Illinois General Assembly - Full Text of HB5002
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Full Text of HB5002  94th General Assembly

HB5002ham001 94TH GENERAL ASSEMBLY

Labor Committee

Filed: 2/15/2006

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 5002

2     AMENDMENT NO. ______. Amend House Bill 5002 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 1. Short title. This Act may be cited as the
5 Employee Classification Act.
 
6     Section 3. Purpose. This Act is intended to address the
7 practice of misclassifying employees as independent
8 contractors.
 
9     Section 5. Definitions. 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 Labor.
17     "Director" means the Director of Labor.
18     "Employer" means any contractor that employs individuals
19 deemed employees under Section 10 of this Act; however,
20 "employer" does not include (i) the State of Illinois or its
21 officers, agencies, or political subdivisions or (ii) the
22 federal government.
23     "Entity" means any contractor for which a person is

 

 

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1 performing any service and is not classified as an employee
2 under Section 10 of this Act; however, "entity" does not
3 include (i) the State of Illinois or its officers, agencies, or
4 political subdivisions or (ii) the federal government.
 
5     Section 10. Applicability; status of individuals
6 performing service. For the purposes of this Act, an individual
7 performing any service for a contractor is deemed to be an
8 employee unless it is shown that:
9         (1) the individual has been and will continue to be
10     free from control or direction over the performance of the
11     service, both under his or her contract of service and in
12     fact;
13         (2) the service is either outside the usual course of
14     the business for which the service is performed or the
15     service is performed outside of all the places of business
16     of the enterprise for which the service is performed; and
17         (3) the individual is engaged in an independently
18     established trade, occupation, profession, or business.
 
19     Section 15. Notice.
20     (a) The Department shall post a summary of the requirements
21 of this Act in English, Spanish, and Polish on its web site and
22 on bulletin boards in each of its offices.
23     (b) An employer or entity for whom one or more persons
24 classified as independent contractors are performing service
25 shall post and keep posted, in conspicuous places on each job
26 site where those persons work and in each of its offices, a
27 notice in English, Spanish, and Polish, prepared by the
28 Department, summarizing the requirements of this Act. The
29 Department shall furnish copies of summaries to employers and
30 entities upon request without charge.
 
31     Section 20. Failure to properly designate or classify

 

 

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1 persons performing services as employees.
2     (a) Except as provided in subsection (b), it is a violation
3 of this Act for an employer or entity not to designate an
4 individual as an employee under Section 10 of this Act unless
5 the employer or entity satisfies the provisions of Section 10.
6     (b) Subsection (a) does not apply to any designation of an
7 individual by an employer or entity in accordance with the
8 requirements of any other law, rule, or regulation.
 
9     Section 25. Enforcement. It shall be the duty of the
10 Department to enforce the provisions of this Act. The
11 Department shall have the power to conduct investigations in
12 connection with the administration and enforcement of this Act
13 and any investigator with the Department shall be authorized to
14 visit and inspect, at all reasonable times, any places covered
15 by this Act and shall be authorized to inspect, at all
16 reasonable times, documents related to the determination of
17 whether a person is an employee under Section 10 of this Act.
18 The Department shall conduct hearings in accordance with the
19 Illinois Administrative Procedure Act upon written complaint
20 by an investigator of the Department or any interested person
21 of a violation of the Act. After the hearing, if supported by
22 the evidence, the Department may (i) issue and cause to be
23 served on any party an order to cease and desist from further
24 violation of the Act, (ii) take affirmative or other action as
25 deemed reasonable to eliminate the effect of the violation, and
26 (iii) determine the amount of any civil penalty allowed by the
27 Act. The Director of Labor or his or her representative may
28 compel, by subpoena, the attendance and testimony of witnesses
29 and the production of books, payrolls, records, papers, and
30 other evidence in any investigation or hearing and may
31 administer oaths to witnesses.
 
32     Section 30. Review under Administrative Review Law. Any

 

 

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1 party to a proceeding under this Act may apply for and obtain
2 judicial review of an order of the Department entered under
3 this Act in accordance with the provisions of the
4 Administrative Review Law, and the Department in proceedings
5 under the Act may obtain an order from the court for the
6 enforcement of its order.
 
7     Section 35. Contempt. Whenever it appears that any employer
8 or entity has violated a valid order of the Department issued
9 under this Act, the Director of Labor may commence an action
10 and obtain from the court an order commanding the employer or
11 entity to obey the order of the Department or be adjudged
12 guilty of contempt of court and punished accordingly.
 
