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1     AN ACT concerning employment.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 1. Short title. This Act may be cited as the Truth
5 in Employment Act.
 
6     Section 3. Purpose. This Act is intended to address the
7 practice of misclassifying employees as independent
8 contractors.
 
9     Section 5. Definition. As used in this Act:
10     "Contractor" means any person who, in any capacity other
11 than as the employee of another for wages as the sole
12 compensation, undertakes to construct, alter, repair, move,
13 wreck, or demolish any fixture or structure. "Contractor"
14 includes a general contractor and a subcontractor, but does not
15 include a person who furnishes only materials or supplies.
16     "Department" means the Department of Revenue.
 
17     Section 10. Filing by contractors.
18     (a) A contractor for whom a person is performing work on a
19 construction project and is classified as an independent
20 contractor with respect to that work must file with the
21 Department a statement regarding that person. The Department
22 shall adopt rules concerning the form, contents, and filing of
23 the statement. The statement shall be available in English and
24 Spanish and shall include: the name and address of the
25 contractor and the person performing the work; the name and
26 address of the general contractor (if the general contractor is
27 not the contractor for whom the person is performing the work);
28 and any other information required by the Department. A
29 separate statement shall be filed by the contractor for each
30 calendar year during which the worker performs work for the

 

 

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1 contractor. The statement shall be filed no later than 3 days
2 after the first date of the calendar year on which the worker
3 performs work for the contractor. The information obtained by
4 the Department through the statement is confidential and shall
5 be used solely for the purposes of this Act.
6     (b) A contractor that is required to file a statement under
7 subsection (a) and does not timely file that statement shall
8 pay, when it files the statement, a $10 late-filing penalty to
9 the Department.
 
10     Section 15. Notice.
11     (a) The Department shall post a summary of the requirements
12 of this Act in English and Spanish on its web site and on
13 bulletin boards in each of its offices.
14     (b) A contractor for whom one or more persons classified as
15 independent contractors are performing work shall post and keep
16 posted, in conspicuous places on each job site where those
17 persons work and in each of its offices, a notice in English
18 and Spanish, prepared by the Department, summarizing the
19 requirements of this Act. The Department shall furnish copies
20 of summaries to contractors upon request without charge.
 
21     Section 20. Investigations.
22     (a) The Department shall commence an investigation if a
23 report is not timely filed under subsection (a) of Section 10
24 or if the Department finds, based on statements filed under
25 this Act or other information supplied to the Department or
26 otherwise obtained by the Department, that there is reason to
27 suspect that a contractor has misclassified one or more
28 employees as independent contractors.
29     (b) A final determination by the United States Internal
30 Revenue Service or a federal court that a person is an employee
31 is deemed correct for all purposes under this Act.
32     (c) The Department shall hire as many investigators as may
33 be necessary to carry out the purposes of this Act.
 

 

 

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1     Section 25. Misclassification of employees as independent
2 contractors.
3     (a) If, upon completion of an investigation commenced
4 pursuant to subsection (a) of Section 20 of this Act, the
5 Department determines that a contractor has misclassified one
6 or more employees as independent contractors on a construction
7 project, that contractor is subject to penalties and interest
8 as provided in subsections (c) and (d) of Section 1002 of the
9 Illinois Income Tax Act. Procedures for notice, protest, and
10 hearings shall be in accordance with the Illinois Income Tax
11 Act and the rules adopted under that Act.
12     (b) If, upon completion of an investigation commenced
13 pursuant to subsection (a) of Section 20 of this Act, the
14 Department determines that a contractor has knowingly or
15 intentionally misclassified one or more employees as
16 independent contractors on a construction project, the
17 Department may: (i) direct the employer to cease its operations
18 on that project; (ii) direct the employer to pay $200 to the
19 Department for each day during which the violation continues;
20 (iii) direct the employer to pay $400 to the Department for
21 each day during which a second or subsequent violation occurs
22 that involves different employees than those involved in an
23 earlier violation by that employer; and (iv) require the
24 employer to continue to pay, for 5 days, employees affected by
25 the determination. The Department shall adopt rules governing
26 notice and protest and establishing procedures for hearings in
27 accordance with Article 10 of the Illinois Administrative
28 Procedure Act.
29     (c) A contractor that knowingly or intentionally
30 misclassifies one or more of its employees as independent
31 contractors on a construction project commits a Class C
32 misdemeanor. A contractor that commits a second or subsequent
33 violation commits a Class 4 felony if the second or subsequent
34 violation involves different employees than those involved in
35 an earlier violation.
 

 

 

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1     Section 30. Attorney General; State's Attorneys. Criminal
2 violations of this Act shall be prosecuted by the Attorney
3 General or the appropriate State's Attorney. The Department
4 shall refer matters to the Attorney General and the appropriate
5 State's Attorney upon determining that a criminal violation may
6 have occurred.
 
