf of the aggrieved independent contractor.
 

 

 

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1    Section 35. Rulemaking authority. The Director or his or
2her authorized representatives shall administer and enforce
3this Act. In order to accomplish the objectives of this Act and
4to carry out the duties prescribed by this Act, the Director or
5his or her authorized representative shall, within one year
6after the effective date of this Act, adopt rules necessary to
7administer and enforce the provisions of this Act including the
8procedures that shall be followed for hearings under Section
920. The adoption, amendment, or rescission of rules shall be in
10conformity with the requirements of the Illinois
11Administrative Procedure Act.
 
12    Section 90. The State Finance Act is amended by adding
13Section 5.930 as follows:
 
14    (30 ILCS 105/5.930 new)
15    Sec. 5.930. The Independent Contractor Compensation Theft
16Enforcement Fund.