13     Section 40. Penalties. An employer or entity that violates
14 any of the provisions of this Act or any rule adopted under
15 this Act shall be subject to a civil penalty not to exceed
16 $1,500 for each violation found in the first audit by the
17 Department. Following a first audit, an employer or entity
18 shall be subject to a civil penalty not to exceed $2,500 for
19 each repeat violation found by the Department within 5 years.
20 For purposes of this Section, each violation of this Act for
21 each person and for each day the violation continues shall
22 constitute a separate and distinct violation. In determining
23 the amount of a penalty, the Director shall consider the
24 appropriateness of the penalty to the employer or entity
25 charged, upon the determination of the gravity of the
26 violations. For any second or subsequent violation determined
27 by the Department which is within 5 years of an earlier
28 violation, the Department shall add the employer or entity's
29 name to a list to be posted on the Department's website. Upon
30 such determination the Department shall notify the violating
31 employer or entity. Such employer or entity shall then have 10
32 working days to request a hearing by the Department on the

 

 

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1 alleged violations. Failure to respond within the 10 working
2 day period shall result in automatic and immediate placement
3 and publication on the list. If the employer or entity requests
4 a hearing within the 10 working day period, the Director shall
5 set a hearing on the alleged violations. Such hearing shall
6 take place no later than 45 calendar days after the receipt by
7 the Department of Labor of the request for a hearing. The
8 Department of Labor is empowered to promulgate, adopt, amend,
9 and rescind rules to govern the hearing procedure. No contract
10 shall be awarded to a employer or entity appearing on the list
11 until 4 years have elapsed from the date of the last violation.
12 The amount of the penalty, when finally determined, may be
13 recovered in a civil action filed in any circuit court by the
14 Director of Labor or a person aggrieved by a violation of this
15 Act or any rule adopted under this Act. In any civil action
16 brought by an aggrieved person pursuant to this Section, the
17 circuit court shall award the aggrieved person 10% of the
18 amount recovered. In such case the remaining amount recovered
19 shall be submitted to the Director of Labor.
 
20     Section 45. Willful violations.
21     (a) Whoever willfully violates any of the provisions of
22 this Act or any rule adopted under this Act or whoever
23 obstructs the Director of Labor, or his or her representatives,
24 or any other person authorized to inspect places of employment
25 under this Act shall be liable for penalties up to double the
26 statutory amount.
27     (b) Whoever willfully violates any of the provisions of
28 this Act or any rule adopted under this Act shall be liable to
29 the employee for punitive damages in an amount equal to the
30 penalties assessed in subsection (a) of this Section.
31     (c) The Director may promulgate rules for the collection of
32 these penalties. The penalty shall be imposed in cases in which
33 an employer or entity's conduct is proven by a preponderance of

 

 

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1 the evidence to be willful. The penalty may be recovered in a
2 civil action brought by the Director of Labor in any circuit
3 court. In any such action, the Director of Labor shall be
4 represented by the Attorney General.
 
5     Section 50. Employee Classification Fund. All moneys
6 received by the Department as fees and civil penalties under
7 this Act shall be deposited into the Employee Classification
8 Fund and shall be used, subject to appropriation by the General
9 Assembly, by the Department for administration, investigation,
10 and other expenses incurred in carrying out its powers and
11 duties under this Act. The Department shall hire as many
12 investigators as may be necessary to carry out the purposes of
13 this Act. Any moneys in the Fund at the end of a fiscal year in
14 excess of those moneys necessary for the Department to carry
15 out its powers and duties under this Act shall be available to
16 the Department for the next fiscal year for any of the
17 Department's duties.
 
18     Section 55. Retaliation.
19     (a) It is a violation of this Act for an employer or
20 entity, or any agent of an employer or entity, to retaliate
21 through discharge or in any other manner against any person for
22 exercising any rights granted under this Act. Such retaliation
23 shall subject an employer or entity to civil penalties pursuant
24 to this Act or a private cause of action.
25     (b) It is a violation of this Act for an employer or entity
26 to retaliate against a person for:
27         (1) making a complaint to an employer or entity, to a
28     co-worker, to a community organization, before a public
29     hearing, or to a State or federal agency that rights
30     guaranteed under this Act have been violated;
31         (2) causing to be instituted any proceeding under or
32     related to this Act; or

 

 

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1         (3) testifying or preparing to testify in an
2     investigation or proceeding under this Act.
 
3     Section 60. Private right of action.
4     (a) A person aggrieved by a violation of this Act or any
5 rule adopted under this Act by an employer or entity may file
6 suit in circuit court, in the county where the alleged offense
7 occurred or where any person who is party to the action
8 resides, without regard to exhaustion of any alternative
9 administrative remedies provided in this Act. Actions may be
10 brought by one or more persons for and on behalf of themselves
11 and other persons similarly situated. A person whose rights
12 have been violated under this Act by an employer or entity is
13 entitled to collect:
14         (1) the amount of any wages, salary, employment
15     benefits, or other compensation denied or lost to the
16     person by reason of the violation, plus an equal amount in
17     liquidated damages;
18         (2) compensatory damages and an amount up to $500 for
19     each violation of this Act or any rule adopted under this
20     Act;
21         (3) in the case of unlawful retaliation, all legal or
22     equitable relief as may be appropriate; and
23         (4) attorney's fees and costs.
24     (b) The right of an aggrieved person to bring an action
25 under this Section terminates upon the passing of 3 years from
26 the final date of service to the employer or entity. This
27 limitations period is tolled if an employer or entity has
28 deterred a person's exercise of rights under this Act by
29 contacting or threatening to contact law enforcement agencies.
 