7     Section 35. Truth in Employment Fund. The Truth in
8 Employment Fund is created as a special fund in the State
9 treasury. All moneys received by the Department under this Act
10 shall be deposited into the Fund. Moneys in the Fund shall be
11 used, subject to appropriation by the General Assembly, by the
12 Department for administration, investigation, and other
13 expenses incurred in carrying out its powers and duties under
14 this Act. Any moneys in the Fund at the end of a fiscal year in
15 excess of those moneys necessary for the Department to carry
16 out its powers and duties under this Act shall be transferred
17 to the General Revenue Fund.
 
18     Section 40. Rulemaking. In addition to any rulemaking
19 required by any other provision of this Act, the Department may
20 adopt reasonable rules to implement and administer this Act.
 
21     Section 45. Judicial review. A final administrative
22 decision of the Department under this Act is subject to
23 judicial review under the Administrative Review Law.
 
24     Section 50. No waivers.
25     (a) There shall be no waiver of any provision of this Act.
26     (b) It is a Class C misdemeanor for a contractor to attempt
27 to induce any individual to waive any provision of this Act.
 
28     Section 85. The Department of Employment Security Law of
29 the Civil Administrative Code of Illinois is amended by adding
30 Section 1005-160 as follows:
 

 

 

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1     (20 ILCS 1005/1005-160 new)
2     Sec. 1005-160. Misclassification of employees as
3 independent contractors. The Department shall cooperate with
4 the Department of Revenue under the Truth in Employment Act by
5 providing information to the Department of Revenue concerning
6 any suspected misclassification by a contractor of one or more
7 of its employees as independent contractors.
 
8     Section 90. The State Finance Act is amended by adding
9 Section 5.641 as follows:
 
10     (30 ILCS 105/5.641 new)
11     Sec. 5.641. The Truth in Employment Fund.
 
12     Section 92. The Illinois Income Tax Act is amended by
13 changing Section 917 as follows:
 
14     (35 ILCS 5/917)  (from Ch. 120, par. 9-917)
15     Sec. 917. Confidentiality and information sharing.
16     (a) Confidentiality. Except as provided in this Section,
17 all information received by the Department from returns filed
18 under this Act, or from any investigation conducted under the
19 provisions of this Act, shall be confidential, except for
20 official purposes within the Department or pursuant to official
21 procedures for collection of any State tax or pursuant to an
22 investigation or audit by the Illinois State Scholarship
23 Commission of a delinquent student loan or monetary award or
24 enforcement of any civil or criminal penalty or sanction
25 imposed by this Act or by another statute imposing a State tax,
26 and any person who divulges any such information in any manner,
27 except for such purposes and pursuant to order of the Director
28 or in accordance with a proper judicial order, shall be guilty
29 of a Class A misdemeanor. However, the provisions of this
30 paragraph are not applicable to information furnished to (i)
31 the Department of Public Aid, State's Attorneys, and the
32 Attorney General for child support enforcement purposes and

 

 

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1 (ii) a licensed attorney representing the taxpayer where an
2 appeal or a protest has been filed on behalf of the taxpayer.
3 If it is necessary to file information obtained pursuant to
4 this Act in a child support enforcement proceeding, the
5 information shall be filed under seal.
6     (b) Public information. Nothing contained in this Act shall
7 prevent the Director from publishing or making available to the
8 public the names and addresses of persons filing returns under
9 this Act, or from publishing or making available reasonable
10 statistics concerning the operation of the tax wherein the
11 contents of returns are grouped into aggregates in such a way
12 that the information contained in any individual return shall
13 not be disclosed.
14     (c) Governmental agencies. The Director may make available
15 to the Secretary of the Treasury of the United States or his
16 delegate, or the proper officer or his delegate of any other
17 state imposing a tax upon or measured by income, for
18 exclusively official purposes, information received by the
19 Department in the administration of this Act, but such
20 permission shall be granted only if the United States or such
21 other state, as the case may be, grants the Department
22 substantially similar privileges. The Director may exchange
23 information with the Illinois Department of Public Aid and the
24 Department of Human Services (acting as successor to the
25 Department of Public Aid under the Department of Human Services
26 Act) for the purpose of verifying sources and amounts of income
27 and for other purposes directly connected with the
28 administration of this Act and the Illinois Public Aid Code.
29 The Director may exchange information with the Director of the
30 Department of Employment Security for the purpose of verifying
31 sources and amounts of income and for other purposes directly
32 connected with the administration of this Act and Acts
33 administered by the Department of Employment Security. The
34 Director may make available to the Illinois Workers'
35 Compensation Commission information regarding employers for
36 the purpose of verifying the insurance coverage required under

 

 

