Full Text of HB2137 94th General Assembly
HB2137eng 94TH GENERAL ASSEMBLY
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| AN ACT concerning employment.
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| Be it enacted by the People of the State of Illinois, | 3 |
| represented in the General Assembly:
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| Section 1. Short title. This Act may be cited as the Truth | 5 |
| in Employment
Act.
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| 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
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| 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
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| include a person who furnishes only materials or supplies.
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| "Department" means the Department of Revenue.
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| 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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| 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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| 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
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| 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.
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| (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.
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| (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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| 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.
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| 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 |
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Civil Administrative Code of Illinois is amended by adding | 30 |
| Section 1005-160 as follows: |
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| (20 ILCS 1005/1005-160 new)
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| 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.
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| Section 90. The State Finance Act is amended by adding | 9 |
| Section
5.641 as follows:
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| (30 ILCS 105/5.641 new)
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| 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:
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| (35 ILCS 5/917) (from Ch. 120, par. 9-917)
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| Sec. 917. Confidentiality and information sharing.
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| (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
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| 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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| (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.
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| (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.
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| (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
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| 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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| 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.
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| 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
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| 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,
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| 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
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| 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
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| interest is a voting security.
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| The Director may make available to any State agency, |
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| including the
Illinois
Supreme Court, units of local | 2 |
| government, and school districts, information
regarding
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| 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
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| certifications.
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| The Director may make any information concerning a criminal | 8 |
| violation that may have occurred under the Truth in Employment
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| 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.
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| 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
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| 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
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| "Department" shall have the same meaning as provided in Section | 28 |
| 3 of the
State Employees Group Insurance Act of 1971.
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| (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:
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| (1) The names, addresses, and identification numbers | 35 |
| of the taxpayer,
related entities, and employees.
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| (2) At the sole discretion of the Director, trade |
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| 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
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| Department shall provide by rule.
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| The Director shall determine the
appropriate extent of the
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| 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).
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| 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
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| 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.
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| (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.
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| (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.)
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| Section 95. The Workers' Compensation Act is amended by | 25 |
| adding Section
26.1 as follows:
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| (820 ILCS 305/26.1 new)
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| 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.
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| Section 97. Severability. The provisions of this Act are |
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| severable under Section 1.31 of the Statute on Statutes.
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