30     Section 65. Rulemaking. In addition to any rulemaking
31 required by any other provision of this Act, the Department may
32 adopt reasonable rules to implement and administer this Act.

 

 

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1 For purposes of this Act, the General Assembly finds that the
2 adoption of rules to implement this Act is deemed an emergency
3 and necessary for the public interest and welfare.
 
4     Section 70. No waivers.
5     (a) There shall be no waiver of any provision of this Act.
6     (b) It is a Class C misdemeanor for an employer to attempt
7 to induce any individual to waive any provision of this Act.
 
8     Section 75. Cooperation. The Department of Labor, the
9 Department of Employment Security, the Department of Revenue,
10 and the Illinois Workers' Compensation Commission shall
11 cooperate under this Act by sharing information concerning any
12 suspected misclassification by an employer of one or more of
13 its employees as independent contractors.
 
14     Section 901. The Department of Employment Security Law of
15 the Civil Administrative Code of Illinois is amended by adding
16 Section 1005-160 as follows:
 
17     (20 ILCS 1005/1005-160 new)
18     Sec. 1005-160. Misclassification of employees as
19 independent contractors. The Department of Labor, the
20 Department of Employment Security, the Department of Revenue,
21 and the Illinois Workers' Compensation Commission shall
22 cooperate under the Employee Classification Act by sharing
23 information concerning any suspected misclassification by an
24 employer or entity, as defined in the Employee Classification
25 Act, of one or more employees as independent contractors.
 
26     Section 905. The Department of Labor Law of the Civil
27 Administrative Code of Illinois is amended by adding Section
28 1505-125 as follows:
 

 

 

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1     (20 ILCS 1505/1505-125 new)
2     Sec. 1505-125. Misclassification of employees as
3 independent contractors. The Department of Labor, the
4 Department of Employment Security, the Department of Revenue,
5 and the Illinois Workers' Compensation Commission shall
6 cooperate under the Employee Classification Act by sharing
7 information concerning any suspected misclassification by an
8 employer or entity, as defined in the Employee Classification
9 Act, of one or more employees as independent contractors.
 
10     Section 910. The Department of Revenue Law of the Civil
11 Administrative Code of Illinois is amended by adding Section
12 2505-750 as follows:
 
13     (20 ILCS 2505/2505-750 new)
14     Sec. 2505-750. Misclassification of employees as
15 independent contractors. The Department of Labor, the
16 Department of Employment Security, the Department of Revenue,
17 and the Illinois Workers' Compensation Commission shall
18 cooperate under the Employee Classification Act by sharing
19 information concerning any suspected misclassification by an
20 employer or entity, as defined in the Employee Classification
21 Act, of one or more employees as independent contractors.
 
22     Section 915. The State Finance Act is amended by adding
23 Section 5.663 as follows:
 
24     (30 ILCS 105/5.663 new)
25     Sec. 5.663. The Employee Classification Fund.
 
26     Section 920. The Illinois Procurement Code is amended by
27 changing Section 50-70 as follows:
 
28     (30 ILCS 500/50-70)

 

 

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1     Sec. 50-70. Additional provisions. This Code is subject to
2 applicable provisions of the following Acts:
3         (1) Article 33E of the Criminal Code of 1961;
4         (2) the Illinois Human Rights Act;
5         (3) the Discriminatory Club Act;
6         (4) the Illinois Governmental Ethics Act;
7         (5) the State Prompt Payment Act;
8         (6) the Public Officer Prohibited Activities Act; and
9         (7) the Drug Free Workplace Act; and
10         (8) the Employee Classification Act.
11 (Source: P.A. 90-572, eff. 2-6-98.)
 
12     Section 925. The Workers' Compensation Act is amended by
13 adding Section 26.1 as follows:
 
14     (820 ILCS 305/26.1 new)
15     Sec. 26.1. Misclassification of employees as independent
16 contractors. The Department of Labor, the Department of
17 Employment Security, the Department of Revenue, and the
18 Illinois Workers' Compensation Commission shall cooperate
19 under the Employee Classification Act by sharing information
20 concerning any suspected misclassification by an employer or
21 entity, as defined in the Employee Classification Act, of one
22 or more employees as independent contractors.
 
23     Section 990. Severability. The provisions of this Act are
24 severable under Section 1.31 of the Statute on Statutes.
 
25     Section 999. Effective date. This Act takes effect July 1,
26 2006.".