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1 the Workers' Compensation Act and Workers' Occupational
2 Diseases Act. The Director may exchange information with the
3 Illinois Department on Aging for the purpose of verifying
4 sources and amounts of income for purposes directly related to
5 confirming eligibility for participation in the programs of
6 benefits authorized by the Senior Citizens and Disabled Persons
7 Property Tax Relief and Pharmaceutical Assistance Act.
8     The Director may make available to any State agency,
9 including the Illinois Supreme Court, which licenses persons to
10 engage in any occupation, information that a person licensed by
11 such agency has failed to file returns under this Act or pay
12 the tax, penalty and interest shown therein, or has failed to
13 pay any final assessment of tax, penalty or interest due under
14 this Act. The Director may make available to any State agency,
15 including the Illinois Supreme Court, information regarding
16 whether a bidder, contractor, or an affiliate of a bidder or
17 contractor has failed to file returns under this Act or pay the
18 tax, penalty, and interest shown therein, or has failed to pay
19 any final assessment of tax, penalty, or interest due under
20 this Act, for the limited purpose of enforcing bidder and
21 contractor certifications. For purposes of this Section, the
22 term "affiliate" means any entity that (1) directly,
23 indirectly, or constructively controls another entity, (2) is
24 directly, indirectly, or constructively controlled by another
25 entity, or (3) is subject to the control of a common entity.
26 For purposes of this subsection (a), an entity controls another
27 entity if it owns, directly or individually, more than 10% of
28 the voting securities of that entity. As used in this
29 subsection (a), the term "voting security" means a security
30 that (1) confers upon the holder the right to vote for the
31 election of members of the board of directors or similar
32 governing body of the business or (2) is convertible into, or
33 entitles the holder to receive upon its exercise, a security
34 that confers such a right to vote. A general partnership
35 interest is a voting security.
36     The Director may make available to any State agency,

 

 

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1 including the Illinois Supreme Court, units of local
2 government, and school districts, information regarding
3 whether a bidder or contractor is an affiliate of a person who
4 is not collecting and remitting Illinois Use taxes, for the
5 limited purpose of enforcing bidder and contractor
6 certifications.
7     The Director may make any information concerning a criminal
8 violation that may have occurred under the Truth in Employment
9 Act available to the Attorney General or the appropriate
10 State's Attorney when the Department refers a matter under
11 Section 30 of the Truth in Employment Act.
12     The Director may also make available to the Secretary of
13 State information that a corporation which has been issued a
14 certificate of incorporation by the Secretary of State has
15 failed to file returns under this Act or pay the tax, penalty
16 and interest shown therein, or has failed to pay any final
17 assessment of tax, penalty or interest due under this Act. An
18 assessment is final when all proceedings in court for review of
19 such assessment have terminated or the time for the taking
20 thereof has expired without such proceedings being instituted.
21 For taxable years ending on or after December 31, 1987, the
22 Director may make available to the Director or principal
23 officer of any Department of the State of Illinois, information
24 that a person employed by such Department has failed to file
25 returns under this Act or pay the tax, penalty and interest
26 shown therein. For purposes of this paragraph, the word
27 "Department" shall have the same meaning as provided in Section
28 3 of the State Employees Group Insurance Act of 1971.
29     (d) The Director shall make available for public inspection
30 in the Department's principal office and for publication, at
31 cost, administrative decisions issued on or after January 1,
32 1995. These decisions are to be made available in a manner so
33 that the following taxpayer information is not disclosed:
34         (1) The names, addresses, and identification numbers
35     of the taxpayer, related entities, and employees.
36         (2) At the sole discretion of the Director, trade

 

 

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1     secrets or other confidential information identified as
2     such by the taxpayer, no later than 30 days after receipt
3     of an administrative decision, by such means as the
4     Department shall provide by rule.
5     The Director shall determine the appropriate extent of the
6 deletions allowed in paragraph (2). In the event the taxpayer
7 does not submit deletions, the Director shall make only the
8 deletions specified in paragraph (1).
9     The Director shall make available for public inspection and
10 publication an administrative decision within 180 days after
11 the issuance of the administrative decision. The term
12 "administrative decision" has the same meaning as defined in
13 Section 3-101 of Article III of the Code of Civil Procedure.
14 Costs collected under this Section shall be paid into the Tax
15 Compliance and Administration Fund.
16     (e) Nothing contained in this Act shall prevent the
17 Director from divulging information to any person pursuant to a
18 request or authorization made by the taxpayer, by an authorized
19 representative of the taxpayer, or, in the case of information
20 related to a joint return, by the spouse filing the joint
21 return with the taxpayer.
22 (Source: P.A. 93-25, eff. 6-20-03; 93-721, eff. 1-1-05; 93-835;
23 eff. 7-29-04; 93-841, eff. 7-30-04; revised 10-25-04.)
 
24     Section 95. The Workers' Compensation Act is amended by
25 adding Section 26.1 as follows:
 
26     (820 ILCS 305/26.1 new)
27     Sec. 26.1. Misclassification of employees as independent
28 contractors. The Commission shall cooperate with the
29 Department of Revenue under the Truth in Employment Act by
30 providing information to the Department of Revenue concerning
31 any suspected misclassification by a contractor of one or more
32 of its employees as independent contractors.
 
33     Section 97. Severability. The provisions of this Act are

 

 

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1 severable under Section 1.31 of the Statute on Statutes.